News: Real Estate, Risk, Economics. Sept. 7-8, 2018

⇧ Wildfires: Causes, Costs & Containment
This article is short and packed.
⇧ World Development Report Gets It Seriously Wrong on Inequality and Labor Markets
The World Bank's annual World Development Report (WDR) is viewed as the Bank's official statement on best practices in development policy. It is important both because it often serves as a basis for project loans and IMF programs, and also because it is viewed as an authoritative document by many people in policy positions throughout the world.
For this reason, it is disconcerting that the draft report gets some very big things wrong.
Dean Baker is being charitable.
Every mistake Dean points out is the result of the deliberate ideology of plutocracy. In other words, the "mistakes" are on purpose: designed to deceive.
⇧ Housing and the Trump Tax Cut
... rent is by far the largest single expenditure for low- and moderate-income households. With rents rising more rapidly than other prices, and more rapidly than wages, many families are finding it increasingly difficult to make ends meet.
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The best hope for bringing rents down, or at least slowing their rate of increase, is by rapidly increasing the supply of housing, thereby putting downward pressure on rents. However, with construction slowing, there is not likely to be much relief any time soon for most of the areas where housing costs are a major problem.
That's typically viewed as good news for residential landlords; however, too much of a "good" thing can backfire. Reasonable stability with good overall economic growth is better than making more money as a landlord only to have to pay more in other ways, even more costly ways, that result from a disintegrating middle and lower class.
⇧ Turkey is business-as-usual for the globalised financial system
Confronting the Great Depression 85 years ago, Roosevelt and Keynes dismantled the globalised financial market system, and led the way to a different age of global prosperity.
Today, global financial markets remain broadly unchallenged by politicians. As a result, the global economy and financial system have lurched forward from one crisis to another, while workers confront insecurity, reduced wages and hollowed out public services.
⇧ Ambiguous Grant Of Collapse Coverage Construed In Policyholder's Favor
Did the building fall down? Not all the way. Did the building cave in? Not all the way. Can the policy language rule out falling down partially? No. In fact, the language says "any part of a building." However, the question of what "part" means matters. Roof trusses failed so that the part of the building held up before fell to some degree (part of the way down: 6 to 10 inches). The court felt that the policy holders had a reasonable expectation that the damage was covered. Therefore, policy language must be written in a manner that anticipates how policy holders might reasonably interpret the language in ways not intended by the insurance company.
⇧ Largest Chicago Apartment Fire in Years Kills 8
Eight people, including six children, were killed when a fire broke out before dawn Sunday at a Chicago apartment in one of the deadliest fires in the nation's third-largest city in years, officials say.
⇧ The IMF as a transmission mechanism for academic knowledge
Economics and politics should be the same thing, and truth and facts should drive it. Unfortunately, people form ideologies to benefit themselves, even if the so-called benefits are fleeting and/or immoral and unethical, etc.
⇧ 5 Unreasonable Landlord Behaviors (& How to Fix Them for Higher Returns)
If there's one lesson I've learned the hard way (many times, to my embarrassment), it's that you always need a detailed move-in/move-out walkthrough report, complete with time-stamped photographs of every wall, every floor, every door, etc.
⇧ Mahathir's pushback against Chinese deals shows belt and road plan needs review
People looking at Chinese ghost cities makes them think more than twice about just how well China does at planning. Also, Xi's extremely heavy-handed dictatorship is giving more people pause too. Lastly, wise people will wait to see how Trump's trade war plays out before they commit to too much with China.
⇧ How I spent my summer vacation: Fleeing wildfires as a climate change refugee
Why are we failing to address a crisis that scientists have warned us about for more than 50 years?
⇧ Fed Paper Questions 'This Time Is Different' Yield Curve Theory
This whole debate continues to strike me as more than a bit silly. The reason is that the economy is controllable, the business cycle is unnatural, and the Fed invariably gets it wrong because the Fed doesn't have all the data in real time and doesn't yet understand what to do with it if it had it. You can top it all off with that the Fed really doesn't put its two supposed mandates first and foremost but puts the interests of the commercial bankers above everything. Don't expect them to admit that publicly.
