GDP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 11

[Sten Sture]

Hours worked for US production/non-supervisory workers on nonfarm payrolls is available from the BLS back to 1937, I have the data back to '64. Two weeks ago the BLS reported the number at 1768 hours.

el freako - you can statistically have a huge boom in employment with a decline in the employment rate... not sure which number from the BLS series you are refering to.

[el freako]

Originally posted by Sten Sture
el freako - you can statistically have a huge boom in employment with a decline in the employment rate.

Only if the working-age population is going up really fast (like 3%-4% a year), and if fewer people of working age have a job is the situation really good just because employment is rising?
For example between 1990 and 2000 Turkey's employment rose by 11% but it's employment rate fell from 56% to 48%.

Originally posted by Sten Sture
not sure which number from the BLS series you are refering to.

It's not from the BLS, I calculate my own employment rates using OECD data on employment and working-age population - again I use this method mainly for easy international comparisons.

[Sten Sture]

I am not familiar with the OECD process, but here is the the household survey data from the BLS:

It shows that the employed percentage of the total population increased a decent amount during the ninties, and at a level higher than previous years.

[DanS]

"If it was a boom comparable to those in the 1970's and 1980's then you would have seen a rise in the US's employment rate (employed/working age population) similar to those times - what happened was stagnation.
If employing all those immigrants was so important then why has the US's activity rate been falling for over a decade?"

I haven't taken a look at these numbers for a long time, but I always thought the female participation rate increase was the big contributer to the employment boom of the 70s and 80s. In the 90s, the big phenomenon seemed to be immigration. We were running out of bodies.

Anyway, the participation rate has fallen, but not exactly precipitously.

"You couldn't PM me either a link or the data could you?"

I wish I could remember where I saw it. I thought it was a pretty graph and mentally logged it. But as stated, I don't know the basis.

"My reason for choosing this measure of budget balance is (as usual) that is is the most internationally comparable figure. It reached a peak of $165bn surplus in Q1 2000 (1.7% of GDP), since then it has deteriorated by around 5% of GDP (or $10bn a week at today's prices"

Oh, OK. Now I understand (well at least enough for a layman). Some time ago you mentioned the UK's big budget swings last cycle. What was that swing again, and how does this one compare? Is that number on a similar basis to these account numbers?

[Sten Sture]

by the by, Canada publishes some G7 data for GDP and gov debt data that lists comparisons, if you want to see the numbers/charts I could post them - not sure how those wylie Northerners adjust the numbers, but...

[el freako]

The main differences I can see between the BLS data and the OECD's is that the BLS uses 'adult population' (those aged over 15) as it's denominator whereas the OECD uses 'working age population' (those aged between 15 and 64).

However I think I know where the discrepancy is, the BLS seems to be using the old (pre-2000 census) data for population.

In my own figures I achieved a workaround by using the OECD's data for the share of population that is of working age and applied that to the latest US population estimates that I got from the BEA (line 16 on
this table)

I have attached the spreadsheet I used to calculate the data, it shows employment rates for most of the OECD countries for the period 1978-2002 (the 2002 figure being the OECD's own estimate for employment, I have made estimates for working age popualtion for both 2001 & 2002)

[DanS]

Good God. None of those Belgians work.

[el freako]

Originally posted by DanS
Anyway, the participation rate has fallen, but not exactly precipitously.

Well according to my data it rose from 70.5% in 1979 to a peak of 76.3% in 1990 - a rise of 0.5% a year
It then fell slowly to 76.1% in 1997 but since then has fallen sharply - the forecast for this year is 74.3% a fall of 0.4% a year.

Originally posted by DanS
Some time ago you mentioned the UK's big budget swings last cycle. What was that swing again, and how does this one compare? Is that number on a similar basis to these account numbers?

The move in the UK (on a similar basis) was from a surplus equivalent to 0.8% of GDP in 1989 to a deficit of 7.9% in 1993 - a deterioration of 2.2% per year.
In the US the balance has gone from a 1.7% surplus in Q1 2000 to a 3.3% deficit in Q2 2002 - again a deterioration of 2.2% per year.

[Sten Sture]

Belgians? What about the Turks!

my god, we are downloading excel spreadsheets with employment figures from the internet...

[el freako]

Originally posted by Sten Sture
Belgians? What about the Turks!

Not to mention the Poles, however to see what can be done look at the data for Ireland, Holland and Spain.

Originally posted by Sten Sture
my god, we are downloading excel spreadsheets with employment figures from the internet...

If you liked that why not try my pride and joy

GDP per head relative to the USA from 1950-2005 for 38 countries plus data for the EU as a whole.

[DanS]

Nice. You've done a lot of work on it since you last posted it.

Re Ireland, it's heartwarming to see them do well--nothing short of amazing. I wonder when good times visited those shores last...

But Argentina has me crying in my beer.

[el freako]

Yup poor old Argentina.

And Russia and New Zealand.

These are the only economies to actually perform worse than the US's over the last half century (and they didn't start out anything like as rich).

But lucky Ireland will actually be richer than america in 3 years time!

[DanS]

Yes, the post-war era has been good for the rest of the world. It appears that this is finally reaching critical mass, and soon we'll be able to benefit more from this trend.

[Roland]

What prey tell is the "critical mass" ?

As for the 5-7 % budget deficit, you had a swing of 4 % already with the mild first stage of the recession. When we go into round 2 it will easily be the same amount again.

And Sten if you think the US economy is "healthy", then why isn't growth getting any traction with the Fed rate at 1.75 and the 10 year treasury at 4/4.25 % ? That should be enough to make an old elephant dance...

[Case]

And Sten if you think the US economy is "healthy", then why isn't growth getting any traction with the Fed rate at 1.75 and the 10 year treasury at 4/4.25 % ? That should be enough to make an old elephant dance...

Considering that a large slice of the last 5-7 years worth American investment was pissed away on the NASDAQ bubble, the US isn't doing too badly.
Also, you need to remember that it takes time for changes in interest rates to have any significant impacts on the economy (12-18 months in Australia).