Do You See What I See?

-Philip Mancuso

Little hiker with binoculars

Said the Fed to the little lambs,

Do you see what I see?

In your wallets, little lambs,

Do you see what I see?

Jobs, Jobs, growing with great might!

Our QE worked great, dyn-o-mite!

Our QE worked great, dyn-o-mite!

Said the little lambs to the Fed – Oh boy,

Do you hear what I hear?

Things are not much better, Oh boy,

Do you hear what I hear?

You’re wrong, You’re wrong, you must by cra-zy

Earning less and less can’t you see?

Earning less and less can’t you see?

Said the shoppers to the Yellen Queen,

Do you know what I know?

Always miss your forecast, GDP!

Do you know what I know?

Growth, Growth shivers in the cold

What happened to our silver and gold?

What happened to our silver and gold?

Said the mighty Queen to the people everywhere,

Listen to what I say,

Growth and jobs are popping everywhere!

Listen to what I say,

The Fed, the Fed, we are always right!

We will bring you goodness and light,

If you close your eyes really tight.

It’s that time of year again where I try to keep it a bit real,  back in late 2013/early 2014 I said “What recovery?”.  This blog post is a riff on and a continuation of that.  Below I’ve included three tables.  The first is job creation from 1990 to present, the second is household income over the same period and lastly GDP during the same time frame.

Job Creation 1990-Present


Household Income 1990-Present


Gross Domestic Product 1990-Present


What the Fed sees is more job growth over the last 3 years than we have seen since the 90’s and in a narrow view they would be right.  What the Fed is also seeing is the highest household income since 2007, and they’d also be right.  Lastly, they see more growth in this decade versus the last decade, and they’d be right there as well.

Here’s what I see:

RE Jobs/Wages Since and including 2008 

1.  Roughly 25% jobs creation vs prior two decades.

2.  Job creation at roughly 1/3 needed to keep pace with population growth.

3.  2016 likely sees fewest jobs created since 2012 (unless December is a blockbuster).

4.  Earnings almost identical to 1998 levels.

5.  More jobs/less wages 2011-2014 (those part-time and low paying jobs we’ve discussed).

6. Since/Including 2008, we are about 11 million (mm) total jobs short of covering population growth over this time period.

7.  This is the Gold star one and a huge part of the basis on my thesis for #NotBroken: Since 2000 we’ve never created 3mm jobs in a year and have never gotten back to 1999 wages, save two years can’t breach 3% growth AND…..

Let me digress for a second.  What happened in 1993?  What happened from 95-2001?  Wait for it…  1/23/1993 the release of the web browser (the information changer).  95-2001 the dot com boom/bust (the automation we’ve talked about).  Folks, everything we’ve been talking about!  Let me say it again, the proliferation of information and the advancement of technology is changing our economy forever.  It is the game changer the Fed ignores to this day as far as I am concerned.  

Therefore, how do companies hire people when they believe they can do it better and cheaper with computers?  How do companies charge a lot for goods and services when consumers know better thanks to the web AND can’t afford it thanks to stagnant wages?  How can consumers afford it given said wage stagnation and the Fed is trying to push rates higher (remember we are a highly levered economy)?


1.  About 1/3 the 90’s.

2.  Not a single year in the 4’s since 2001 and 3’s since 2006.  

Maybe the jobs/wages picture have something to do with the growth picture?

Wrap it in a bow:

From my perspective, regardless of whatever perceived recovery we have experienced since 2008, when you include the damage of 2008 we aren’t even back to 2007!  This realization is the biggest miss in this whole thing on the part of the Fed and Fed apologists.  

What does this mean?

So is the web going away?  Are computers going away?  The definition of insanity is to do the same thing over and over again and expect a different outcome.  I’d tweak that here and say it is insanity to expect a different outcome given the same conditions persisting.  

Here’s the worst part of it.  If you notice that in a bubble things have been pretty good the last few years.  That begs the question, what will bad look like?  This is why I can’t predict anything other than #LowerForLonger and #NotSoFast.  So #TheDeathOfLowRatesMayBeGreatlyExaggerated

Do you see what I see?

Happy Holidays 2016!

-Philip Mancuso

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