⇧ Which state tops list for having the best and worst economies?
How should this data impact your decisions as to where to invest in residential income-properties?
The best ranked states tend to have fast-growing economies, low poverty and unemployment rates, high job growth, and a relatively well-educated workforce, while the opposite is generally the case among states with the worst ranked economies.
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Many of the states with contracting economies have a high reliance on jobs in energy extraction industries like coal mining and oil production. Four of the five worst ranked states on this list — Louisiana, West Virginia, Alaska, and New Mexico — also have among the largest mining sectors relative to total state employment.
When the price of oil collapsed beginning in 2014, many oil-dependent state economies suffered as a result. "These are states that are very reliant on energy — either coal mining or oil drilling — and they're not as diversified as the states at the top of the list," Kohli said.
Properties are cheaper in the bottom states. You can purchase more upscale properties for renting out. However, until industries change from carbon-fuel production within the given states, be careful. The upper-middle and middle class bottom can still fall out.
Catch the lower states on the rebound. How does that strike you? If you have the time, you can get in early by focusing on regions on the upswing within lower states.
⇧ Trump's Nafta Deal Isn't Worth the Price [It's not that simple]
TPP was a terrible plan. That aside, I find a great deal of benefit in the deal with Mexico but likely not in ways most people would imagine I might mean.
What I find beneficial is that Trump has played his hand to the end for the world to see. The deal was not onerous for Mexico. Therefore, most of the rest of the world should see that Trump won't hold out for being completely unreasonable. That should reduce volatility in general.
Naturally, each deal, each nation, will be different and the final demeanor of the parties involved remains to be seen. We'll need at least two more deals under Trump's belt before a predictive pattern might emerge.
Trump might deliberately upset that.
⇧ Zillow: US won't see a buyer's market until 2020
I see the corporate tax-cuts as most importantly oversold by advocates and which cuts will end up leading to recession if the Fed continues raising and if the EM hot money coming in slows (that's a big if).
Susan Wachter, University of Pennsylvania Wharton school real estate & finance professor, and Aaron Terrazas, Zillow senior economist, join the 'Power Lunch' team to discuss if a housing slowdown is in the forecast.
Zillow: US won't see a buyer's market until 2020 from CNBC.
⇧ Why Hemp Houses Will Be The Best Houses In the World
⇧ As Trade Tensions Rise, Fewer Americans See China Favorably
When I was in my teens, China's totalitarian dictatorship and total lack of democracy were front and center. Then came those clamoring to "Open" China economically by selling that as the way to create democracy in China. China was opened, and now China is just as anti-democratic as ever while Pew Research and others don't even put the issue on the radar screen. Why is that?
Well, the fact is that opening China was never about increasing democracy in China but about US plutocratic ambitions to get huge slices of a trade pie increased by trading with China. It made them so much money that they completely look the other way while Chinese citizens protest in the streets nearly constantly without a word of it reaching US media audiences and while much less severe governments get the heavy-sanctions treatment for being supposedly anti-democratic.
This all matters to US real estate investors who need the average US tenant to be in relatively good shape financially to continue making rent payments in full and on time. Letting a dictatorship eat their lunch so the superrich can get richer off Chinese labor was never a good plan and should be shut down just as soon as possible and also so the Chinese People will throw off the dictatorship.
⇧ Almost half of Americans can't pay for their basic needs
This article reinforces what I wrote above about the need for a decent economy.
⇧ Wow! China is far and away the worst plastic polluter of the oceans
Just 10 streams carry 95% of all river-borne plastic into the ocean
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... the Yangtze is the main culprit, ejecting around 1.5 million tonnes of plastic into the East China Sea. That's more than the other nine rivers combined.
Now, rather than China focusing on its Belt and Road Initiative so it can sell more products, how about China declare total and immediate domestic war on plastics flowing into our globally shared oceans!
Oh, and how about China paying a huge share of the cost of cleaning up the plastics it has already allowed into our oceans.
