Skip to comments.ZOT!!! How do we get fed to the kittens?
Posted on 01/09/2004 3:05:21 PM PST by Whatodo
Fridays disappointing employment report did little to derail forecasts of strong growth this year but gave fresh ammunition to critics who complain the Bush administration has failed to achieve its chief economic goal job creation.
The unemployment rate fell in December to 5.7 percent, its lowest level in nearly a year but only because 309,000 people dropped out of the labor force, according to government data. Employers added a scant 1,000 jobs last month, a barely perceptible number in an economy of 130 million workers and far short of the 127,000 net new jobs analysts had been expecting. The Labor Department also revised away 51,000 jobs that had been reported in previous months.
Its a lousy report any way you look at it, said David Wyss, chief economist at Standard & Poors Corp. Employment has been up five months in a row, but all five months together add up to about one normal month of growth. Were just not getting any kind of job growth despite the strength weve seen in GDP.
The figures were especially disappointing considering the surge in gross domestic product that began in mid-2003 and more recent evidence of growth. Weekly claims for new unemployment benefits have fallen to their lowest level in three years, and surveys have led analysts to predict that businesses at last are boosting hiring after the long jobless recovery.
The popular, man-in-the-street, ground-level view of the job market is that is still stinks, said Bill Cheney, chief economist for John Hancock. All of us forecasters were getting a bit complacent, and it turns out the man in the street was probably right.
President Bush and others in the administration chose to focus on the improved unemployment rate, which has fallen from a peak of 6.4 percent in June.
Bush, speaking to a forum on small business, said economic indicators were very strong and called the drop in the unemployment rate a positive sign.
Labor Secretary Elaine Chao acknowledged that job creation last month was less robust than forecasters projected but said Bushs economic policies are working. In a written statement, she called for congressional action on Bushs six-point plan to boost employment by streamlining government regulations, limiting excessive lawsuits and extending tax breaks that are scheduled to expire.
Stock prices fell and bonds soared, sending market interest rates sharply lower. The weak demand for workers is keeping wage inflation in check and makes it even more likely that the Federal Reserve will not begin raising short-term interest rates until next year, analysts said.
GUIDE Key economic indicators
Click an indicator name to learn more Period Latest Prev. Consumer Confidence Dec.* 91.3 92.5 Retail sales Nov.* 0.9% 0.0% GDP Q3* 8.2% 3.3% ISM Index Dec.* 66.2 62.8 Factory Orders Nov.* -1.4% 2.4% Unemployment Rate Nov. 5.9% 6.0% Employment situation Nov.* 57,000 137,000 Consumer inflation Nov. 1.1% 1.3% Housing starts Nov.* 2,070,000 1,980,000 Home sales Nov.* 7,142,000 7,459,000
back to list | next CONSUMER CONFIDENCE Recent figures Dec.* 91.3 Nov. 92.5 Oct. 81.7 Sept. 77.0 Aug. 81.7 July 77.0 June 83.5 May 83.6 April 81.0 March 61.4 Feb. 64.8 Jan. 03 78.8
What is it? Consumer confidence is considered important because consumer spending accounts for more than two-thirds of U.S. economic activity. The monthly Conference Board survey is one of the two most closely watched indicators of sentiment. Based on a mail-in survey sent to about 5,000 households. Results are converted to an index and expressed in comparison to the 1985 average of 100. Source: The Conference Board
back to list | next RETAIL SALES Recent figures Nov.* 0.9% Oct. 0.0% Sept. -0.3% Aug. 1.0% July 1.4% June 0.9% May 0.5% April -0.3% March 2.3% Feb. -1.4% Jan. 03 0.4% Dec. 1.4%
What is it? A broad measure of consumer spending trends. Includes sales of motor vehicles, clothing, food at both grocery stores and restaurants, electronics, building materials drugs and other items. Expressed as a percent change from previous month, adjusted for seasonal variations but not price changes. Source: Census Bureau
back to list | next GDP Recent figures Q3* 8.2% Q2 3.3% Q1 2003 1.4% Q4 1.4% Q3 4.0% Q2 1.3% Q1 2002 5.0% Q4 2.7% Q3 -0.3% Q2 -1.6% Q1 2001 -0.6% Q4 1.1%
What is it? The gross domestic product is the broadest measure of the economy, comprising the value of all goods and services produced in the United States. It is reported quarterly with frequent revisions. Generally expressed as a percentage change from the previous quarter in "real" or inflation-adjusted terms. Economists presume real GDP is capable of growing at an annual rate of about 3.5 percent over the long term. When GDP declines over a sustained period of time the economy is considered to be in recession. Source: Bureau of Economic Analysis.
