http://online.wsj.com/article_email/SB125993225142676615-lMyQjAxMDI5NTA5NTkwMzUyWj.html
Over the last two years (from that dismal November/December, 2007 period) there has not been much in the way of "good news" on the economy. Yesterday's much anticipated announcement by the BLS was some solid good news. The color graphs in the article we've attached from today's WSJ do an excellent job of highlighting the key positives:
Job Losses Slow - November data showed 11,000 jobs lost. Some analysts actually thought that was a misprint (thinking it had to be 111,000)! Obviously, that is the fewest jobs lost since the recession began 2 years ago. In addition, upward revisions showed that 159,000 fewer jobs were lost in September and October than were previously thought.
Temporary Hiring Picked Up - November data showed temporary hiring up 52,400. That is the 4th straight month for that key indicator.
Average Workweek - The length of the average workweek expanded from 33 to 33.2 hours. That this key indicator expands at all is important.
The overall unemployment rate dropped from 10.2% to 10% but that number may be an erratic one as the economy comes back (some economists expect it to get as high as 10.5%) because other key rates that affect it could bump it back up. The closely watched U6 rate (unemployed plus discouraged) dropped in November from 17.5% to 17.2%, a very good sign. But, if some of those formerly "discouraged" workers who are now back on the market don't find work, they'll be bumping the active unemployed numbers up.
Overall, November marked the 23rd straight month of overall job losses. There were 15.4 million Americans unemployed in November, more than twice as many as when the recession began.
So, while Stephen Stanley of RBS refers to these data as a "game changer" that should fundamentally alter perceptions regarding the economy, we prefer to be cautiously optimistic.
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This is excellent news, but I am with you on the cautious part. Someone on NPR the other day (one of the ubiquitous experts) was saying that most bounce-backs looked like a square root sign, with a drop then a sharp uptick and a stable plateau. He said that this time we could expect to see a much slower uptick and probably several dips before we hit a plateau again. Being a visual person, this was a nice way to package it for me.
ReplyDeleteOne of the indications for the "squiggles" (my unscientific term for the dips and upticks) is in the cosmetics industry. In a bad economy, lipstick and movies are supposed to do well. However, in this economy, cosmetics companies are also struggling. Estee Lauder recently announced that they are closing a line that has performed well in the past. They need to find cash fast. So, when lipstick sales are down in a bad economy, I think we should be very cautious indeed...
Good news: Average workweek expanded to 33.2 hours
ReplyDeleteBad news: Companies do not hire until until hours per workweek exceeds 45
We still have a long way to go ...
Tracey: Great point! My biggest fear is the double dip recession which we have lived thru before. It looks like the Obama administration is headed for further assistance to the economy with small business tax incentives that relate to job creation (among other proposals). Both Krugman and Buffet were there 6 months ago.
ReplyDelete