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.
That's funny! Next thing you'll tell us that food is 30% more expensive than it was 5 months ago. LOL!
That's the "illusion of prosperity" that I was talking about.
This lame horse economy is being forced to plod along by beating it with the whip of deficit spending.
All the while our wealth creating industries are being shut down and the American taxpayer is being buried in unfathomable debt.
There is no such thing as a free lunch. Sooner or later, the horse is going to drop dead from the Bush Administration's deliberately irresponsible abuse.
Large Trade Deficit Spells More Difficulties Ahead for US Economy
I am not couching anything. We just have a disagreement in regard to government policy spurring economic development abroad.
You think one way, I think the other. Whether the program bears fruit or not, should be up for evaluation. It should be audited, like any other govenment program, and if nothing has come out of it...then such action by the government should be discontinued.
But let's not descend the debate to a differnet tangent (which would be beneath us, since that is a ploy of democrats.)
According to my original supposition, that you cannot make an equivocation between people who feel that should be "entitled" to by right to have a good job and high pay without looking for opportunity, and government policy to incentivize foreign governments to open and modernize their respective economies still holds.
And, there's nothing, I repeat, nothing disingenious about my point. To argue such a thing is a mere act of deflection, and truly a democrat debate tactic (again beneath us.).
In Hoc.
My families prosperity, sale of our previous home in 12 days above asking price in December (and the highest price ever paid for a home in our community), our building of a new home that is twice the size of the one we just sold, along with our projected 2006 income being nearly triple that of what we earned in 2005 is not an "illusion of prosperity". It is reality!
Household net worth at record $51 trillion.
More buyers than sellers. More demand than supply.
It was not intended as a smack and if it came across as one, I apologize. I'm building my own business and think it's the only way to go.
I attribute it to the constant ads on radio, "Add gold to your portfolio."
Household net worth at record $51 trillion.
I'll go with Willie on this one. Willie was referring to the national debt and the crushing taxation it is likely to cause down the road. Unless I am mistaken, he was not talking about personal debt. Hence his use of "taxpayer".
Willie was referring to the national debt and the crushing taxation it is likely to cause down the road.
Unfathomable debt? Isn't the national debt about $8 trillion? About $27,000 per capita? See my link in post #86. Household net worth $51 trillion, up $10.4 trillion since 2001. How much has national debt increased since 2001?
You'd have to ask the buyers that question.
The state of the economy at the moment is in the eye of the beholder. Current economic measurements are positive, but I am concerned about these questions:
Is our nation's growth in wealth based on the net increase of tangible assets or is it based on manipulated speculation funded by deficit spending?
Does our diminshed manafacturing capacity expose America to being dependent upon the goodwill of other countries for the supply of goods and materials needed to sustain our national defense?
Does the lack of a self sufficent energy policy expose
the economy to ruin through blackmail?
I do not have answers to these questions, but they are
questions that I feel need to be considered in the economic debate.
Problem with this is that our manufacturing capacity is higher than it has ever been.
Does the lack of a self sufficent energy policy expose the economy to ruin through blackmail?
Yes.
Which cheap consumer goods that we buy from China have shut down which vital domestic defense capacities?
Does the lack of a self sufficent energy policy expose the economy to ruin through blackmail?
Yes. Open ANWR and build more nuke power plants now.
My paycheck was fairly stagnant and I was not satisfied with it. I went out and got another job with a 27% increase in pay.
Stop blaming everyone else and do something about it!
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