Instead of building up its military navy to bully its democratic neighbors, it should be building a pollution-cleanup navy.
⇧ Utah Sees Most Wildfires in 15 Years
... dry conditions and one devastating wildfire in Dollar Ridge that has consumed 363 structures have made 2018 stand out.
⇧ Church Pastor Pleads Guilty to Setting Fire to His Apartment in Scam to Collect Insurance Money
⇧ Shower Floor Ideas: Which Linear Drain to Choose
⇧ The Ocean Cleanup Is Starting, Aims To Cut Garbage Patch By 90% By 2040
How could anyone be against this? It's one of the greatest things that's happened in my lifetime. Boyan Slat is a real global leader even though he's so young. We could use about 10,000 just like him to tackle 10,000 different environmental issues.
The Chinese government should at least double the fleet from 60 to 120 just because China is dumping more plastics into the oceans than any other nation by far.
⇧ Detroit battles tax penalties that create city of renters
On the legal front, in July the city settled a lawsuit brought by the American Civil Liberties Union that alleged the city made it too difficult for residents to learn about, and qualify for, a property tax exemption based on poverty.
⇧ Turkey's Debt & Currency Crisis Morphs into Financial Crisis as Banks Face Funding Squeeze
Until or unless Erdogan bites the bullet by allowing the Bank of Turkey to massively hike interest rates — by as much as 500 basis points according to some analysts — and/or requesting a bailout from the IMF, the problems for Turkey's economy are only going to get worse as more and more spooked investors flee for the exits, while fewer enter the market. By Don Quijones.
But even if he bites the bullet... Because there's Argentina: Unlike Turkey, it has bitten that bullet and has just jacked up its policy interest rate to 60% and has agreed to a $50-billion bailout from the IMF in June. And yet its economy is spiraling down and inflation now exceeds 30%. Just when you think Argentina's financial crisis can't get worse, it gets a whole lot worse.Read... The Price of Cheap Dollar-Debt: Argentina's Peso Collapses 24% in 2 Days as Government Begs for Faster IMF Bailout.
⇧ Fugitive Brooklyn landlord faces felony charges connected to alleged tenant harassment
We'll watch this one to see how it turns out.
⇧ The $1 billion price cut: Luxury real estate gets slashed
... the prices for the homes were fantasies. Sellers had irrational expectations or they were using the sky-high prices to attract attention to their properties. The luxury real-estate market has fallen since its peak in 2014 and 2015, and many sellers are finally adjusting to a different market.
Supply of homes at the high end is also high, especially for newer condos and spec homes in New York, Los Angeles and major metro areas.
"There could be an over-supply of these high-end homes," Marr said.
The new federal tax law, which limits deductions of state and local taxes, is also putting pressure on real-estate in high-tax states. And foreign buyers, who were driving some of the highest-priced sales in 2014 and 2015, have pulled back. A stronger dollar has also made U.S. real-estate more expensive.
⇧ 117 council tower blocks across England have flammable windows
"There are large gaps in building regulation when it comes to windows" says building surveyor Arnold Tarling as 117 council tower blocks across England have flammable windows.
Research: "fire-rated windows".
⇧ If Fed Policy Is Still Easy, Consumers Aren't Getting the Memo
... the proportion of consumers in the Michigan survey reporting favorable buying conditions due to low interest rates is also well below historical averages — it's only been lower 13 percent of the time in monthly data from 1980 — which suggests the impact of Fed tightening may be kicking in at lower borrowing costs than in the past.
No "may." It's a given considering that it's been an entire decade since the Great Recession kicked in. Many, many people have come of age with no other rate levels as an example under which to actually function. Plus, they can readily see that wages certainly haven't gone up much at all relative to productivity and the gains of those at the very top. Why spend? Why borrow and take the risks? Most are used to being more frugal.
⇧ Just Hours After Ordering Pay Cut for Millions of Public Workers, Trump Proposes $100 Billion Gift to Richest 1%
These people really hate Trump's economics.
Trump's Oval Office interview with Bloomberg came shortly after the president announced in a letter to congressional leaders that he is freezing a planned 2.1 percent pay increase for federal workers just ahead of Labor Day, claiming that "federal agency budgets cannot sustain such increases."
