Art Sandusky 0 Report post Posted July 9, 2005 Unemployment rate near 4-year low Rate dips to 5.0 percent, lowest since 9/11, but job growth again falls short of forecasts. July 8, 2005: 11:25 AM EDT By Chris Isidore, CNN/Money senior writer NEW YORK (CNN/Money) - The nation's unemployment rate in June fell to the lowest level in nearly four years even as job growth came in weaker than most economists' forecasts. The unemployment rate fell to 5 percent from 5.1 percent in May, the Labor Department reported, the lowest since a matching reading in September 2001, the month of the terrorist attacks on New York and Washington. Economists had forecast the rate would remain unchanged at 5.1 percent. But the department's survey of employers showed they added just 146,000 jobs to payrolls in June, up from a revised 104,000 in May. That was well short of the average forecast for a net gain of 195,000 jobs last month, according to economists surveyed by Briefing.com. "The improvement in the unemployment rate has been very steady, which looks very believable," said Mark Vitner, senior economist with Wachovia Securities. "It points to a probable undercount in (payroll) employment." June marked the ninth time in the last 12 months that employer payrolls came in weaker than forecasts. The 146,000 jobs added last month is barely enough to keep up with growth in the labor force, according to most economists, and it trailed the average increase of about 172,000 jobs a month added over the last 12 months. John Challenger, CEO of outplacement firm Challenger Gray & Christmas, said employers are clearly still more cautious about adding employees than in past expansions. "With the economy growing at a steady pace and healthy corporate earnings, the lack of much stronger job growth is a mystery," he said in a statement. Challenger said part of the problem is employers' doubts about the strength of the current economic expansion. He said there is "concern that a sudden jolt to the economy could bring down this house of cards," adding, "The terrorist attack in London yesterday serves as a reminder that we are still vulnerable." The average hourly wage edged up 3 cents to $16.06. That was in line with forecasts and brought hourly wages up 2.7 percent over the last 12 months, while consumer prices are up 2.8 percent for the 12 months through May, meaning wages for hourly workers are barely keeping pace with inflation. On Wall Street, stocks edged higher in morning trading while Treasury bonds were little changed. The facts that job growth once again trails expectations and wages remained in check were seen as more confirmation that the Federal Reserve can maintain its current "measured" pace of interest rate hikes. "The pace of average hourly earnings continues to rise at just a tepid pace leading me to believe that this overall report is a very monetary policy-friendly report," said Anthony Chan, senior economist with JPMorgan Asset Management. "So although, this report still suggests that another rate hike in August is baked into the cake, we see nothing here that would cause the Fed to relinquish its 'measured pace' approach," he said. Chan noted that the May and April payroll numbers were both increased by a combined 44,000 in revisions issued Friday. He said coupling those upward revisions to the 146,000 job gain puts the payroll number close to average forecasts for June. And a recent survey of manufacturing executives suggests the 24,000-job drop in manufacturing employment seen in June isn't likely to be repeated. "I believe that it is safe to say that this report understates the true strength of current labor market conditions," Chan added. Hey, at least the economy is improving, and I'd rather see a gradual improvement instead of a sudden one. I'm no economist, but to me it would seem that slow growth would be better at building a base for future improvements. Share this post Link to post Share on other sites
Guest Agent of Oblivion Report post Posted July 9, 2005 I'd take the lump sum if I ever won the lottery. Share this post Link to post Share on other sites
Art Sandusky 0 Report post Posted July 10, 2005 Me too. Share this post Link to post Share on other sites
SuperJerk 0 Report post Posted July 10, 2005 Hey, at least the economy is improving, and I'd rather see a gradual improvement instead of a sudden one. I'm no economist, but to me it would seem that slow growth would be better at building a base for future improvements. <{POST_SNAPBACK}> You know what really helps economic growth? Pumping hundreds of billions of dollars in deficit spending into the economy. Is there any analysis that indicates if the economic growth is public or private sector driven? Share this post Link to post Share on other sites
Stephen Joseph 0 Report post Posted July 11, 2005 Hey, at least the economy is improving, and I'd rather see a gradual improvement instead of a sudden one. I'm no economist, but to me it would seem that slow growth would be better at building a base for future improvements. <{POST_SNAPBACK}> Indeed. There's alot of evidence to support your notion. You know what really helps economic growth? Pumping hundreds of billions of dollars in deficit spending into the economy. Is there any analysis that indicates if the economic growth is public or private sector driven? <{POST_SNAPBACK}> You're kidding, right? If you're serious, the turnaround is being led by the private sector, in particular the healthcare, IT, and service sector companies finally pulling in some strong numbers. Also, pumping deficit spending winds up putting the brakes on an economy. We would be growing faster without the debt we currently have (as interest rates would have overall been lower, encouraging investment blah blah blah). Share this post Link to post Share on other sites
