Businessmen in office doesn’t work

From Talking Points Memo, with emphasis added:

Ross, who has known Trump for a while, told CNN on Wednesday that Trump is a great negotiator.

“I’ve negotiated with him over the years and he is not a bluffer. So if he says he will do something in a negotiation, not– I’m not talking about a campaign speech, in an actual negotiation, if he says, ‘If you don’t do this, I’ll do that,’ you bet your booty he will do it,” Ross said.

This is great. Ross goes out of his way to say Trump is probably dishonest when making campaign speeches.

And Ross says Trump keeps his word when punishing. No mention of keeping his word when there is actually a deal. That part, Trump does not do, as we all know. I was thinking that what this country really needs to succeed is more angry old white male confrontation.

This again puts the lie to the idea that businessmen know “how the economy works.” These buffoons think it is a zero sum game. Remember back in 09 when all the whiners whined that Obama didn’t have enough businessmen in his cabinet, unlike, say, Hoover or Bush II? Well, they no longer need to worry! They are going to run the government like a big business, seeking to curry favor with the clients and destroy the competition.

No doubt they will cite Adam Smith along the way, being so businessy and all. Morons.

Obama’s last job’s report

The idea that the president determines the path of employment growth is probably mostly a stretch. Congress and — more to the point — influences from outside government collectively matter more, obviously.

But I like to point out that the GDP and employment tend to grow more quickly under Democrats than Republican presidents only because it is fun so easily to falsify those ridiculous claims that the GOP are “pro-growth.” My ass. Of course, we are now post-reality, so the whole effort was a waste.  Reality will impose itself, but more directly, than through government statistics. For example, people are going to lose their health insurance.

Still, if you are going to play the game of assigning economic results to a president, and if you want to do this honestly, then you need to decide ahead of time (not after the fact) when to start the clock. Does the Autocrat’s terms start in February after he is swing in or is it more after the election itself? I plan to measure this going forward, so I am going to commit to the latter.  Trump is sufficiently obviously transformative that it is reasonable to believe that expectations will play a key role. So I arbitrarily say the clock starts now and tomorrow is Obummer’s last jobs report.  I will have to tweak my historical “analysis” to reflect this, just so it is all apples to apples.  So tomorrow, we can add up how Obummer did. On the new data he will own more of the collapse, so the margin to Bush II will be slightly narrower.

I can anticipate a retort to this approach. No fair! Of course, the GOP cannot deliver fast employment growth.  Every time the DEM leaves the labor market is fully employed, with nowhere to go. Devastating!

Speaking of tomorrow’s jobs report, you guys might want to check out El-Erian’s piece on Bloomberg. He is out saying the jobs report could affect the rate at which markets price the Fed to tighten, not just for next month, but beyond that too.

Non financial profits in the Q3 GDP release

This is not major news, but I would like to make three quick points for fun.


Profit margins recovered, mostly in response to a steep quickening of nominal output growth in the corporate sector. The growth rate there quickened from 2% in the second quarter to 7.6% in the third. It would be odd if this did not generate a widening.  I definitely assign zero value to the idea of profit margin “mean reversion.” What mean? But the cyclical trend here seems narrower, so I would not extrapolate.


The share of output taken by labor compensation narrower marginally last quarter, which supports margin expansion. But the real story is how little the share narrowed.  This goes to the point made immediately above.  Incidentally, I think if you want to look into income shares out of an interest in income inequality, then you should probably look at the chart on the right, which takes depreciation out of corporate output. In a “fair” world, which is not the one we live in, that series would be the one that would mean revert. To expect that the one at left should mean revert is odd, but very common. I worry about income inequality, but not because of such Marxist constructs as the labor “share.”  There are more than three kinds of things in the world, you know. Plus we have to respect the Trump voter, and not call him racist or anything, and act on the belief that he really wants more income inequality. So bring it.


The other two important determinants of profit margin are depreciation costs and net interest costs. I show them on scales that may seem odd, but I want the range to be an equal 12 percentage points of nominal output so that the relative importance can be seen from the charts.  Note that depreciation charges have a rising trend (related to my second point) and are cyclical too. In contrast, net interest charges are mostly just cyclical.  Neither of them have a dangerous steepening trend just now.  This fits into my view that the outlook is not exciting — from a markets perspective — but that we are not yet in the dangerous punchbowl taking away period.  I think.

Oxford Economics so insightful

They may have a forecast of the labor market. Don’t know. Don’t care. What is striking is that they have a forecast of how the Autocrat will characterize the labor market, “to his advantage.”

“The statistics can say anything, and I think Trump is using that to his advantage and will continue to do so,” Daco said. “We’ll gradually see a shift from the negative rhetoric around the labor market toward a more positive one as he comes into power. As president, he might have a more favorable tune on the labor market.”

That’s so helpful, because the markets will react to how the Autocrat characterizes the labor market and the unemployed will be so relieved by that as well. Subscribe now!