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
IBRYMB! I miss the good ole days.
Worst economy since Herbert Hoover....
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.
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.
RATS should definitely be jumping off something. I strongly recommend it. Quick! Fore it's too late!
ping
Yeah, but they're all burger assembly jobs...
Don't live it, don't breath it, just listen to it, read it, and believe it..
A good democrat would tax some one else for the opportunity, for those who have nothing worthy to tax, to jump for them.
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.
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.
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.
The Federal Reserve will guarentee the unemployment rate doesn't go too low, by raising interest rates. They always have.
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.
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.
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?
Are they eating each other yet?
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.
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