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Is The Unemployment Rate About To Collapse?
USNews & World Report/Capital Commerce blog ^ | 1-31-2007 | James Pethokoukis

Posted on 01/31/2007 5:26:16 PM PST by DredTennis

Is the Unemployment Rate About to Collapse?

Know what's really impressive about today's boffo 3.5 percent GDP growth number for the fourth quarter? It wasn't so long ago that Wall Street economists were wondering if the number would be a "one-handle"–meaning growth between 1.0 and 1.9 percent. And instead of a "hard or "soft" landing, investment pros are now talking about a "growth scare" where a surprisingly robust economy would push the Federal Reserve into raising interest rates.

In any event, I am starting to lend more personal credence to the theory that a combination of strong growth, fat corporate profits, and already tight labor market might push the unemployment rate to lows we have not seen since the 1960s. Here is MKM Partners economist Michael Darda:

"Our indicators suggest that the outlook for the labor market is stronger than anytime since the late 1960s, when the unemployment rate dropped below 4 percent on a sustained basis. Weakness in profits and high real interest rates undermined the tight labor market of 1999–2000, whereas profits are much stronger today while real rates are much lower. In other words, monetary policy is much more accommodative now than it was before the last recession, which put an end to the tightest labor markets in 40 years. In fact, the profit and productivity backdrop is stronger now than it was during the first 20 quarters of the 1961–1969 expansion. ... We thus expect unemployment to drop below 4 percent during 2007. ... It also would mean the bond market's dovish fantasies for weak growth and Fed rate cuts would fade as the FOMC's concerns over cost-push inflation intensify."

And here is a similarly bullish take from yesterday by Oak Associates economist Edward Yardeni:

"... the Conference Board reported yesterday that consumers saying jobs are "hard to get" declined to 19.7 percent from 21.3 percent. Those claiming jobs are "plentiful" increased to 29.9 percent from 27.6 percent in December. This suggests that real people are seeing a real improvement in the labor markets. It also suggests that the unemployment rate is falling. Indeed ... I believe that it could drop from 4.5 percent in December to 3.5 percent by the end of this year. Undoubtedly, this would freak out lots of investors who are convinced that such tight labor markets must mean higher labor costs and higher inflation. But, we believe that global competition, affordable technology tools, and robust productivity will keep a lid on inflation."

Now both these optimistic forecasts are outliers, hardly within the mainstream Wall Street consensus. But given that the mainstream Wall Street consensus is often wrong, perhaps on the fringes isn't such a bad place to be. Payroll numbers from the Labor Department for January come out on Friday, and they'll give a better idea of where the job market is heading. An early read came out today from the ADP National Employment report, which found that private-sector employment jumped by 152,000 based on an analysis of actual payroll data. Posted at 12:12 PM by James Pethokoukis


TOPICS: Business/Economy; News/Current Events
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The GOP could have used this sort of news six months ago ...
1 posted on 01/31/2007 5:26:22 PM PST by DredTennis
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To: DredTennis

IBRYMB! I miss the good ole days.


2 posted on 01/31/2007 5:28:10 PM PST by neodad (USS Vincennes (CG-49) Freedom's Fortress)
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To: neodad

Worst economy since Herbert Hoover....


3 posted on 01/31/2007 5:35:15 PM PST by BenLurkin
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To: BenLurkin

I'm with you.
Its so bad here that men are killing themselves. No one has work and its not looking to improve.

forclosures by the hundreds.


4 posted on 01/31/2007 5:46:17 PM PST by annelizly
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To: DredTennis

Unfortunately I think this current crowd would have been too dumb to use it. Remember Memo-Gate? The had the dems dead to right and they failed to pull the trigger.


5 posted on 01/31/2007 5:50:53 PM PST by Dutch Boy
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To: DredTennis

RATS should definitely be jumping off something. I strongly recommend it. Quick! Fore it's too late!


6 posted on 01/31/2007 5:52:13 PM PST by Waco
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To: trussell

ping


7 posted on 01/31/2007 5:57:40 PM PST by EGPWS (Trust in God, question everyone else)
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To: DredTennis

Yeah, but they're all burger assembly jobs...


8 posted on 01/31/2007 5:59:50 PM PST by Fresh Wind (All we are sa-a-a-ying, is give Beast a chance.)
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To: BenLurkin
Worst economy since Herbert Hoover....

Don't live it, don't breath it, just listen to it, read it, and believe it..

9 posted on 01/31/2007 6:08:40 PM PST by EGPWS (Trust in God, question everyone else)
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To: Waco
RATS should definitely be jumping off something.

