Employment Report: Summary Of My Tweets

By: Michael Ashton | Fri, May 4, 2012
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Tweets from @inflation_guy on the Employment release, and added detail:

Here's a chart of the participation rate. It's really dreadful when you consider the secular increase was due to a broadening of the workforce. I doubt women are leaving the workforce in droves now - so in a real sense the current employment situation is worse than it was in the 1970s. So the government is doing a great job of pushing down the Unemployment Rate...by pushing people out of the workforce altogether.

Participation rate chart

Of course, at some level this is good news for companies, because the "industrial reserve army of the unemployed" is toothless. Pressure on corporate margins will have to wait since labor doesn't have the teeth to reclaim its share. That doesn't mean inflation is dead, though - margins can also expand simply by having prices of labor rise slower than prices of consumption goods. Remember: wage inflation results from, it does not cause, broad price inflation.

 


 

Michael Ashton

Author: Michael Ashton

Michael Ashton, CFA
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Michael Ashton

Michael Ashton is Managing Principal at Enduring Investments LLC, a specialty consulting and investment management boutique that offers focused inflation-market expertise. He may be contacted through that site. He is on Twitter at @inflation_guy

Prior to founding Enduring Investments, Mr. Ashton worked as a trader, strategist, and salesman during a 20-year Wall Street career that included tours of duty at Deutsche Bank, Bankers Trust, Barclays Capital, and J.P. Morgan.

Since 2003 he has played an integral role in developing the U.S. inflation derivatives markets and is widely viewed as a premier subject matter expert on inflation products and inflation trading. While at Barclays, he traded the first interbank U.S. CPI swaps. He was primarily responsible for the creation of the CPI Futures contract that the Chicago Mercantile Exchange listed in February 2004 and was the lead market maker for that contract. Mr. Ashton has written extensively about the use of inflation-indexed products for hedging real exposures, including papers and book chapters on "Inflation and Commodities," "The Real-Feel Inflation Rate," "Hedging Post-Retirement Medical Liabilities," and "Liability-Driven Investment For Individuals." He frequently speaks in front of professional and retail audiences, both large and small. He runs the Inflation-Indexed Investing Association.

For many years, Mr. Ashton has written frequent market commentary, sometimes for client distribution and more recently for wider public dissemination. Mr. Ashton received a Bachelor of Arts degree in Economics from Trinity University in 1990 and was awarded his CFA charter in 2001.

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