American Economic Status looking up After Sluggish Febuary

[Ice]

http://money.cnn.com/2007/04/06/news...ion=2007040612

Jobs much stronger than expected
Growth in payrolls well above forecasts, unemployment rate drops; Fed seen on hold.
April 6 2007: 12:57 PM EDT

NEW YORK (CNNMoney.com) -- Job growth jumped and unemployment dipped unexpectedly in March, the government reported Friday, signs the labor market is holding up better than economists had thought.

Employers added 180,000 jobs to payrolls last month, the Labor Department reported, up from 113,000 in February, which was also revised higher. Economists surveyed by Briefing.com had forecast a gain of 135,000 while Reuters' survey showed a consensus for 120,000.

The unemployment rate dipped to 4.4 percent - the lowest since October - from 4.5 percent in February. Economists had bet the rate would creep back up to 4.6 percent. October and March are the only two months since May 2001 that unemployment has been this low. The unemployment rate for college graduates is down to 1.8 percent.

"I think this is really encouraging. It shows that employers were in a hiring mode," said Rich Yamarone, director of economic research at Argus Research. "We're not going to have blistering job growth. But the nation is (essentially) at full employment."

Manufacturing was one of the only sectors showing weakness, losing 16,000 jobs last month. Even the battered automotive sector saw employment levels remain essentially unchanged. Professional and business services lost 7,000 jobs.

But construction, which many had feared would show a seasonally adjusted decline due to continued slowdown in home building, picked up, adding 56,000 jobs.

There was some weakness in residential construction, as home contractors trimmed 1,200 jobs, but the subcontractors they employ added 11,000 jobs.

Retailers added 36,000 jobs despite weakness at auto dealers, furniture stores and building material stores, all hurt by the troubled auto and housing markets. But department stores, clothing retailers, electronics chains, groceries and gas stations added jobs.

Average hourly wages rose 0.3 percent to $17.22, in line with forecasts and down from the 0.4 percent increase posted in February.

That left wages up 4.0 percent over the last 12 months, meaning typical hourly workers are seeing their paychecks grow faster than prices. A separate Labor Department reading shows a 2.4 percent increase in prices in the 12 months ending in February.

Friday marked the rare holiday release of the government's most closely watched economic report. Stock markets in the U.S. and Europe are closed for Good Friday, giving investors more limited ability to react to the number.

But the bond market was open, and Treasury bond prices tumbled, taking the yield on the 10-year note up to 4.74 percent from 4.67 late Thursday as investors bet the strong numbers significantly reduced the chance that the Federal Reserve would cut interest rates later this year.

Yamarone said that even with the unemployment rate falling and wages continuing to creep up, he doesn't believe the Fed will feel a need to raise rates at any point in 2007, and it certainly won't cut rates.

"The inflation barometers are all exceeding their comfort zone, but they're not upending the economy," he said.

Employers added jobs at a faster pace in March, according to the government's latest reading of the labor market that came in much stronger than forecasts.

This is very good news indeed. Unemployment shrunk rather than rose, as was predicted by most economists, and worker's wage increases almost completely recovered from the February lost, rising 4% over the last twelve months. Not only that, but the wage is rising faster than the current prices of many goods, which means people will have more money to spend.

[Odin]

Given the state of the housing market and the eagerness of banks to loan out cash to people of suspect credit, the job market news is the best possible outcome.

Putting people back to work will help with the housing issue (which was due for a slow down anyway). I am curious to see how the sales of durable goods did, and capital investment by corporations. If those two things pick up as well then that might counter the housing market slowdown which has been a major catalyst for economic growth for the last 5 years.

[Vladimir]

Hmm. I thought concerns about the economy was one of the reasons Democrats took control of congress.

[Odin]

Hmm. I thought concerns about the economy was one of the reasons Democrats took control of congress.

It was, and primarily the main concern for voters was that thier wages havent matched inflation for the last 5 years.

So yes more are working, but are unable to afford as much as they did 5 years ago. This is the main problem of the U.S. economy right now as i see it and is the leading antagonizer in the shrinking middle class argument.

[Hosakawa Tito]

Unfortunately the downside is that the Feds may raise interest rates over inflation fears, which could nudge us into a recession.

[Odin]

Unfortunately the downside is that the Feds may raise interest rates over inflation fears, which could nudge us into a recession.

Good point. I will be intrested to see what the fed does with rates given the housing situation. Raising rates might not be such a bad idea given a lot of the housing boon (and the economic up turn that went with it IE Home depot stock shares for one)was based on lending money to people with suspect credit.