Dan Alpert Profile picture
Oct 26, 2021 10 tweets 5 min read Read on X
1/10
THREAD: There's No "Great Resignation"
There's this idea that a post-pandemic "labor shortage," yielding wage inflation, is caused by disinterest in work.
A good example of the "paralysis of aggregates" I spoke of in this @Bloomberg podcast this week:
bloomberg.com/news/articles/…
2/10
That's an easy snap judgment to arrive at when you correlate the malaise related to these 19 months of plague with the fact that, in the aggregate, millions of workers have, in fact, not yet returned to their jobs:
3/10
But if that is where you stop in your analysis you miss the underlying realities. First of all, we know where the unfilled jobs are - they are disproportionately in the low-wage/low-hours (read "low income") sectors. See the income levels below for guidance and bear with me:
4/10
Not all sectors have lost jobs since January 2020, and not all job losses, of course, are due to a lack of workers. In some sectors that have seen the highest levels of income growth (see professional and technical services), and a tight jobs market, there are more jobs now.
5/10
In fact by far the biggest winners of the $359 billion annualized bounty in increased household incomes to date have been in the two of the highest paid sectors (with a relatively lower propensity to spend what they earn - and therefore less of an impact on price inflation).
6/10
By contrast, there has been a pearl-clutching gasp about the PERCENTAGE increases in wages and incomes to workers in leisure and hospitality, retail, social assistance, admins etc. (orange dots - R axis) But expressed in dollars (blue bars - L axis) - um - not so much, eh?
7/10
And all that talk about elevated quits rates (JOLTS data)? Surprise, its mostly in the low income sectors that saw the high percentage changes as workers move from onw employer to another for better pay - just as you would expect them to do - not to go home and "lay flat."
8/10
So what about workers who haven't gone back yet? Have they thrown in the towel? Nope.
They simply don't have to go back to the lousy jobs on offer to them - YET.
They have the option to stay off their feet a little longer, a reasonable choice, but only for a few more weeks:
9/10
As with the prices of goods, distortions in the price of labor resulting from the post-pandemic reopening and the pandemic-era actions taken to rescue and preserve our households and enterprises, are unique and cannot be understood from data aggregates (or headlines).>>
10/10
And here's another riddle that comes from the @AtlantaFed wage tracker.
Who benefitted most from high percentage growth in wages?
16 to 24 year-olds disproportionately so!
As well as the unskilled and low income as discussed above.

FOR NOW.

More workers coming back.

END

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More from @DanielAlpert

Jun 7
What will the Bureau of Labor Statistics serve up in 15 minutes?
More confusion sown by post-pandemic era noise in the Birth-Death Model and Seasonal Adjustment factors?
Or a clean trend towards a slowing employment situation, reflective of the latest ADP and JOLTS data?
#JobsDay
And we have our answer. For the month of May 2024:
Non-farm payrolls: 272,000 (229,000 private)
Unemployment Rate: 4.0%!
Hourly Wages: +0.4%
Hours: 34.3 flat
Revisions: -10,000 in April
Let's look under the hood now and see what led to this...
Clearly a surprise top line number even discarding the 43,000 in government employment (almost all state and local).
The rest were a continuation in mostly low-wage/low-hours jobs:
Health and Social Assistance: +84K
Leisure and Hosp. +42K
Retail + 13K
Other +6K
63% of private.
Read 9 tweets
Mar 13, 2023
Post-intervention #SVB 🧵:
1/n The Fed stepped up last evening and fulfilled a central bank's primary reason for existence - to stop bank panics by acting as lender of last resort and providing ample liquidity. This made all the more easier by the fact that the majority of...>
2/n...assets held by SVB were the debt of, or debt guaranteed by, the government itself. They now have made clear an already implicit backstop at par on those assets (and if it wasn't implicit to you, you haven't been paying attention this past quarter century). But this move...>
3/n...also set down another policy (in coordination with Treasury and the FDIC) that the backstop would come at a decisive cost. All equity, preferred equity and subordinated debt is now pushed way to the back of the line on recoveries - presumably recoveries to market prices.>
Read 9 tweets
Mar 11, 2023
#SVBCollapse 🧵
1/n There's a lot of conflation out there between the absence of mark to market accounting on US government bonds and the fact that SVB took losses on its bond portfolio when it sold a few billion to raise cash to accommodate withdrawals.
There's no great mystery>
2/n The book value of a bank's US government (risk-free) portfolio will always be recovered in full through their maturity (unless purchased at a humongous premium, which is extremely rare). The market value of a portfolio, of course, dances around with prevailing interest rates>
3/n In the present case, it is true that the Fed has increased the policy rate more rapidly than at any time in 50 years and that has crashed the price of preexisting government securities severely. But every institution has pretty constant rolloff and generally can look to...>
Read 11 tweets
Feb 20, 2023
Funny thing about the Fed's trying to whip inflation by raising the policy interest rate: If it doesn't result in a job-killing recession, it creates MORE INFLATION. Here's why... (cc. @stephaniekelton)
@StephanieKelton Let's say that last week one had $200,000 in 2 year Treasuries mature that had been acquired (at a small discount, admittedly) a year ago when one was concerned that equities had peaked and were in the midst of a slide (and there was this war in Ukraine brewing).
@StephanieKelton The US Treasury was paying the holder $300 per annum in interest on those securities, all that the poor sod had to show - from the government - for parking his money in exchange for its guaranteed, risk-free return at a later date.
Read 9 tweets
Jan 20, 2023
🧵 on the coming Commercial Real Estate crisis:
1/n
It is a mistake to view the present state of global real estate through the analytical lens of earlier crises.
In the 1987 - 1993 era, overbuilding spurred by tax incentives and excessive leverage was...2 bloomberg.com/news/features/…
2/n
...the driver of collapse (especially after the 1986 tax act ripped the tax benefits away).
Coming into the Global Financial Crisis, CRE was over-leveraged as a result of lax credit rating standards and property valuations then, as now, being forced down by Fed tightening.>
3/n
But this crisis is different from both of the renowned commercial real estate debacles of the past half century.
It starts with an enormous contraction in end-demand.
The most obvious and unprecedented form being in the office sector.
But other CRE...
nypost.com/2022/05/08/big…
Read 13 tweets
Dec 28, 2022
A 🧵 on the oh so crazy @CathieDWood and $ARKK.
1/n I bought into her top 10 wealth destroying actively managed ETF (Morningstar) this morning at $29.50 as an experiment.
One might think from the below chart that Cathie has been all hat and no cattle.
With huge hype from... Image
2/n (ex) Bloomberg's @Matthew_Winkler in 2020, ARKK hit nearly $140 a share and has lost nearly 80% of its then value.
Cathie was (is) selling a concept she calls "disruptive innovation" claiming that she can spot those with real disruptive technology and business models and...
3/n separate them from the 'fake it til you make it' crowd.
Very Schumpeterian of course, but Cathie packs a larger ideological bag as a disciple of Arthur Laffer, and is a still-avid supply sider and producerist -- long past the sell-by date for those theories.
Yet she has...
Read 12 tweets

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