But for Trump and the Republican Party, concerns for "fiscal sustainability" are quickly dropped when it comes time to deliver major gifts to the rich, Wall Street, and the Pentagon.
What Trump is doing is looking to privatize as much as possible while continuing the decades-long attempt to dupe the masses (it worked for decades) with the utterly discredited notion of trickledown economics. How long will he get away with it? Does he even really understand economics yet? His back and forth about Fed policy sure indicates that he didn't when he assumed office.
⇧ Americans are flocking to these 15 cities for their jobs and wages
I suggest more variables be used to decide where to invest. Excellent due diligence requires it.
⇧ Early Recession Warnings Are Flashing Red Orange
In an unequal economy when many households have no wealth and can't self-insure against a downturn, cuts in personal consumption are particularly drastic and the recession grows deeper.
⇧ The Myth of Secular Stagnation [sort of]
Joseph E. Stiglitz really hates Donald Trump, but I'm not posting a link to the article for that.
The Obama administration made a crucial mistake in 2009 in not pursuing a larger, longer, better-structured, and more flexible fiscal stimulus. Had it done so, the economy's rebound would have been stronger, and there would have been no talk of secular stagnation. As it was, only those in the top 1% saw their incomes grow during the first three years of the so-called recovery.
I completely agree with that and even called for a vastly larger and longer effort at the time.
In some defense of Larry Summers, who is the main culprit Joe appears to be referring to, "Secular Stagnation" is pointed to by Larry as the reason why more progressive policies and practices should be employed. Larry means that without such policies and practices, there will be Secular Stagnation.
I'm not sure whether Joe and Larry have discussed this. Perhaps Joe is not pointing directly at Larry but more so others.
It is true that Larry is insufficiently progressive. Joe's plan would be better for the economy than would Larry's, although I think Joe's is still too weak and too commercial-banking oriented too (insufficiently democratic).
⇧ War on plastics getting loose in the environment is a good idea. China is just getting started.
China Desperately Grapples With Its Plastic Waste Crisis
Tipping Point: Beijing produces 25,000 tonnes of waste every day, putting a strain on the city's infrastructure, but efforts to streamline the recycling process may threaten the livelihoods of the city's poorest.
People are suffering from the pollution", says campaigner Chen Liwen. "Without sustainable waste management, we don't have a future." However, dramatic policy changes, namely serious restrictions on the import of foreign waste, endanger the livelihoods of 170,000 rubbish pickers. "They rely on recycling to raise their family", says Liwen. Even entrepreneurs like Liu Xuesong may pose a threat. "I wish to give the industry more dignity", she says; but by encouraging the consumer to recycle directly, the rubbish picker 'middle man' loses out. Wang Jindong is being pressured by the government to abandon rubbish picking, and fears for his young nephew's future. "My hope is that for his whole life he has food to eat and he can have a family and a career", says Jindong. "Then my job will be done."
⇧ New Climate Study Warns of Dangerous 'Hothouse Earth' Scenario - YouTube
Climate scientist Will Steffen explains that continued warming of the atmosphere could trigger a cascade of tipping points.
⇧ Lessons from the Greek tragedy unlearnt
If you are unfortunate to live under a Eurozone government that secretly borrows too much, many more of your countrymen will die as a result of being in the Eurozone.
⇧ Argentina's president announces new austerity measures
... by lowering the deficit we will lower our need to issue debt," the minister said.
If you weren't issuing debt to create your currency, you wouldn't have the problem. Just issue the currency you need without issuing any debt. Issue the amount of currency that is exactly needed to match real productivity, and you won't be facing inflation either.
⇧ Getting that sinking feeling: The ticking time bomb that could trigger a new financial crisis
Not too long ago, I told someone that the next recession won't be as bad as the last because the bottom won't fall out of the housing market. Well, that was then. Since that time, more and more speculation has been taking place throughout the financial economy such that the bottom could fall out just as much as it did when the housing market collapsed and for the same reasons, only not specifically in housing this time but in even broader sectors just as impactful when combined.
