Oh yeah, one more thing...
Total employment taxes collected by the Federal gov't in Feb was $186.8b. That is down slightly from the $189.5b collected in January, however, February was a shorter month with less work days so I am hesitant to call any "weaker than expected" result for Friday's jobs number.
Consider this: Last Feb the total employment tax collection was $177.1b and in Jan of last year it was $185b. That was an $8b differential between Feb and Jan. This year that difference was less than $3 billion, so I am calling Friday's number to be in line with expectations or stronger.
So there you have it. As I have been saying the Daily Treasury Statement, which details the flows between the Federal government and the economy is a more up-to-date and better predictor of the economy, economic trends and markets.
The people who have been focused on the change in the deficit have been wrong for more than two years. It's not about the deficit. Nor is it about making stuff "harder to get." Follow that stuff...trade/invest, you will get killed. I guarantee it. Follow flows and you will make money.
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Except that the unemployment rate is fake since so many unemployed are not counted as unemployed.
The more reliable employment-population ratio did not budge, and is still stuck at recession levels.
Okay. Trade off that or, trade off the deficit then. You would have been short stocks for four years.
Right. Stock market has been doing great, main street not so much.
My red flag to sell the farm will be when and if the Fed raises rates--that's no given though. Today's 10yr breakout bears watching too. follow through above 6 mo trendline @2.40% will be a bearish bond signal. Fed hawks will take note.
deficit so far this FY is $406B (cash basis) so over 5 months that is running about $80B/mo or almost $1T annual...
$1T is pretty high... I think this remains to be indicative of the real problem which is a lack of consistency and/or growth in source/leading flow...
iow (to me) "the deficit is too high..."
rsp,
Dan,
That is just parroting Warren Mosler and it's useless information. What does that mean, anyway? Has total output not increased by $2 trillion since the deficit has been shrinking? Have we not sold $17 million vehicles? Come on, man. There has to be some applicability in what we do or what's the purpose? The deficit indicator has been a failure whereas flows--what Matt Franko and I focus on--have been far better predictors.
Yes, subprime auto sales had a good run. Junk-bond funded fracking had a good run. The tech bubble 2.0 is still going strong.
I agree that WM puts too much emphasis on the deficit, though lately he has taken a cue from Steve Keen and paid more attention to private debt.
I was not disagreeing with your point about the importance of government spending, Mike, only disagreeing with the mainstream view that we're approaching full employment and everything is just wonderful.
The "deficit indicator" as a predictor of economic performance is an absurdity.
When private spending increases, the deficit shrinks, GDP goes up and so does employment.
And it´s enough to have a look at the Krugman cross diagram in order to understand that.
With that diagram, the (mainly but not always) neo-classical Krugman introduced a great description of MMT principles, that some of the old MMTers seem too distracted to remember.
The real trick in trading this info is knowing whether the market would fall as a result of rate hike expectations, or rally because of a stronger-than-expected jobs number. I dont know how the treasury flows could inform you of this.
Dan,
I agree that it is, unfortunately, not wonderful for a lot of people.
Whatever makes that bear run, and makes me money, is wonderful. Only mushroom clouds could ruin my day.
With respect, dissmissing Dan's comment as "parroting Mosler" is a dodge. For those of us who actually interact with main street on a daily basis, it's quite clear the headline figures are politically massaged bullshit and anyone not an unproductive speculator, their lackeys or a beneficiary of government subsidy (law, health, tech etc.) are doing poorly. What good is increasing output when living standards don't follow, when putting a good face on things means ignoring immense distributional problems? We might as well be blasting those goods and services into space for all the good they're doing.
There are dark shadows on the earth, but its lights are stronger in the contrast. See the link below for more info.
#stronger
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