Posted on 01/13/2006 6:50:55 AM PST by Willie Green
For education and discussion only. Not for commercial use.
The Labor Department reported the economy added 108,000 payroll jobs in December. The consensus forecast was 207,000, and my forecast, published by Reuters was 180,000.
Unemployment fell to 4.9 percent, mainly because fewer adults chose to participate in the labor force.
In the fourth quarter, 438,000 jobs were added, and this is consistent with GDP growth in the range of 3.0 to 3.5 percent
Economic growth appears to be moderating from the red hot numbers posted in the third quarter, and if the Fed does not push interest rates too much higher, the economy will grow at a 3.5 percent pace the first half of 2006.
Wage increases were moderate, despite fears that labor markets are too tight.
Wages were up 0.3 percent. Wages are advancing less rapidly that productivity, indicating that a tightening labor market poses little threat of igniting inflation.
In light of recent productivity gains, this moderate wage growth should dispel any notions the Fed may hold that labor markets and spiraling wages could reignite inflation.
In 2005 wages grew 3.1 percent, while inflation exceeded 3.5 percent.
It was a year of big bonuses and hefty raises for highly skilled professionals and executives but slim pickings for the ordinary working Joe.
Such tepid wage growth is particularly disappointing given the strong productivity advances posted by the private business sector over the last year.
Moderate wage growth and strong productivity growth should soon convince the Fed to end its cycle of interest rate increases soon. The Fed will increase the federal funds rate to 4.5 percent on January 31 but increases beyond 4.5 percent are less likely.
Manufacturing employment increased 18,000; however, employment in that sector has been unchanged since June and down 51,000 since last December.
Inexpensive imports, especially from China, are holding down employment in manufacturing and some service activities, clamping down on wages even as the economy grows.
The continuing competitive woes of General Motors and Ford compound the damage inflicted by the trade deficit.
Together, the trade deficit and troubles of U.S. automakers cast a long shadow over the job market.Overall, the manufacturing sector has shed three million jobs since 2000, and by this point in the recovery, two million of those jobs should have been recovered.
Paradoxically, an overvalued dollar plays a key role in slow wage growth and the inverted yield curve, which has recently captured the headlines.
To keep their currencies cheap against the dollar, China and other foreign governments buy billions of dollars of U.S. government securities. Foreign government purchases of U.S. securities drive down long-term interest rates, and these make possible inexpensive mortgages and home equity loans. However, those foreign government purchases of U.S. securities also subsidize U.S. imports and stifle the growth of jobs offering good pay and benefits.
And if foreign companies are taking over the mortgage business, why is the mob letting them do it? All your previous post claim the mob was taking it over.
Some things never change. As Red (from that 70's show says), "You're a Dumb-Ass!
LLS
You're complaining about entitlements. Just listing some of them for you.
"I will grant them they can blame government for this as the government sets price minimums that dairy products can be sold for and they are periodically increased."
Yeah, I probably shouldn't have chosen "cheese" off the top of my head.
You're comparing oranges to apples.
Nope, what I am argueing is in regard to an actual "individual's" feeling of "entitlement". To me, what you propose is "not" an "entitlement" as much as you wish to define it as such, thus apples and oranges. There's no equivocation.
People beleiving they're personally "entitled" to high pay a good job etc...without looking or makeing the opportunity happen for themselves is a far cry from the government offering assistance to spur economic growth in developing markets so that eventually those developing markets will be able to afford American products. (i.e. India buying Boeing aircraft...etc.)
Willie, if you are not taking it to the bank in 2006 you never will.
The bottom line is that if people are making less and less compared to inflation, there is less disposable income available for consumption and the system will reach a breaking point. The only bright side is that increasing cheaper imports from China is somewhat of a relief. But that also feeds the negative feedback loop. The cheaper goods cause more job losses in the U.S., and puts more downward pressure on wages. Eventually, the price drops will not be made up for the loss in wages and even Chinese goods will beome less affordable.
I can give some anecdotal evidence for FL. Housing prices have skyrocketed. The locals cannot afford to buy into the market any more. A lot of the homes are bought by out-of-state people, by speculators and a lot of wealthy Europeans looking for vacation homes. A pension from someone living in NYC will make ends meet there, but will let you live well in FL.
A few months ago Walmart of all groups called for an increase in the minimum wage for this reason. When they are worried htat the cheap plastic crap they sell will become out of the reach of consumers then we should all take notice.
That decision by Wal-Mart was part of a war of attrition with it's competitors. Wal Mart could better afford an increase in minimum wage compared to some of it's competitors.
That's the problem right there. There should never be any fear of tight labor markets. That way workers will get higher wages when they are in greater demand. Otherwise, the Federal Reserve will react out of fear, cause a recession, and people won't get the higher wages they deserve, especially for greater productivity.
No. The truth is that the Bush Administration has maintained an illusion of prosperity with in excess of $2 Trillion of deficit spending. This fiscal irresponsiblity conceals the fact that our wealth-creating industries are being systematicly downsized and relocated offshore, sacrificing the long term national security of the American People.
There is little doubt that George Bush is conducting economic warfare against the prosperity of the American Middle Class.
"The prohibiting duties we lay on all articles of foreign manufacture which prudence requires us to establish at home, with the patriotic determination of every good citizen to use no foreign article which can be made within ourselves without regard to difference of price, secures us against a relapse into foreign dependency."
--Thomas Jefferson to Jean Baptiste Say, 1815.
"I am one of those who do not believe that a national debt is a national blessing, but rather a curse to a republic; inasmuch as it is calculated to raise around the administration a moneyed aristocracy dangerous to the liberties of the country."-- President Andrew Jackson - (1824)
If wages are lagging inflation, then that must mean wages don't cause inflation. How long before the elite economists and politicians figure that out?
Women, children and minorities hurt worst.
You forgot that in your post , Willie.
GDP growth, low unemployment, record home ownership, and low interest rates say otherwise Willie.
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