Covenants require a borrower to pass financial tests, usually on a quarterly basis. These tests can stipulate how much debt a company can have or the earnings it needs to generate.
But cov-lite loans now make up around 80 per cent of new issuance in the booming leveraged loan market, which surged past the $1 trillion milestone in the US earlier this year.
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Doumar believes the surge in cov-lite loans is just the tip of the iceberg. "The bigger problem is the overall erosion of documentation, which has become almost a joke. It has crept into the documentation that more and more cash from the company can be dividended out to the private equity firm when the lenders have not been repaid."
Furthermore, the US appeals court ruled in February that CLO managers, the biggest buyers of these risky corporate loans, will no longer be required to have "skin in the game". CLO managers are now exempt from the post-crisis rules that stipulated that they have to hold some of the loans that they were packaging up to sell on.
⇧ Setting the Record Straight on Secular Stagnation [well, not quite]
So, I wrote my commentary above on Joe's link before reading this article/response by Larry.
I believe I was right in my commentary above on Joe's post.
I'm not defending Larry's history of economic decisions and policy making here. I was completely opposed to the entire deregulation mania that caused the Great Recession. Attacking Glass-Steagall is attacking a strawman. It wasn't as if Glass-Steagall would have prevented all the damage or deregulation across-the-board, but that's the point. Deregulation went way beyond those things Glass-Steagall could have prevented. Obviously, the deregulation was extremely excessive. Consequently, had Glass-Steagall been left in place, the mania would not have been in swing dismantling it and other regulations and blocking the implementation of other needed regulations in the face of the "innovation" of the commercial bankers and investment houses at the time.
⇧ These 11 innovations will tackle the causes of ocean plastic pollution, not just the symptoms
The old saying is that necessity is the mother of invention. Doing this is a necessity if we intend to survive as a species on an open-environment Earth and for the planet to get back to health.
It would be a crying shame and an indictment against humanity if we were to have to seal ourselves off from the environment because we made it so toxic.
Those who don't care, those who put making money first and above the health of the environment, ought not be allowed to lead or rule anything of much consequence.
⇧ Miami Will Be Underwater Soon. Its Drinking Water Could Go First
⇧ No emissions, no engines: Waste haulers carve out niche with bikes
Keeping organics out of landfills is of particular concern because methane emissions from decomposing food waste are a major contributor to climate change.
On the issue of the bikes, I think that bikes are so much better than carbon-burning trucks that the biking should be subsidized.
⇧ Trump's Policies Will Displace the Dollar
I used to have extremely serious issues with Jeffrey D. Sachs. He was one of the "wizzes" sent to Russia to help turn it into an economic basket case rather than help it to make it a real ally, as could have happened and should have happened, as it would have meant no more nuclear weapons pointing at each other, etc., etc.
Jeffrey Sachs, however, has truly managed to remake himself and in earnest. He's much more interested in the welfare of the People in general than he was when the USSR collapsed.
Well, he now seems to simply loath Donald Trump so much that Jeffery is overstating or failing to see other possibilities.
I agree that Trump's economics won't work, but China is not exactly a paragon of virtue deserving of continued coddling. In addition, the sanctions against China are having a much bigger negative impact than China is letting on. Various other nations have also been going about the work of reevaluating China's role in general and have seen that China is coming up short in the planning and morals departments, not that any nation is doing particularly well in either of those.
Anyway, I think Jeff is more right than wrong but just overstating.
⇧ San Bernardino shooting: Eight people shot at California apartment complex
⇧ The emerging market crisis is back. And this time it's serious
It looks like the emerging market bubble is about to burst.
⇧ California Is Close to Passing a Bill That Would Require 100% Clean Energy by 2045
26 years is way too long.
If SB100 passes, California would become the largest economy in the world to commit to sourcing 100% of its energy from renewable sources.
⇧ It's better to rent than to buy in today's housing market
Fast-rising home prices and higher mortgage rates have made it cheaper to rent a home than buy and own one.