SuperJerk 0 Report post Posted July 11, 2005 You're kidding, right? No. If you're serious, the turnaround is being led by the private sector, in particular the healthcare, IT, and service sector companies finally pulling in some strong numbers. Evidence? (Not an argument, just asking a question.) Also, pumping deficit spending winds up putting the brakes on an economy. World War II? The 1980s? Share this post Link to post Share on other sites
Ripper 0 Report post Posted July 11, 2005 Do they still caculate unemployment rates by new claims for unemployment? because that has got to be the dumbest thing I have ever heard of. Share this post Link to post Share on other sites
Stephen Joseph 0 Report post Posted July 12, 2005 1. To answer the question of public vs. private, please refer to this website: http://www.vankampen.com/vksite/news/comme...tline062005.asp 2. Deficit spending in the LONG RUN hurts an economy by pulling money that could have been better used in savings and investments. That's economics 101, Solow growth curve shite. 3. We experienced a growth boon after WWII because of a) The Great Depression being right before it, and wage and price controls from 1939 onward containing the economic pressures for price and wage increases (which we saw explode in the economic expansion during Eisenhower). 4. You can credit the expansion of the 1980s economy to the computer revolution (increased productivity) and the lowered tax brackets. The deficit spending was just a result of the lowered taxes, and was not the primary determinant. It was a cause of the primary (less taxes) 5. The unemployment rate is calculated by new claims. That is not dumb. Tell me how you would calculate it, and how much your way would cost hmmm? The unemployment rate considers frictional and structural unemployment. When workers drop out altogether of the market and are not seeking jobs, we have no effective means of identifying them, apart from surveying everyone. Therefore, people who drop entirely from the market and are not "actively searching" are not considered. Again, there's no cost-effective feasible and timely way to create this "perfect" statistic. Share this post Link to post Share on other sites
SuperJerk 0 Report post Posted July 12, 2005 1. To answer the question of public vs. private, please refer to this website: http://www.vankampen.com/vksite/news/comme...tline062005.asp <{POST_SNAPBACK}> Here's what your source had to say about deficit spending: The federal government reports a $35.3 billion shortfall in May 2005. However, this number compares favorably with the $62 billion-plus shortfall in the same month a year ago. Unquestionably, the fiscal position appears to be improving faster than projected at the beginning of the year. That said, government spending remains a stimulant to economic activity. Doesn't that contradict your position? Deficit spending in the LONG RUN hurts an economy by pulling money that could have been better used in savings and investments. That's economics 101, Solow growth curve shite. Well yes, I know this. That's why I'm concerned that our current economic growth is based on the short-term fix of deficit spending. We experienced a growth boon after WWII because of a) The Great Depression being right before it, and wage and price controls from 1939 onward containing the economic pressures for price and wage increases (which we saw explode in the economic expansion during Eisenhower). But isn't government spending on war materials for WW2 given credit for ending the Depression? Isn't that a sign of the positive effects of deficit spending on economic growth? (Although there were rough economic times in the late 1940s, of course.) You can credit the expansion of the 1980s economy to the computer revolution (increased productivity) and the lowered tax brackets. The deficit spending was just a result of the lowered taxes, and was not the primary determinant. It was a cause of the primary (less taxes) What about increased government spending in the defense industry. Surely that impacted the computer industry, as well as creating factory jobs? Some have even suggested that the decrease of governemnt spending on defense in the late 1980s and early 1990s was the cause of the recession of that period. Please don't think I'm trying to debate you on this. I'm merely trying to reconcile your replies with what I already I know about deficit spending. Share this post Link to post Share on other sites
Stephen Joseph 0 Report post Posted July 12, 2005 (edited) Holy! Spending is a stimulant? Holy OBVIOUS STATEMENT Batman!!! (joking) Note: What I said was that the public sector is not the PRIMARY reason why the economy is doing well. That does not mean it is not contributing. The economy of the WW2 pretty much grew because we got distracted by a war and got confidence and stopped worrying. Plus, it was mainly the fault of very lax investment rules ... Of course government spending helped out. But private spending for outstripped the government involvement. If economic improvement was a pie, and the contents were the reasons for the improvements, maybe 15% of the growth could be considered due to defense contracts (and thats an overestimate, because the government budget for defense was 15% of its total budget...) EDIT: It is very difficult to differentiate primary and secondary effects. I refer to primary ones. Investment happened because of confidence. So you COULD attribute the growth to increased investment but the truer answer lies in what caused investment to rise. To that, you can recredit the fat one's rhetoric. Edited July 12, 2005 by Stephen Joseph Share this post Link to post Share on other sites
SuperJerk 0 Report post Posted July 12, 2005 What I said was that the public sector is not the PRIMARY reason why the economy is doing well. That does not mean it is not contributing. <{POST_SNAPBACK}> Gotcha. Share this post Link to post Share on other sites