With the unemployment rate falling from 10.0 to 9.7 the employment report implies that the economy is in a transition phase.
The period of widespread layoff and job cuts is over. So if you still have a job the odds of
your losing it have roughly returned to normal. This change is reflected in the improvement in
personal confidence. But firms have not yet begin widespread hiring. So if you are still looking
for a job it is going to be rough.
During this transition phase the things that normally happen are occurring about as normal.
Firms are hiring temporary workers and hours worked are expanding.
Average hourly earnings are still weakening as the recent labor compensation reports showed when they reported that labor compensation growth was running at record lows.
But the combination of weak wages and expanding hours is generating a nice acceleration in weekly earnings.
The gains in weekly wages imply that the recent pick-up in nominal personal income should continue and may actually improve. In recent months average hourly earnings has been running at about a 4% rate, a sharp improvement over that in 2009. In 2009 nominal personal income growth turned negative for the first time since 1938. But with nominal personal income only growing in the low single digit rates the threat of accelerating inflation remains remote. Remember, before the 2009 surge in bank reserves can show up in inflation it has to first generate a pick up in money supply growth and nominal income and neither of those appear to be on the immediate horizon.
The cycle is running its course and it should not be long until we can start showing charts of presidential comparisons like this table. the interesting comparison will be between Obama and Reagan. Of course the Reagan administration was during the era of low productivity growth when a given gain in real GDP growth generated a larger increase in employment than should be expected in the current environment of very strong productivity. But the real message in this table is that those who thought Bush did a good job and want to repeat his policies sure have some explaining to do. Even Carter created some five times as many jobs as Bush in only four years.
Correction of first sentence made. Thanks.
One correction: the labor force did not contract in January — it was up 111K. This looks to be within standard confidence bounds of zero, but it is positive.
Correction two: “Even Carter created some five times as many jobs as Bush in only four years.” The POTUS is not the “job creator” of Amerika. You might be able to make a convincing arument that the Congress/Senate creates and destroys federal government jobs. But the rest of the jobs are created by businesses (including korporations) and state/local governments.
I would like to object to the same sentence as Jay, for a different reason. The “even” in “even Carter” tends to perpetuate the cliche of the terrible president. Carter urged energy concervation, which all right thinking people understand is and has been the readiest remedy for rising imports of foreign energy, pollution resulting from energy consumption and production, among a number of other ills. Even Jimmy didn’t just beat Bush the Lesser. He topped everybody by Kennedy/Johnson. Clinton is a failure in the same way Ronnie is a saint – in the rhetoric of a political culture that values feel-good and image over substance and long-term thinking. If I were Even Jimmy, I’d be feeling pretty much vindicated these days.
khARRIS — I AGREE WITH YOU COMPLETELY.
Carter was a terrible president in part for the very reason you applaud him. He created the deptment of energy. He did it as a sop for stupid people. It made it look like he cared and was on it. Thing is he was a dumb ass and didn’t know what to do with this new department. The dept. of energy took controll of Nuclear energy away from the DOD. Under the DOD Nuclear secrets safer, but under the dept. of energy any chinamen with a computor was allowed to hack in and steal all of our secrets. Thanks alot Jimmy.
Really, and you don’t believe the Fed during Clinton’s era had something to do with jon growth. Think about it.
Really, and you don’t believe the Fed during Clinton’s era had something to do with job growth. Think about it. Clinton worked with Greenspan.
The recent report in the economy is good news to everyone. 2009 wasn’t a good year, as many companies were collapsed that resulted to the growth of unemployment rate. This year might be a good year. The unemployment rate is at a record high point, but what’s even higher is the rate of underemployment. More people are not running for payday loans, as they are working in jobs that are below their previous salary level or qualification, and willing to accept lower salaries just to keep money coming in. The lower salaries have a lot to do with why people aren’t spending as freely as they had previously. The numbers of unemployed aren’t growing at as fast a rate as they had, which leads many to believe that the recession is ending.