The monthly costs of buying and owning a home that you occupy are up 14 percent over the past year, more than three times the annual increase in rent rates nationally, according to Realtor.com. Rents are up just 4 percent.
Renting and reinvesting the savings from renting, on average, will outperform owning and building home equity, in terms of wealth creation.
⇧ Beyond Secular Stagnation, Joseph E. Stiglitz
True:
As Summers again knows full well, when Peter Orszag, the head of the Office of Management and Budget at the beginning of Obama's first administration, and I analyzed the risks of mortgage lender Fannie Mae in 2002, we said that its lending practices at that time were safe. We did not say that no matter what it did, there was no risk.
And what Fannie Mae did later in the decade mattered very much. It changed its lending practices to resemble more closely those of the private sector, with predictable consequences. (Even then, notwithstanding the right-wing canard blaming Fannie Mae and the other government-sponsored lender, Freddie Mac, it was private-sector lending, especially by the big banks, that underlay the financial crisis.)
I think Larry agrees. We shall see, as they are doing a back-and-forth in the open, which is a good thing.
⇧ Climate Change-Driven Wildfires Reshape West
I was severely criticize for stating decades ago that not allowing natural burning only makes matters worse. It appears I've been vindicated, not that not allowing natural burning is still the only major issue contributing to more severe forest or wildfires.
Regardless, it is becoming very clear that for the forests to survive and thrive again, we must not build structures in them that we will want to save from burning. If we want to mix human habitats and forests, we must build with materials that won't burn or build buildings we will not even attempt to save from natural fires. Fire and heat proof building make the most sense to me along with limited development in forests in the first place.
Of course, we must reverse carbon-burning-caused global warming ASAP!
⇧ Two Counties Declare Disaster After Pennsylvania Flooding
⇧ Couple Sues Utility Over Fatal Nebraska Blast That Destroyed Houses
Authorities say a gas line to a clothes dryer was not shut off when the dryer was disconnected and removed by an evicted tenant.
Never allow an evicted tenant to leave unattended.
⇧ Over 300 People Evacuated Due to Flooding in Manhattan, Kansas
... buildings flooded nearly to their roofs.
⇧ The American middle class is stable in size, but losing ground financially to upper-income families
⇧ Federal Grant Helps Michigan Town Place 2K Smoke Detectors
⇧ The Economy Needs More Workers. Last Month, It Got Fewer.
... the labor market could finally be so tight that employers just don't have a choice if they want to attract and retain workers.
As always, it would be a mistake to read too much into a single month's report, and both the good and bad news in the August numbers could vanish as soon as the September data is on the books.
You have to raise wages to pull people off their couches. That includes pulling retired people back in too. Businesses don't have to raise prices as much as they used to to pay higher wages either because there's so much compensation going to the top that can be switched to paying wages at the bottom. As for inflation fears, higher wages means more workers means more goods and services to meet rising demand. Let's not overreact. Let's not forget tax cuts at the bottom are also earmarked for termination.
⇧ U.S. Wage Gains Pick Up to 2.9% While Payrolls Rise 201,000
Revisions subtracted a total of 50,000 jobs from payrolls in the previous two months, according to the figures, resulting in a three-month average of 185,000.
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... The U-6, or underemployment rate, fell to 7.4 percent, the lowest since 2001, from 7.5 percent. That gauge includes part-time workers who'd prefer a full-time position and people who want a job but aren't actively looking.
7.4 percent is labor slack. There's plenty of room to come down before applying price inflation if compensation at the top is redistributed to workers, as it should be.
⇧ U.S. job growth surges; annual wage gain largest since 2009
"If the tariffs on all the imports from China go into effect, significant layoffs will be inevitable with higher prices," said Sung Won Sohn, chief economist at SS Economics in Los Angeles.
That's the traditional thinking, but the US could gear up to supply itself to meet demand. That would require an industrial policy, which Trump hasn't addressed. I don't think he knows much about the subject and would lean in the wrong direction to begin with, though I'd like to be pleasantly surprised by seeing him learning about the subject first rather than winging it and going against having an industrial policy.
