Mail Answer Syndrome - TheStreet

Mail Answer Syndrome

The Mouth takes a trip to the mailbox.
Publish date:

Call Me Claven

JACKSON HOLE, Wyo. -- And today we dip into the mailbag.

The BLS says payrolls would have risen only 50k even in the absence of Floyd. What do you say to that?

The BLS has an early-release problem. It cannot even get the

cream into the


I therefore prefer to do my own employment analysis thankyouverymuch.

Well, say the BLS is right. Wouldn't that mean the demand for labor is slowing?

No. It wouldn't.

Not when every other employment indicator under the sun -- not to mention a conversation with any employer in the country -- says the demand for labor is most certainly not slowing.

The biggest threat to employment growth in this country (as this column has been

pointing out since January and


has been

warning since February) does not come from the demand side. It comes from the supply side.

The labor force

grew by an average 213k persons per month in 1996.

Then it grew an average 169k in 19997.

Then it grew an average 122k last year.

And it has grown an average 93k so far this year.

We are running out of bodies.

Slower employment growth is slower employment growth. Who cares whether it comes from the demand side or the supply side? Does it really matter?

Uhh ... yes. It very much matters.

A decrease in the supply of labor puts upward pressure on wages. A decrease in the demand for labor does not.

And the Feds fret much more about the price implications one of those than they do the other.

No points for guessing which.

What can you say about California employment?

It accounts for roughly 11% of total U.S. employment. It has recently proven so strong that California's jobless rate has been dropping much faster than the national one. Matter of fact, the gap between the two now stands at its lowest level since 1991 (see table below).

I don't live in California. What about employment in my state?

Your state doesn't matter.

And New York?

That includes you.

Dallas Fed President McTeer does not believe that "rapid growth based on new technology, rising productivity, and other supply-side factors is inflationary, especially in the current global environment." He prefers "to test the growth limits of the new economy." Why don't you ever write about what the Fed presidents say?

Because what Fed presidents say doesn't matter.

It is the Chairman who matters. It is the Chairman who is

always on the winning side of a policy vote.

What the governors say matters a little. What the Chairman says matters a lot.

What the presidents say matters none.

Do you write about stocks?


I write about the economy and the Fed and the bond market.

Is your column at all about stocks?


I write about the economy and the Fed and the bond market.

Should I use your column to make decisions about stocks?


I write about the economy and the Fed and the bond market.

Can I write in and accuse you of hating stocks? And of being way too pessimistic about absolutely everything? And of predicting that the world will end?

You certainly can if you wanna.

But you're wasting your time with such misguided mail.

One more time: I don't write about stocks. (And, for the record, I don't hate them anyway. I am not sitting on any cash; about half my money is in shares.)

I've been stressing just how strong this economy is (and calling bull*!%# on all the slowdown thinking out there); that's been the right call. I've been stressing that the Fed is more likely to tighten (and directing you to the speeches and statistics that indicate as much) than it is to ease; that's been the right call. I've been stressing a

bear market in bonds (and explaining why the fundamentals still point that way); that's been the right call.

The mail indicates -- and all apologies yet again for not being able to answer all of it -- that some people clearly interpret those things to mean that I hate everything and very much want the sky to fall.

Those folks probably ought to quit reading the column already.

My favorite market commentator says that if labor markets were tight, the average workweek would be increasing -- but it isn't, so they aren't. What do you say to that?

I say your favorite market commentator sucks.

I say it is much more likely that, especially against a backdrop of strong readings from hiring-intention surveys and an exceptionally low level of claims for unemployment insurance, employers are hoarding workers.

That they are keeping (and will keep) them on the payrolls through the occasional lull in activity because they know that they wouldn't be able to fill positions later were they to fire people now.

And that, my friends, is the very definition of tight labor markets.

Why do you sometimes seem so angry?

It isn't anger. It's frustration.

The people in this racket who want it both ways and who put forth ridiculous crap arguments and who just plain lie ought to piss you to no end -- just like they do me.

Don't wish them away, though.

They're the best motivators around.

Side Dish

Most satisfying loss?




San Francisco.

Minnesota (either one).