A good democrat would tax some one else for the opportunity, for those who have nothing worthy to tax, to jump for them.

10 posted on 01/31/2007 6:12:58 PM PST by EGPWS (Trust in God, question everyone else)
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To: DredTennis

Will someone please define the word job for me.Or did I miss something. All the jobs I know of are (1)great pay but no insurance or benefits or (2)bad pay and no benefits or (3)bad pay and very little benefits.


11 posted on 01/31/2007 6:19:34 PM PST by MATSEVAH
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To: MATSEVAH

There's a fourth option: jobs with great pay and great benefits.

Like the one I started last week after 5 months unemployed.

Quit whining.


12 posted on 01/31/2007 6:56:30 PM PST by El Conservador ("No blood for oil!"... Then don't drive, you moron!!!)
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To: El Conservador

Why did you leave your country, no job looking for the better life, hell my tax dollars are supporting you,I would be happy to.I have a right to cry I was born here.And by the way I have my own business.And the next time we have a war be sure to put you name on the line like I had to do.


13 posted on 01/31/2007 7:30:40 PM PST by MATSEVAH
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To: DredTennis

The Federal Reserve will guarentee the unemployment rate doesn't go too low, by raising interest rates. They always have.


14 posted on 01/31/2007 7:41:52 PM PST by aimhigh
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To: DredTennis

The GOP should be accusing the democrats of destroying the job market for our young people and our home grown minorities by flooding the country with illegals and H1s and immigrants out of control.


15 posted on 01/31/2007 7:42:57 PM PST by tkathy (Sectarian violence? Or genocidal racists? Which is a better description of islamists?)
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To: MATSEVAH

I came here because I had a chance of LEGALLY doing so, and I wasn't going to waste it.

Fortunately, your tax dollars don't have to support me, because, as I did mention before, I have a well-paid job as a civil engineer.

Congratulations on being a business owner in the best country to do business in. In fact, if you're a self-sustaining business owner, why do you have to gripe about low-paying, low-benefit jobs, since clearly you're not in need of them???

Maybe you're even a closet leftist, since you're using the "why don't you sign up for the war?" straw man.

Overall, your reply is full of straw men, non sequiturs and guilt by association.

Again, quit whining.


16 posted on 01/31/2007 7:44:34 PM PST by El Conservador ("No blood for oil!"... Then don't drive, you moron!!!)
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To: DredTennis

I quit my job 2 weeks ago because they tried to cut my pay by 40% and I could care less. I'm going to milk it for a few more weeks and get some things done around the house.Then I'll start looking for a job that pays less than I was making before (or the same if they will pay)as long as I don't have to put in 60 hours a week like I was doing. How F U is that?


17 posted on 01/31/2007 7:45:53 PM PST by BreezyDog
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To: annelizly

Are they eating each other yet?


18 posted on 01/31/2007 7:54:45 PM PST by Hostage
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To: El Conservador
I had to get my own business to make ends meet.But for some people they don't have that option.they don't have money to gamble away trying to start a business.They don't get free medical insurance.If they are lucky maybe they get food stamp.they either have to go back to school or get a job for less pay because a bunch of people came into this country which are not suppose to be here. working for way less but the big business lets them get away with it knowing they don't have to pay insurance, or top pay which causes many Americans to loss jobs. Yes I'm for war if it benefits this great country we live in,But I'm not for giving it away to people from other lands while they can profit and are military people comes homes without jobs. Once again I'm crying damn right listen to the news have you ever thought about sending money to the men fighting in Iraq for you to have a job.After all without them you would not have a job.And by the way at sometime when you came into this country my tax dollars was at work maybe not for you. but for someone else that came into this country.remember I was here before you I have a Right to complain.I have never had anything given to me.I bet during 9-11 you was one of those who said we deserved it.
19 posted on 01/31/2007 8:25:23 PM PST by MATSEVAH
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To: MATSEVAH; Clemenza

Wow.

Talk about a run-on.

Again, why do you blame me for something I haven't done? I came here legally, went through school, graduated and obtained productive, well-paid jobs. All in the 6 years I've been living in this country.

Again, your ill-spaced, ill-punctuated, ill-spelled, ill-conjugated rant is chock full of straw men, non-sequiturs, guilt by association, and now you put a new, spicier ingredient: ad hominems, like the one in which you accuse me of rejoicing on the 9/11 attacks. You're truly sick, if you want to know.

Once again, quit whining.


20 posted on 01/31/2007 8:47:55 PM PST by El Conservador ("No blood for oil!"... Then don't drive, you moron!!!)
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