Real Hourly Wages Fall, New Jobs Below Forecast
The Labor Department today also reported that the economy formed 157,000 new jobs in December. For the sixth time in the past seven months the consensus forecast, which for November was 175,000, has been too high. The 157,000 new jobs would barely be enough under ideal conditions to meet the month-to-month growth of 150,000 in the labor force. As reported here, yesterday, disparities in skills required and geographic distribution of the jobs available means that the economy must generate well more than one new job for each new worker to ensure that the unemployment rate does not reflect excessive search period gaps in matching jobs to workers.
For the year just ended, the number of new jobs in the U.S. accumulated to 2.2 million, which would be an average of about 183,300 per month.
The unemployment rate for November held firm at 5.4%, marking yet another month at the general level typical during the Bush Administration but much higher than the average during the preceding Administration of Bill Clinton.
The White House provided no explanation today for why its budget-busting fiscal policies—including three rounds of tax cuts and a war of opportunity that has already pumped billions of dollars into certain narrow areas of the business sector—has yet to produce anything approaching the economic growth of the Clinton Administration. Instead, President Bush today focused on the 2.2 million new jobs formed during the year, describing it as "very positive." He did not address the connection between declining real hourly wages and the quality of life those 2.2 million new jobs will provide for the American labor force.
Wildly unimpressed by what the President declared were good jobs numbers, stocks showed no hint of celebration, instead generally drifting lower, with the news about the weak employment numbers already anticipated and impounded in prices. The large-cap stock indices were down modestly, and the NASDAQ gave up more turf, slipping ever closer toward the psychologically important 2,000-point mark that it had recently managed, after many months of fitful effort, to cross to the upside.
Bond prices generally finished flat to a fraction lower, with the inversely related yields on short- to intermediate-term Treasury instruments continuing their slow and inexorable march upward into recession-inducing territory.
Published 1/07/2005 10:43:49 PM
<< 6 Comments Total
Perhaps this is a silly question, but how will we know when we are actually in a "recession", given that the press will never challenge the Bush Team's rosy assessment of any economic indicators. If this "jobless recovery" can be presented as prosperity, I don't want to see an undeniable downturn.
Good afternoon, LindiBee.
Given that I am a trained economist, I know better than to worry that a recession won't be reported to have begun at the point when it actually has. Nevertheless, I am still worried that, somehow, a manipulation of definitions or numbers will prevent the news from being reported by the mainstream media.
The Dark Wraith Forums publishes information that is mostly in the public domain, yet it seems as if even those who generally pay attention to the news are unaware of some of what is being reported here. It is as if the truth is out there, but the cacaphony buries the drumbeat of looming recession. So, when it comes, many people—and many pretty well-informed people—will be quite surprised... if they ever hear about it.
A serious problem is that the times in which we are living seem to offer a defiant new definition of economic prosperity. Just yesterday, CNN referred to the economy as being in—and having been in—an "expansion" for the past couple of years.
I know very well that the current conditions don't meet the classical definition of a "recession," but this is not what any economist with a grasp of the employment situation would call a classical "expansion," either. It is a new animal... at least it sure looks like a new animal, right now.
However, even new animals must live by the laws of nature; and sooner or later, that new animal of our economic times will show its true colors. And I'll bet you those colors are going to look suspiciously like the ones worn by a great big, old-fashioned, roaring lion of a recession that will smack the business world just as hard as it's been clawing at the jobs market for the entirety of the Bush Administration.
And I'll bet you that once the world of big business starts getting chewed up by the policy genius of that cabal of neo-con incompetents, suddenly the big-business media giants will stop treating Bush as if he can do no wrong.
We'll just have to wait and see, though.
The Dark Wraith hides in the duck blind (hoping that the lion prefers dining on Right-wing Dodo as opposed to snacking on the blogging duck).
The observation of a new economic animal makes me remember the last time such a new animal was famously sighted.
Remember stagflation, anyone?
Interesting that in both cases it would appear the new animal is/was a creation of an ahistoric interest rate environment, no?
- oddjob
Good morning, OddJob.
You are right on the money: stagflation was the combination of inflation and a stagnant economy. The economy was in slow motion because interest rates were high, and interest rates were high because of a large and escalating expected inflation premium that had embedded itself in them.
This time, the interest rates are going up for now because real interest rates (before the expected inflation premium is included) are rising. If the capital markets begin to impound a serious expected inflation premium—in other words, if the capital markets don't believe the Fed is going into inflation-fighting mode soon enough or seriously enough—we'll see interest rates that will really put the brakes on this economy of ours.
So the time is now to place your bets on the Alan Greenspan Fed. Will it convince the capital markets that the possibility of inflation is all in their minds; or will the capital markets say, "Too late, Sparky: you've already poured bazillions of extra dollars into the economy to prop up your soul mates in the White House, and now those extra dollars are swirling around out there, cheapening the value of the currency. And that means inflation is coming. And that means we're gonna have to put the inflation we're expecting into the interest rates we charge, even though the Fed and the budget deficits have already made 'em go up."
Only time will tell.
The Dark Wraith lays his bet.
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