Sunday, April 22, 2018

A better name for The Kids Today: iGeneration


 - by New Deal democrat

You know the drill. It's Sunday so I get to ruminate about all stuff that isn't dry economics.

The oldest member of the Millennial generation is 38. Not only do I not think that The Kids Today would want to be lumped with that age group, but their uncool parents are probably precisely members of that group!

So what to name the generation that came after the Millennials? both "post-Millennials" and "Gen Z" are condescending and probably don't cut it with The Kids Today. Remember, "Gen X" was originally called "the baby bust," and Millennials were originally called "Gen Y" or "the echo boom," before catchier names were found.

A good dividing point is whether or not you remember 9/11. If you do, and were born after 1980, you're a Millennial. If you don't, you're not. Most studies seems to agree with this, using 1996 or so as the cut-off year after which you are not a Millennial. A similar if less apocalyptic marker is the Columbine school shooting of 1999. If you remember it, you're a Millennial. If your schooling always included "active shooter" drills, you're not.

But while the War on Terror or mass shootings have always been in the background for The Kids Today, everyday life has been dominated by something else.  If you were born after 1996, iPods were always around -- and there's a good chance you owned one. So were cell phones. For most of your youth -- *always* for the younger part of this cohort -- iPhones and flat screen TV's have been around, and you probably have had one (or another smart phone) since junior high school. In fact you may spend most of your time glued to one! The term "iGeneration" captures this perfectly.

I'm not the first person to think this is a better name. From Wikipedia:
iGeneration (or iGen) is a name that several persons claim to have coined. Demographer Cheryl Russell claims to have first used the term in 2009. Psychology professor and author Jean Twenge claims that the name iGen "just popped into her head" while she was driving near Silicon Valley, and that she had intended to use it as the title of her 2006 book Generation Me about the Millennial generation, until it was overridden by her publisher. In 2012, Ad Age magazine thought that iGen was "the name that best fits and will best lead to understanding of this generation". In 2014, an NPR news intern noted that iGeneration "seems to be winning" as the name for the post-Millennials.
So henceforth when I examine demographics issues, I am going to use the term "iGeneration," the earliest polling as to which indicates that they hate Trump even more than their Millennial predecessors do! 

Saturday, April 21, 2018

Weekly Indicators for April 16 - 20 at XE.com


 - by New Deal democrat

My Weekly Indicators post is up at XE.com.

The regional Fed indexes, which presaged real strength in the industrial sector over the last year, are faltering (while still positive).

Meanwhile housing, as exmplified by purchase mortgage applications, refuses to be held down.

Friday, April 20, 2018

Do interest rates still matter for the housing market?


 - by New Deal democrat

In the past few years, the strength of the housing market has seemed to defy the impact of interest rates.

Do they still affect housing?  I take a detailed look over at XE.com.

Thursday, April 19, 2018

Higher wage growth for job switchers: more eviden of a taboo against raising wages?


 - by New Deal democrat

Yesterday the Atlanta Fed published a note touting the wage growth for those who quit their jobs and transfer to a different line of work, writing that:
Although wages haven't been rising faster for the median individual, they have been for those who switch jobs. This distinction is important because the wage growth of job-switchers tends to be a better cyclical indicator than overall wage growth. In particular, the median wage growth of people who change industry or occupation tends to rise more rapidly as the labor market tightens.
The following graph was posted in support of this point:



Essentially the Atlanta Fed is highlighting the orange line as a "better cyclical indicator."

Is it? There's no doubt that wage growth among job switches declined first in the last two expansions. But I would want to see a much longer record before being that confident.

Because what I see in the above graph is a decline among job keepers (the green line) that is only matched by those declines presaging the onset of the last two recessions. Meanwhile the orange line, while still rising, has flattened.

In fact I think the Atlanta Fed's graph mainly shows evidence of what I highlighted last week as an emerging "taboo" against raising wages -- i.e., a stubborn refusal to raise wages even if it would lead to even higher output and gross profits for a net gain.

Once again the JOLTS data gives us a good proxy.  If wage growth is increasing at a "normal" rate compared with previous expansions, there shouldn't be an inordinate need to change jobs in order to get a raise, i.e., a rate higher than previous expansions. Thus the ratio of job changers who quit vs. the number of actual hires should be equivalent to similar stages in those expansions. If, on the other hand, employers have become inordinately stingy, quitting is almost essential to get ahead, in which case the ratio of quits to hires should be higher than normal.

Here is what the data shows:



For the last several years, Quits have been in the range of 58%-60% of hires, the highest since 2001, and specifically higher than the 56%-58% peak of the last expansion.

In other words, it looks like what the Atlanta Fed's graph is showing is that employees are reacting to the taboo against raising wages by quitting their jobs and moving to employers in fields that are already paying more.

Wednesday, April 18, 2018

Is the US economy booming? April 2018 update


 - by New Deal democrat

Back in January, I asked if the economy was "booming." There's no official definition, but based on my recollection of the two periods I have lived through that felt like booms, the1960s and late 1990s, I answered in the negative. I considered a number of indicators of well-being, to see what stood out in those two periods, and concluded that 

the five markers of an economic Boom are the following: 

1. An unemployment rate under 4.5%
2. YoY industrial production growth of at least 4%
3. YoY real wage growth of at least 1%
4. YoY real aggregate wage growth of at least 4%
5. Increasing YoY inflation.

In January, only the first and last markers were present. Let's update now that the first quarter iv over.

Unemployment rate under 4.5%




This remains at 4.1%


YoY industrial production growth of at least 4%



Due to the big surge of 1% in February alone, this is now over 4% YoY:


YoY real wage growth of at least 1%



Real wage growth is up just barely above zero, at +0.1%.

YoY real aggregate wage growth of at least 4%



This is only a little over 2%  and has been decelerating.

Increasing YoY inflation.


Inflation was increasing in January, and has continued to increase since.

The bottom line is that, while the economy might feel like it is booming on the production side, it isn't booming at all on the worker/consumer side.