Bad news.
Well, good news, actually, except to treasonous types who think anything good that happens to the country under a Republican President is bad.
Job growth provides missing piece to recovery
Economist Lakshman Achuthan discusses
the upswing in payrolls on CNBC Friday
By Martin Wolk
MSNBC
Nov. 7 — The nation’s unemployment rate fell to 6 percent in October as companies added jobs for a third straight month, offering compelling evidence that the long jobless recovery at last has given way to more normal expansion.
Eye on the Economy; E-mail Martin Wolk
THE LABOR DEPARTMENT REPORT Friday was greeted by economists as a signal that the missing piece of the economic recovery has fallen into place, setting the stage for sustainable growth over the next several quarters.
“What makes it a blockbuster report is that it’s the ingredient that we’ve all been looking for in the economy,” said Ethan Harris, chief U.S. economist for Lehman Bros. “There have been bigger reports with bigger surprises, but this is what everyone has been zeroing in on. We finally have cleared the first hurdle to a normal recovery.”
The Bureau of Labor Statistics reported that payrolls grew by 126,000 last month, significantly more than the 50,000 new jobs that economists had predicted. Equally important, the bureau upwardly revised figures from September and August, showing that the economy added a total of 286,000 jobs over the past three months. That was the best three-month total since late in 2000, before the economy slipped into recession and proceeded to shed 2.6 million jobs over the next 30 months.
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“We can finally put the nail in the coffin of the jobless recovery,” said Ken Mayland, president of ClearView Economics. “We are back on a rising job track.”
While the report was significantly better even than “whisper” numbers on Wall Street, it was still well short of what typically would be expected in the 23rd month of an expansion, and investors took it in stride. Stock prices succumbed to a modest selloff late in the session, and long-term interest rates edged higher on the bond market.
“The market entered the day with a different mind-set than it has had for the past three years,” said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co. Instead of bracing for bad news, he said, traders were “hoping for something better” than published forecasts and so had little reaction once the figures were digested.
Even a published report suggesting that the Federal Reserve will change its policy statement on interest rates next month did little to ruffle feathers on the bond market, which normally follows such reports closely.
Despite the turnaround in the labor market and the sizzling 7.2 percent third-quarter growth rate, many analysts expect the central bank to keep the benchmark overnight lending rate at a 45-year low of 1 percent well into 2004 and possibly into 2005.
BY THE NUMBERS
Key economic indicators
Period Latest Prev.
• Consumer Confidence Oct.* 81.1 77.0
• Retail sales Sept* -0.2% 1.2%
• GDP Q2 3.3% 1.4%
• ISM Index Oct.* 57.0 53.7
• Factory Orders Sept.* 0.5% -0.3%
• Unemployment Rate Oct. 6.0% 6.1%
• Employment situation Oct.* 126,000 125,000
• Consumer inflation Sept 1.2% 1.3%
• Housing starts Sept* 1,888,000 1,826,000
• Home sales Sept* 7,835,000 7,607,000
CONSUMER CONFIDENCE
Recent figures
Oct.* 81.1
Sept. 77.0
Aug 81.7
July 77.0
June 83.5
May 83.6
April 81.0
March 61.4
Feb 64.8
Jan 03 78.8
Dec 80.7
Nov 84.9
What is it?
Consumer confidence is considered important because consumer spending accounts for more than two-thirds of U.S. economic activity. The monthly Conference Board survey is one of the two most closely watched indicators of sentiment. Based on a mail-in survey sent to about 5,000 households. Results are converted to an index and expressed in comparison to the 1985 average of 100.
Source: The Conference Board
RETAIL SALES
Recent figures
Sept* -0.2%
Aug 1.2%
July 1.4%
June 0.9%
May 0.5%
April -0.3%
March 2.3%
Feb -1.4%
Jan 03 0.4%
Dec 1.4%
Nov 0.8%
Oct 0.1%
What is it?
A broad measure of consumer spending trends. Includes sales of motor vehicles, clothing, food at both grocery stores and restaurants, electronics, building materials drugs and other items. Expressed as a percent change from previous month, adjusted for seasonal variations but not price changes.
Source: Census Bureau
GDP
Recent figures
Q2 3.3%
Q1 2003 1.4%
Q4 1.4%
Q3 4.0%
Q2 1.3%
Q1 2002 5.0%
Q4 2.7%
Q3 -0.3%
Q2 -1.6%
Q1 2001 -0.6%
Q4 1.1%
Q3 0.6%
What is it?
The gross domestic product is the broadest measure of the economy, comprising the value of all goods and services produced in the United States. It is reported quarterly with frequent revisions. Generally expressed as a percentage change from the previous quarter in “real” or inflation-adjusted terms. Economists presume real GDP is capable of growing at an annual rate of about 3.5 percent over the long term. When GDP declines over a sustained period of time the economy is considered to be in recession.
Source: Bureau of Economic Analysis.
ISM INDEX
Recent figures
Oct.* 57.0
Sept. 53.7
Aug 54.7
July 51.8
June 49.8
May 49.4
April 45.4
March 46.2
Feb 50.5
Jan 03 53.9
Dec 55.2
Nov 50.5
What is it?
