Hall Of Mirrors, Where’d The Labor Shortage Go?

Today was supposed to see the release of the Census Bureau’s retail trade report, a key data set pertaining to the (alarming) state of American consumers, therefore workers by extension (income). With the federal government in partial shutdown, those numbers will be delayed until further notice. In their place, we will have to manage with something like the Federal Reserves’ Beige Book.

It may not be close to the same caliber as retail sales but it can be interesting in an important sort of way nonetheless. It really doesn’t give us much by way of information about the economy, the Beige Book instead tells us what our central bankers think of it. I wrote about it almost two years ago:

Fed officials today still refer to the Beige Book quite often in their discussions, though from a truly objective point of view it isn’t at all clear why they should. It is notorious for getting things wrong, and often very wrong. Perhaps that is because any anecdotal report filtered through the bureaucratic apparatus in any official setting will become by nature an echo chamber. The various Fed presidents will do what is perfectly corrosive, which means they will select stories or conversations they have had that best reflect their own beliefs and biases. If the Fed presidents are all wrong, as they have been, the Beige Book will necessarily follow, not lead.

Tracking what Fed Presidents get wrong is itself a measure for measuring expectations. The cover of the volume should be changed from Beige to the mirrored glass.

For example, US policymakers have been talking about a labor shortage for years. The reason is quite simple; the unemployment rate is the only metric that is consistent with a healthy economy and therefore the successful conclusion of so much monetary “accommodation.”

An economy that is doing so well businesses are having trouble finding workers would really put an enormously positive exclamation on what had been a very tough decade for everyone.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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Duanne Johnson 3 months ago Member's comment

Fascinating. You learn something new every day....