back to list | next ISM INDEX Recent figures Dec.* 66.2 Nov. 62.8 Oct. 57.0 Sept. 53.7 Aug. 54.7 July 51.8 June 49.8 May 49.4 April 45.4 March 46.2 Feb. 50.5 Jan. 03 53.9
What is it? The first major indicator reported each month, considered a reliable assessment of how the manufacturing sector is performing. Based on a survey of executives done by the Institute for Supply Management, formerly known as the National Association of Purchasing Management. Responses are compiled and reported as an index number. A reading above 50 percent indicates the manufacturing sector is expanding, while a reading below 50 indicates it is shrinking. Source: Institute for Supply Management
back to list | next FACTORY ORDERS Recent figures Nov.* -1.4% Oct. 2.4% Sept. 1.4% Aug. -0.3% July 2.0% June 1.9% May 0.3% April -2.6% March 1.5% Feb. -0.5% Jan. 03 1.6% Dec. 0.3%
What is it? Data on new orders for manufactured goods, adjusted for seasonal variation, offer a good indicator of the manufacturing sector's health, closely watched because it is the most volatile part of the economy. Expressed as percent change from previous month. Source: Census Bureau.
back to list | next UNEMPLOYMENT RATE Recent figures Nov. 5.9% Oct. 6.0% Sept. 6.1% Aug. 6.1% July 6.2% June 6.4% May 6.1% April 6.0% March 5.8% Feb. 5.8% Jan. 03 5.7% Dec. 6.0%
What is it? One of the best known and most politically powerful economic indicators, the rate is calculated from a monthly survey among a sample of about 60,000 households. The rate is adjusted for seasonal variations, but unlike most economic statistics it is never revised. Source: Bureau of Labor Statistics.
back to list | next EMPLOYMENT SITUATION Recent figures Nov.* 57,000 Oct. 137,000 Sept. 99,000 Aug. 35,000 July -57,000 June -83,000 May -76,000 April -22,000 March -151,000 Feb. -121,000 Jan. 03 158,000 Dec. -211,000
What is it? Represents the month-to-month change in jobs on payrolls of the nation's business, government and non-profit establishments. Generally considered a more accurate indicator of labor market health than the unemployment rate. Analysts estimate the economy should add about 150,000 jobs monthly to keep up with the nation's growing work force. Based on a sample of 300,000 establishments employing nearly a third of the nation's workers, the figure is adjusted for seasonal variations and frequently revised. Source: Bureau of Labor Statistics.
back to list | next CONSUMER INFLATION Recent figures Nov. 1.1% Oct. 1.3% Sept. 1.2% Aug. 1.3% July 1.5% June 1.5% May 1.6% April 1.5% March 1.7% Feb. 1.7% Jan. 03 1.9% Dec. 1.9%
What is it? The most widely known and used measure of inflation, the Consumer Price Index is based on the price of a "basket"of goods including food, beverages, fuel, medical care and clothing. Value refers to year-over-year change in "core" prices, excluding volatile food and energy categories. Source: Bureau of Labor Statistics.
back to list | next HOUSING STARTS (seasonally adjusted annual rate) Recent figures Nov.* 2,070,000 Oct. 1,980,000 Sept. 1,931,000 Aug. 1,831,000 July 1,890,000 June 1,844,000 May 1,745,000 April 1,627,000 March 1,742,000 Feb. 1,640,000 Jan. 03 1,828,000 Dec. 1,815,000
What is it? A good indicator to assess demand for housing and construction industry health. Represents the number of new residential buildings, including single-family and multifamily homes, where construction was started. Expressed as a seasonally adjusted annual rate. Construction was started on 1.7 million new residential structures in 2002, the highest level since 1986. Source: Census Bureau.
back to list | next HOME SALES (seasonally adjusted annual rate) Recent figures Nov.* 7,142,000 Oct. 7,459,000 Sept. 7,817,000 Aug. 7,650,000 July 7,275,000 June 7,030,000 May 6,931,000 April 6,854,000 March 6,538,000 Feb. 6,795,000 Jan. 03 7,029,000 Dec. 6,973,000
What is it? One of the bright spots of the economy in recent years, driven at least in part by historically low mortgage rates. Figure represents the sum of new and existing single-family home sales, expressed as a seasonally adjusted annual rate. In 2002, a record 6.5 million homes were sold. Sources: National Association of Realtors, Census Bureau
* preliminary figures Printable version
Critics of Bushs economic policy, including his Democratic rivals for the presidency, were quick to pounce on the report as evidence that last years huge tax cut package had failed to achieve the White Houses stated goals for job growth, which called for 510,000 new jobs in 2003. The economy has lost 2.3 million jobs over the past three years including 74,000 jobs last year.
