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Source: theplanningmotivedotcom

Relevant links:

retail sales 2016+ (spreadsheet)

graph workers VS hours (spreadsheet)

INDUSTRIAL PRODUCTION 2016+ (spreadsheet)

RETAIL SALES & EMPLOYMENT: digging below the headline figures

One  of  the  current  contradictions in  the  [global]  economy, is  the contraction  in industrial production versus the expansion of [personal] consumption. The same applies to employment. This is an issue bound to arise at the historical materialism session on Sunday.

It appears to be a prima facie impossibility for retail sales or personal consumption expenditures to be  rising  when  the  source  of  this  consumption,  industrial production is  falling. Even  if we take production of investment goods out of the picture this [dichotomy] continues to exist. Graph 1, relates retail sales to the production of consumer goods. Retail sales have been adjusted to take into account changes  to  inventories  and  that  element  of  sales  provided  by  overseas production.  All  these [adjustments] will be found in the  attached spreadsheet “Retail Sales 2016+”. When using personal consumption expenditures on goods, a more comprehensive survey, the results are similar. At the end of the period the index for retail sales is 115.3 for PCEs and 116.4 for retail sales.

While US industrial production of consumer goods has barely increased, the sales of these goods has shot up. The difference between the two series is plotted in Graph 2 below. From this data it appears that the retail series is inflated even if we were to consider a rise in retail margins which is ruled out because of the time period,and,which is not supported by the data.

It may very well be the case that the Census Bureau is understating retail inflation particularly in the light of the additional [tariffs] imposed by the “China Trade War”.Of particular note is the accelerated gap in 2019. In 2018 the gap [remains] constant but in 2019, with additional tariffs in play, it has gone up  by  nearly  5  points. A  truly remarkable  jump.  This  jump  has occurred at  a  time  of  economic slowdown resulting in personal consumption accounting for most of the growth in US GDP.

Employment & hours.

Two  of  the  four  main  indicators propping  up  the  stock  markets  are  personal  consumption  and  the employment  data.  We  have  already  shown  that  the  personal  consumption  data  is  suspect,  even though the comparison between production and retail is not a mechanical one. The same can be said for  employment  data.  The  release  of  the  headline  figures  for  October last  week surprised  on  the upside as did the revisions. Seems the economy was in good health, or was it? Graph [6] below tells a somewhat different story.

(Source: spreadsheet “workers vs hours”https: //www.bls.gov/ces/#tables)

This data is taken from  the Bureau of Labour Statistics TABLE 6. Over-the-month and over-the-year changes in aggregate weekly hours and payrolls of all employees, seasonally adjusted (in thousands). It can be accessed via the link below graph [6]. What the spreadsheet shows is that while payrolls have allegedly increased by 4.1% over the year to October, total hours have only increased 0.88%.

Despite this gulf between payrolls and hours, the average work week has declined by 0.1 hours over the same period. Unbelievable. (BLS Table B-2). And yet as the final Graph below shows, the average hours worked per worker has decreased in every industry. All data in Graph 4 is negative showing that hours  worked  per  worker  fell. In  the  case  of  mining  and  logging  by  7%. This  is  inconsistent  with  a constant workweek. What would bring congruity to this incongruity would be a reduction in payrolls or a rise in hours. The bet is on payrolls needing to be restated but this would spook the algorithms.

Conclusion.

From  Marx’s Das  Kapital  to  today, critics  of  capitalist  economics  have  always placed  industrial production, that is the actual production of the bulk of commodities, at the heart of our analysis. In the information age this focus seems to have been eclipsed by a host of charlatans many claiming to adhere to Marxist methodologies. Industry remains at the heart of capitalism as its primary source of value and surplus value. In an earlier posting, it was shown that two thirds of the profits enjoyed by S&P 500 corporations and by default, all the other corporations,emanated from the goods producing sector. That figure would even be higher if we included the transferred value and surplus value from the  goods  producing  sector,to  say,the  advertising  sector  which  finances  those  titans  like  Google, Facebook and Twitter. https://theplanningmotivedotcom.files.wordpress.com/2019/10/s-and-p-500-profits-by-sector-pdf.pdf

One indication of the scale of the industrial crisis is today’s release by the Bureau of Labour Statistics of  its  productivity  and  costs  report  which  shows  a  0.3% fall in  non-farm  productivity  for  the  third quarter, which  leaves manufacturing  in  negative territory for  the  year  as  a  whole.  A  bad  omen for profits given the 3.6% jump in labour costs. https://www.bls.gov/news.release/prod2.nr0.htm

(This is the last paper written in the context of the session at Historical Materialism.)

                                                                   Brian Green  6th November 2019.