⇧ California Homeowners Feel Burned As Companies Drop Insurance
It's not the insurance industry's fault except that the industry could have been more vocal about carbon-burning causing global warming causing more and larger wildfires. The article is correct that the FAIR Plan is the way to go as a last resort, but hammer the national politicians to get on board the war on carbon fuel.
Insurance companies don't want what's happening. They make more money writing more policies. The whole industry is taking a hit right along with everyone else. Industry employees are losing their homes to fires too. It's a national crisis, a global crisis. It won't get better if we don't go into crisis mode to deal with it. All the talk about increasing coal and oil and gas drilling and burning is, quite frankly, insane on every level — totally counterproductive.
⇧ Rental Glut Sends Chill Through the Hottest U.S. Housing Markets
Landlords and developers should not rue this. It had to happen for the sake of the entire economy. Steady is vastly better than boom and then bust! Those who don't give up on building at the proper rate will reap rewards.
Seattle isn't going to not fill the units. People want to move to Seattle. There's a predictable lag. Give it enough time. Plan for that when building.
⇧ Economy continues on its trend of more than eight years of job growth
This is analysis without rose-colored glasses.
⇧ Income Inequality Is Skyrocketing, Especially In These 5 States
You see, if incomes were more fairly distributed, our whole economy could do much, much better without fear of price inflation.
⇧ Economy Adds 201,000 Jobs in August, Unemployment Steady at 3.9 Percent
Interestingly, the pay gains are not especially strong in areas where employers have been complaining about labor shortages. The average hourly wage in construction was up 3.3 percent over the last year, but the gain was 3.5 percent back in September of 2016. Wages in manufacturing have risen by just 1.8 percent over the last year.
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The overall picture in the August jobs report is overwhelmingly positive. The economy continues to create jobs at a very healthy pace, and there is some modest evidence that wage growth may be accelerating so that wages at least slightly outpace the rate of inflation. The one noteworthy negative in this report is the evidence of weakness in the manufacturing sector. This could indicate that the Trump administration's trade policy is backfiring.
It's way too early to jump to any conclusions about the tariffs and domestic manufacturing. Business people aren't going to gear up if the tariffs could come off due to a deal between the US and China, etc. We have to wait to see how soon Xi will blink and to what degree. Light manufacturing can transition back and forth but there are still training issues/expenses. Supply chains have to be established too.
Will Xi drop support for the Chinese currency so Chinese goods will be cheaper everywhere to make up for the increased prices due to the tariffs? How hard and long is Trump prepared to push things? So far, he's clearly winning because the US has more room to fight because the US is the net importer. I think he'll push it all the way if Xi refuses to blink. If that holds, the US manufacturing sector will be ripe for gearing up in every area and to do so with cutting edge technology and with money pushed into research and development, which is the whole point for the sake of national security, etc.
⇧ Employment Situation Summary 8:30 a.m. (EDT) Friday, September 7, 2018
In August, 1.4 million persons were marginally attached to the labor force, little different from a year earlier. (Data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 434,000 discouraged workers in August, essentially unchanged from a year earlier. (Data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.0 million persons marginally attached to the labor force in August had not searched for work for reasons such as school attendance or family responsibilities. (See table A-16.)
That's slack!
⇧ The Case for a US Public Banking Option
We have emphasized the regulatory power of a public option because that is the feature that seems to have been most obviously forgotten since the Great Depression. The public options offered through New Deal programs created widely accessible, stable mortgage finance in the postwar period. Only after these programs were dismantled did the twin problems of financial exclusion and predatory lending reemerge, with serious consequences for the public. It is crucial that we revive the power of public action, and deploy it to foster financial inclusion and economic security for all.
⇧ Chinese imports and domestic employment across 18 OECD countries
... we find that China's rapid rise on the global economic stage is associated with lower manufacturing employment levels and disproportionally fewer hours worked by low-skilled workers.
The data supports what we already knew.
⇧ Claims from California Summer Fires Top $845M, Commissioner Blames Climate Change
The report shows how climate change is a contributor to wildfire losses in California ....