Alas, all good things must come to an end. As the kids summer vacation trip comes sadly to an end, it is only fitting that the final edition of “Thoughts From The Beach (TFTB)” would be this weekend’s “5 Things To Ponder.”
This week was very busy with economic data. Â For the most part, the majority of the data came basically inline with expectations. Â However, the internals of the various reports were much less encouraging. The most noteworthy report, and the least important from an investment standpoint, was the monthly employment report which came in at 288,000 jobs for the month.Â
As with the bulk of other reports, the more important details were lost to the headlines. Â The average number of hours worked made no gains, and hourly earnings growth remains muted. The bulk of the job creation remained focused in the lower wage paying areas of the economy such as retail and transportation. Â Most importantly, full-time jobs fell by roughly 500k.
As I discussed in “Jobless Claims And The Issue Of Full Employment,” there is only one analysis of employment that matters.  That is full-time jobs relative to the population. Full-time employment is what fosters household formation and long-term economic growth. As shown in the chart below, full-time employment relative to the working age population has remained primarily stagnant since the financial crisis and actually fell in the latest month. This is a key reason why economic growth continues to struggle.
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However, I digress, and our plane is getting ready to board as we make our way back to reality. Â Come Monday it is back to a dimly lit desk, stale coffee and the daily grind. Â In the meantime, here is what I will be reading on the trip home.
1) The Next Financial Crisis Is Brewing Right Now by David Dayen via The Fiscal Times
“The Office of the Comptroller of the Currency (OCC), not typically seen as a strident regulator, is warning about risky lending as low interest rates drive a reach for higher yields. Both the OCC and the Federal Reserve have decried the slippage in underwriting standards on particular loan products. Fed Chair Janet Yellen cited ‘pockets of increased risk-taking’ in a speech yesterday. And the Bank for International Settlements (BIS), a consortium of the world’s central banks, cautioned this week about asset bubbles forming throughout the global economy.”