With the recovery that were supposed to be in, adding 1,000 jobs is pathetic, said Democratic hopeful Richard Gephardt, campaigning in New Hampshire. Its nothing short of pitiful and pathetic. This is truly a jobless recovery.
"Democrats need issues, and this number today keeps the issue alive for them," said Greg Valliere, chief strategist for Schwab Washington Research Group. "It's probably Bush's greatest domestic vulnarability, that job growth just doesnt pick up."
To be sure, nobody was predicting the economy was in any danger of reversing course, and some analysts suggested the latest payroll numbers may be understating the strength of the labor market, partly because of seasonal factors related to sluggish holiday hiring.
Retail employment fell by 38,000 last month, suggesting that the usual seasonal layoffs in January also will be lighter than typically seen in past years. That could result in a spike of new jobs next month, said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.
Were not in a downward spiral or anything like that, agreed Cheney. I dont think theres anything else that would suggest the economy is heading down again. I dont even think the job market is heading down again.
But he said the failure of the economy to create job raises the risk that economic models, including those used by the White House, seriously underestimate the growth rate needed to boost employment. And he said the weak job growth is likely to shake confidence and make the economy more vulnerable to an external shock.
Crescenzi and some others said the payroll numbers are failing to capture a surge in self-employment and small-business hiring that show up in the separate household survey, which is the source of the unemployment rate.
But Wyss said such structural changes are not necessarily to the benefit of workers, because they imply less job security and fewer fringe benefits.
You can look at the payrolls or the household survey and they will give the same message -- that this recovery is still a fairly slow-motion event in terms of job creation, said Ed McKelvey, senior economist at Goldman Sachs. Companies are being extraordinarily careful in how many people they put on the payrolls.
John Silvia, chief economist at Wachovia Securities, said the weak job growth is mixed news for financial markets, suggesting the consumer spending will be weaker than expected but profits could be stronger because of surprising productivity growth.
He said Democrats are justified in challenging President Bush to do more to generate job growth rather than simply cutting taxes and waiting for the business cycle to take over.
From my personal perspective, youve turned the corner from an economy that was losing jobs to one that is adding jobs, he said. But its not like a Nascar race where youve turned the corner and are accelerating out of the turn. Youve turned the corner and youre still going at the same mopey speed.
In the 90's many older worker delayed retirement and many women jumped into the workforce to earn quick money. When they got layed off, they collected unemployment- of course, as long as they were "looking" for work. When the congressional extended benefits ran out, they were all of the sudden, not looking for work.
The trend needs to be stronger. A lot stronger. The economy needs to produce about 150,000 (that's what the estimates were for todays numbers) new jobs a month to keep up with new entrants into the job market. If it were 25,000 that would only qualify as "not as bad" as 1000, but still bad.
LOL! And a big Idaho baked potato is God's way of letting us eat 1/4 lb. of butter at one sitting.
Best to use the Stock Market in it's leading indicator role.
The SM bottomed in October 2002, ans retested the lows in March, 2003.
Using standard "Leads and Lags", we should recognize that the Economy hit bottom sometime in the 2 Quarter 2003 to the 4 Quarter 2003.
Hence, we are 'bumping along the bottom' employment wise, and probably will for the rest of 2004.
This outlook Jibes with the most recent Federal Reserve Board Minutes from October [always delayed 45 days], where the consensus is that significant hiring won't occur until well into 2005.
BTW, I have had considerable experience with these things since we were responsible for forecasting Commercial and Industrial Loan demand, as well as forecasting the Asset and Liabilities Accounts for several New York Banks.
The economy has been getting better for the last year. Economic expansion has been robust. Inflation, interest rates and unemployment figures are all looking good. OTOH, job creation has been slow. After the WallSt bubble busted, the nation went into recession and the events of 9-11 occured, employers have been extremely reluctant to engage in new hires. The figures released today continue this trend of a jobless recovery. Overall, things are looking good. The Bush tax cuts have made a significant difference in kick starting the US economy. But the business cycle is a more critical factor in how the US economy recovers from this downturn period.
You have violated Robot's Rules of Order and will be asked to leave the Future immediately.
Don't forget the sour cream ;)
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