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SAMPLE RESEARCH: Bulletins, Domestic Regions, and Special Reports

We offer two subscriptions: Sightlines Bulletin itself, which is released monthly and includes information gleaned from our ongoing discussions with revenue officials around the country, analysis of macro-economic data, indexes of special fuel usage and what the trend portends for future growth, and a round-up of financial and real indicators. The subscription includes our Special Reports, released whenever we come across information between reports that we believe you need to know immediately. Additionally, we are developing forward looking regional and state indexes, available as a separate subscription. You can read through some samples of the three categories, Bulletins, Domestic Regions, and Special Reports using the links below.



After a shaky start, 2015 ended on a positive note, with payrolls up, unemployment down, and the long-term unemployed coming back into the labor force. Our updated spider, or radar, graphs spin an uneven, but encouraging tale; and the OECD recently ranked the U.S. pretty low on the financial vulnerability scale. Even so, we continue to face risks, both at homr and from abroad.

To read full report, click here: SL 1-15


While the job market looked strong in May, consumption seems to be slowing. Worrywarts to the contrary, the labor market is far from tight, but some other indicators are looking a bit late cycle-ish. The Federal Open Market Committee lowered their projections for 2014 in their June meeting, a smart move given the most recent downward revision to Q1 GDP. Diesel fuel sales rose 5.1% over the year for the November-January period, an encouraging signal for future job growth.

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Diesel Fuel Update
The three BEA regions showing the strongest growth in diesel fuel usage, the Northeast, the Midwest, and the Southwest, were the same as in September. Weakness in the Great Lakes might be thought to reflect a slowdown in auto production, but on closer look, much of the sag comes from Wisconsin. The Plains are the laggard, but they did go positive.

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How Much Has the Job Market Recovered?
We just updated our Jobs Spider, a graph taken from the work of James Bullard, President of the St. Louis Fed, who collected about a dozen takes on the health of the job market. The leading indicators are still a bit ahead of reality, but the distance has narrowed in recent months.

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by admin· · 0 comments · Sightlines Bulletin

Consumer Purchasing Power Rising Faster than Wages

By Anthony Mirhaydari

The big question from last week’s pre-holiday jobs report, given the drop in the unemployment rate and a further drop in the labor participation rate, is why a tightening workforce isn’t resulting in long-delayed wage gains.

Thursday’s numbers were largely as expected: Nonfarm payrolls expanded by 223,000 (vs. 230,000 expected) as the unemployment rate dropped to 5.3 percent (down from 5.5 percent) to the lowest level in seven years. The numbers from the last two months were downwardly revised by 60,000.

[Co-]editor Philippa Dunne of research publication The Liscio Report notes that while the result may seem disappointing at first blush, it’s in line with the average of the past three months. And it still represented a bounceback from a weak first quarter, although we haven’t returned to the strength seen at the end of 2014.

Yet average hourly earnings were unchanged in June from May, a slowdown from the 0.2 percent growth seen in the April and May and the 0.3 percent jump in March.

Aneta Markowska, chief U.S. economist at Societe Generale, notes that the lack of wage growth is at odds with the healthy pickup in the Employment Cost Index (ECI) in the first quarter, shown below, which indicates businesses are paying more for their workers. She wonders if this raises questions about the veracity of the ECI’s numbers given that it hasn’t yet been confirmed by other data sources.


The lack of wage inflation has led many to assume the Federal Reserve could possibly wait until December or even early 2016 before starting its rate hike campaign. As a reminder, the Fed hasn’t raised rates since 2006 and has maintained a 0 percent interest rate policy since 2008.

But this could be a mistake. At the current trajectory, the unemployment rate is on track to hit 5 percent in December. Fed Chair Janet Yellen has also said that wage growth is not a prerequisite for a lift-off in rates.

Also, while headline wages may have stalled, so-called “real wages” that take into account inflation are actually rising at a very impressive clip, according to Ed Yardeni of Yardeni Research. This supports the strong rebound in retail sales we’ve seen lately, which rose 1.2 percent in May. Personal consumption expenditures jumped 0.9 percent that month; real PCE rose at a 2.1 percent seasonally adjusted annual rate.

Want more? Consider that total real personal consumption expenditures per household rose to a record $96,550 in March on a seasonally adjusted annual basis — up 1.6 percent over last year and up 6.5 percent from the previous cyclical peak hit in August 2007.


What’s fueling this? Certainly, asset price gains from the rise in stock prices and the bounce back in home values are playing a big role. Yet so are wages: Real disposable personal income rose 3.5 percent in May with real wages and salaries up 4.8 percent. Real average hourly earnings for all workers in the private sector rose 2.1 percent year-over-year to a record-high $22.89 last month.

Given that the job market accelerated into the second quarter, these aternative measures of take home pay should continue their surge to the upside in the months to come.

As long as inflation remains tepid, real wages can keep growing even if nominal wages — the number on your paycheck — doesn’t move very much. The personal consumption price deflator (PCED) rose at just a 0.2 percent year-over-year rate in May. The core rate, which excludes food and energy, rose 1.2 percent.

Factors that are driving the slowdown in inflation include a drop in durable goods prices, with prices of used cars, furniture and bedding leading the way.

The takeaway is that while the headlines are saying wage growth remains stagnant, this dismisses the “real” gains to purchasing power consumers are enjoying thanks, in part, to cheaper second-hand goods.

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Trust the Jobs Data Experts

September’s unemployment rate plunges to 7.8 percent. Despite glaring contradictions between data from households and employers, experts explain why you can trust the numbers. Conway G. Gittens reports.


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The Bottom Line of Disabilities

Philippa Dunne introducing Jack Markell, Governor of Delaware, at a conference on bringing the disabled into the work-force at the Philadelphia Federal Reserve Bank.

Full program here.

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