Goldilocks, GDP, Icky IPO & More


There were 263,000 new jobs created in April, with all sectors but retail gaining. This strong growth is more proof of a solid economic rebound after a tough start to 2019. While pay rose 3.2% Y-o-Y, wage increases have been steady at 3.2% since 8/18, dampening inflation fears despite unemployment falling to 3.6%, the lowest rate since 12/69! Strong job growth, low unemployment, quiescent inflation and good GDP gains; Goldilocks!


GDP 19Q1 came in at a remarkably strong 3.2%. Growth was pushed up by an unsustainable surge in inventories, a huge one-time jump in state and local government spending, and a drop in imports precipitated by a rise in 18Q4 imports in advance of Chinese tariffs that never materialized. That said, the economy chugs along, and more importantly, inflation remains MIA.


From 2009 through mid-2012, weekly earnings for those with less than a high school diploma declined. From then through late-2017, their wages improved and grew at the same rate as the wages of all others. Since late-2017, their wages have been growing faster than all others. Maybe it’s because since 2009 the labor force has grown by 13 million, but the number with no college has declined by 4.4 million.


In 2005, the share of the labor force working in non-standard arrangements was 10.9%. In 2017, despite the “sharing economy” the percentage declined to 10.1%! Within non-standard arrangements, the percentage of independent contractors fell from 7.4% to 6.9%, on-call workers declined from 1.8% to 1.7%, while temp agency and contract company workers were unchanged at 0.9% and 0.6% respectively. As for app-based employment, it’s just 1% of the labor force.


With Lyft and Uber now public, we know both have lost about $11 billion since 2009, with no end in sight to losses as they reduce fares to gain share. But brutal competition makes ride hailing a commodity business absent customer loyalty. The solution? Beg government for regulatory relief like capping number of vehicles! For now, these firms may be nothing more than bets on increased ride-hailing regulation.


The number of spam and spoof calls received by Americans has risen from 3.7% of all calls in 2017, or 100 calls/person, to 29.2% in 2018, and is expected to reach half of all calls by year end 2019. At a penny a call, the inconvenience cost Americans $3 billion in CY2018, and will cost $4 billion in CY2019. Make the tel-cos credit us a dime a call – problem solved.

Source: Elliot Eisenberg, PhD., Chief Economist for GraphsandLaughs, LLC, an economic consulting firm serving a variety of clients across the United States. All rights reserved.

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