> The U.S. Labour Department reported that the May unemployment rate
> climbed to 4.1 percent from its 30-year low of 3.9 percent.
Joel wrote:
>It's my understanding that the rate would have gone even higher without the
>hiring of 200,000+ census workers. Since these jobs are temporary, Wall
>Street must be quite confident that the trajectory for the unemployment rate
>will likely trend upward in the next few months.
Though we shouldn't conclude too much from a month-to-month change in the
unemployment rate, it sure looks like the U-rate is bouncing upward (never
to attain its recent minimum again for a long time), as indicated by the
declines in various indicators of the demand for goods. That of course, is
what Alan G. and the Feds want. They hope, of course, that the US economy
will attain the Holy Grail of monetary policy, "the soft landing" (a
slower, but not negative, GDP growth rate). I don't know if they're
conscious of the possibilities for a "hard landing" or worse resulting from
consumer indebtedness, the large US deficit on the current account, the
accelerator effect, etc. I get the feeling that Alan G. flies by the seat
of his pants, following intuition more than anything else. That method
didn't work well in the early 1990s, when the attempted soft landing turned
into a serious recession that undermined George W's father's attempts at
reelection.
The news sources I've seen (mostly US NPR) suggest that "Wall Street" (that
collective animal) doesn't care about the rise in the U-rate as much as the
perception that Alan G. won't raise interest rates again in the immediate
future. Though WS doesn't care if, say, 20 million people become
unemployed (as long as they're not brokers or other members of the club), I
don't think their speculations revolve around the U-rate as much as
expected changes in interest rates, profitability, etc. For such powerful
people, they are remarkably superficial. Maybe Alan G. sees the need for a
reserve army of the unemployed to preserve profitability and/or prevent
inflation, but I doubt that the WS people have anything close to this
understanding.
Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