The first major indicator reported each month, considered a reliable assessment of how the manufacturing sector is performing. Based on a survey of executives done by the Institute for Supply Management, formerly known as the National Association of Purchasing Management. Responses are compiled and reported as an index number. A reading above 50 percent indicates the manufacturing sector is expanding, while a reading below 50 indicates it is shrinking.
Source: Institute for Supply Management
FACTORY ORDERS
Recent figures
Sept.* 0.5%
Aug. -0.3%
July 2.0%
June 1.9%
May 0.3%
April -2.6%
March 1.5%
Feb -0.5%
Jan 03 1.6%
Dec 0.3%
Nov -0.7%
Oct 1.9%
What is it?
Data on new orders for manufactured goods, adjusted for seasonal variation, offer a good indicator of the manufacturing sector's health, closely watched because it is the most volatile part of the economy. Expressed as percent change from previous month.
Source: Census Bureau.
UNEMPLOYMENT RATE
Recent figures
Oct. 6.0%
Sept. 6.1%
Aug 6.1%
July 6.2%
June 6.4%
May 6.1%
April 6.0%
March 5.8%
Feb 5.8%
Jan 03 5.7%
Dec 6.0%
Nov 5.9%
What is it?
One of the best known and most politically powerful economic indicators, the rate is calculated from a monthly survey among a sample of about 60,000 households. The rate is adjusted for seasonal variations, but unlike most economic statistics it is never revised.
Source: Bureau of Labor Statistics.
EMPLOYMENT SITUATION
Recent figures
Oct.* 126,000
Sept. 125,000
Aug 35,000
July -57,000
June -83,000
May -76,000
April -22,000
March -151,000
Feb -121,000
Jan 03 158,000
Dec -211,000
Nov 1,000
What is it?
Represents the month-to-month change in jobs on payrolls of the nation’s business, government and non-profit establishments. Generally considered a more accurate indicator of labor market health than the unemployment rate. Analysts estimate the economy should add about 150,000 jobs monthly to keep up with the nation’s growing work force. Based on a sample of 300,000 establishments employing nearly a third of the nation’s workers, the figure is adjusted for seasonal variations and frequently revised.
Source: Bureau of Labor Statistics.
CONSUMER INFLATION
Recent figures
Sept 1.2%
Aug 1.3%
July 1.5%
June 1.5%
May 1.6%
April 1.5%
March 1.7%
Feb 1.7%
Jan 03 1.9%
Dec 1.9%
Nov 2.0%
Oct 2.2%
What is it?
The most widely known and used measure of inflation, the Consumer Price Index is based on the price of a “basket” of goods including food, beverages, fuel, medical care and clothing. Value refers to year-over-year change in "core" prices, excluding volatile food and energy categories.
Source: Bureau of Labor Statistics.
HOUSING STARTS
(seasonally adjusted annual rate)
Recent figures
Sept* 1,888,000
Aug 1,826,000
July 1,890,000
June 1,844,000
May 1,745,000
April 1,627,000
March 1,742,000
Feb 1,640,000
Jan 03 1,828,000
Dec 1,815,000
Nov 1,760,000
Oct 1,653,000
What is it?
A good indicator to assess demand for housing and construction industry health. Represents the number of new residential buildings, including single-family and multifamily homes, where construction was started. Expressed as a seasonally adjusted annual rate. Construction was started on 1.7 million new residential structures in 2002, the highest level since 1986.
Source: Census Bureau.
HOME SALES
(seasonally adjusted annual rate)
Recent figures
Sept* 7,835,000
Aug 7,607,000
July 7,264,000
June 7,030,000
May 6,931,000
April 6,854,000
March 6,538,000
Feb 6,795,000
Jan 03 7,029,000
Dec 6,973,000
Nov 6,662,000
Oct 6,771,000
What is it?
One of the bright spots of the economy in recent years, driven at least in part by historically low mortgage rates. Figure represents the sum of new and existing single-family home sales, expressed as a seasonally adjusted annual rate. In 2002, a record 6.5 million homes were sold.
Sources: National Association of Realtors, Census Bureau
* preliminary figures
Fed Gov. Ben Bernanke said Thursday that with inflation almost non-existent, the central bank can afford to be patient. At a conference in Pittsburgh, Bernanke said there is “considerable scope for a continuation of the currently accommodative monetary policy without undue risk to price stability.”
Analysts said the Fed is determined to do all it can to generate an economic boom and avoid the sluggish growth that has been the hallmark of this recovery’s early stages.
“If (job growth) accelerates into the 200,000 range and the unemployment rate falls, that’s when the clock starts ticking on a Fed rate hike,” said Harris. “The Fed is pretty determined to keep its foot on the accelerator until it is forced to do otherwise.”
The economy’s growing momentum appears likely to neutralize what had been one of the biggest issues for Democrats who hope to challenge President Bush in next year’s presidential election.
And Bush, facing a steady stream of bad news from Iraq, was eager to trumpet the positive economic report Friday.
“Things are beginning to brighten up for people looking for work, which is positive,” Bush told a community college audience in North Carolina. “This is the beginning of good news for job seekers.”
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