Posted on 11/13/2003 5:34:34 PM PST by Cathryn Crawford
Economists groping to explain lack of job growth
By ROBERT DODGE / The Dallas Morning News
WASHINGTON – It seems as though the economy is beginning to catch fire.
Retail sales are strong. Housing remains hot. Corporate earnings are exceeding expectations. The stock market has rallied. Even the nation's beleaguered factories are doing better. And analysts predict a government report due Oct. 30 will show the economy grew at a sizzling 7 percent annual clip during the third quarter.
So where are the jobs?
It is the gauge most Americans use for economic health. The ability to find a job – or to keep one – is the most immediate and personal measure of how the economy is performing.
And, unfortunately, most economists do not have a clear answer.
"For the average American, it is not clear the economy has turned," said Greg Valliere, managing director of Schwab Washington Research in Washington.
Indeed, the jobless rate remains at a stubborn 6.1 percent. And there are few signs that employers are eager to hang "help wanted" signs in the doors of factories and offices.
Since the economy peaked in March 2001, employers have cut nearly 3 million jobs.
"Significant employment gains are the last piece of economic information which will tell us that self-sustaining economic growth is here to stay," said Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis.
Mr. Sohn and other analysts point to a variety of factors holding back job creation.
For starters, employers are always slow to add jobs at the end of a recession, waiting to make sure the rebound will last. The last recession ended in March 1991, but it took more than a year before recovery began to produce significant employment opportunities.
This time around, companies are enjoying enormous productivity gains, allowing them to produce more goods and services without hiring new workers.
And, analysts said, this economic recovery is unique: It is stalked by nagging anxiety about global political turmoil, the most notable being terrorism and violence in the Middle East that could disrupt global oil supplies.
"This expansion certainly faces some risks," said Lynn Reaser, chief economist at Banc of America Capital Management in St. Louis.
Jobless rate uncertainty
Economists such as Ms. Reaser said the unemployment rate will fall next year, but not below 5.5 percent during the next 12 months. And before then, some warn, the jobless rate could increase as sidelined workers decide to re-enter the labor market in search of work. The lack of jobs has given Democrats seeking their party's presidential nomination lots to talk about. And the upcoming 2004 campaign has left President Bush anxiously hoping that tax cuts and low interest rates will eventually provide enough stimulus to create jobs.
The good news for workers and incumbents is that there are tenuous signs the job market may be poised for a recovery. The bad news is that hiring will not begin soon enough to satisfy the unemployed before next year's election.
One of the most encouraging and public signs so far was IBM Corp.'s announcement last week that it would hire 10,000 workers next year.
Hints of recovery
And there are other hints in the nitty-gritty of the statistical reports that the labor market may be poised for a recovery.
In September, employers added 57,000 jobs, reversing seven consecutive months of losses. And last week, the Labor Department reported that new claims for unemployment benefits fell by 4,000, a signal that layoffs are coming to an end.
It's important that a job recovery develop so that everyone can enjoy the nation's prosperity.
But it is also vital to making consumers feel confident enough to make new purchases and keep the recovery on track. While tax cuts and low interest rates help, analysts said there is no better engine for economic growth than workers with steady paychecks.
"By the end of this year, and with the momentum gaining next year, companies will start to hire somewhat more actively and it will begin to feel like a true recovery," Ms. Reaser said.
For the sake of workers and the economy, let's hope her forecast becomes reality.
E-mail rdodge@dallasnews.com
In other words, employment growth is a lagging indicator. The important thing is that we get some new jobs by June of next year!! ;-)
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The problem is not that they are groping to explain it, but that they are attempting to avoid facing the reasons for it.
Actually, they're running it on the editorial section of the DMN website - which is surprising, since yes, it is outdated.
But the factors that it discusses are interesting nonetheless.
The good news for workers and incumbents is that there are tenuous signs the job market may be poised for a recovery. The bad news is that hiring will not begin soon enough to satisfy the unemployed before next year's election.
And this one:
Indeed, the jobless rate remains at a stubborn 6.1 percent. And there are few signs that employers are eager to hang "help wanted" signs in the doors of factories and offices.
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What are we producing, more sales positions to sell foreign goods?
California's economy is in the crapper, we are in debt, with lousy job numbers, and it was announced today that the median price for a home in Los Angeles rose 25% this year. Explain that to me? 25% in one year. L.A. is actually cheaper than the rest of the state. $352,000 median price for LA, about $368,000 for the state. I don't get it. I figured that with the down economy, people being layed off, it would make housing cheaper. But, what do I know.
Of course. I'm optimistic, though!! ;-)
"Productivity" improves because the high-skilled tech jobs are still being shed offshore at an alarming pace.
Most of the jobs that are being created are low-wage McServiceJobs.
As a boss, I ignored some sound advice from my compant's owner. He told me it's easy to throw bodies at tasks, hiring them is fun. He told me that I was not facing a future of pleasant times even though we were working like mad and making money. Each month he made me come in his office and show him how I could survive with one less person. If not, the person fired would be me. Out of the ten hires I did in thirty days, I kept two. We still had the same output and when orders dipped or deliveries were pushed back, I did not have to cut any more people.
Those eight I had to fire was due entirely to my poor planning. I had to learn.
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You got it.
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