-Caveat Lector-
Begin forwarded message:
From: [EMAIL PROTECTED]
Date: June 3, 2007 12:45:06 AM PDT
To: [EMAIL PROTECTED]
Cc: [EMAIL PROTECTED], [EMAIL PROTECTED], [EMAIL PROTECTED]
Subject: If The US Economy Were A Horse, We'd Have Shot It By Now
"Employment of those without a high school education increased
nearly 2 percent from 2001 to 2007, accounting for 42.9 percent of
all job holders. Employment of [high school graduates, the college
educated, and those with vocational training] decreased 2% during
the same period."
"The average monthly employment growth in 2006 was 188,500, down
from 211,800 in 2005. Yet in 2007, the economy has so far added
only 132,800 jobs on average each month — a drop of 34.2 percent
compared to 3 years ago. The economy would have to create on
average twice as many new jobs every month all year long just to
catch up with last year’s monthly employment data."
"Health care workers, security guards, clerical staff, and food
servers accounted for HALF of all job gains reported in May 2007.
Job losses continued in construction work and factory labor."
Economic growth slows to a near halt
By JEANNINE AVERSA AP Economics Writer
San Jose Mercury News, 05/31/2007
http://www.mercurynews.com/business/ci_6027935
WASHINGTON- Economic growth skidded to a near halt in the first
quarter, with the worst showing in more than four years, raising
concerns about how long the country's sluggish spell will last.
The Commerce Department reported Thursday that gross domestic
product increased by just a 0.6 percent pace in the January-through-
March period, much weaker than estimated a month ago. Government
statisticians slashed by more than half their first estimate of a
1.3 percent growth rate for the quarter.
The main forces behind the downgrade: the bloated trade deficit and
businesses cutting supplies of the goods they hold in inventories.
"The economy didn't slip under the waves <i.e., drown or sink> in
the first quarter, but we got close," said Joel Naroff, president
of Naroff Economic Advisors.
What largely prevented the economy from going under: consumers, who
showed an even bigger appetite to spend.
For nearly a year, the economy has been enduring a stretch of
subpar economic growth due mostly to a housing slump. That in turn
has made some businesses act more cautiously in their spending and
investing.
The economy's 0.6 percent growth rate in the opening quarter of
this year marked a big loss of momentum from the 2.5 percent pace
logged in the final quarter of last year.
Federal Reserve Chairman Ben Bernanke says he doesn't believe the
economy will slide into recession this year, nor do Bush
administration officials and many economists. But ex-Fed chief
Alan Greenspan has put the odds at one in three.
In fact, many economists believe the first quarter will probably
turn out to be the weakest point for the economy this year.
"I think the worst is behind us," said Richard Yamarone, economist
at Argus Research. "While we did have a miserable quarter in the
first three months of the year, it doesn't look like it will be
repeated any time soon."
The National Association for Business Economics predicts the
economy will expand at a 2.3 percent pace from April through June.
If that happens, the economy would have staged a rebound but would
still be growing at a pace below its average, which is around 3 to
3.25 percent, analysts said. Yamarone, however, thinks the economy
is poised for a bigger bounceback in growth.
On Wall Street, stocks finished nearly flat after the weak GDP
reading muted investors' enthusiasm over a new spate of
acquisitions. The Dow Jones industrials, which had set a new
closing high on Wednesday, lost 5.44 points to close at 13,627.64.
GDP measures the value of all goods and services produced in the
United States. It is considered the best measure of the country's
economic fitness.
The first-quarter's performance was the weakest since the final
quarter of 2002, when the economy was recovering from a recession
and GDP eked out a 0.2 percent growth rate.
In the first quarter, there was a larger trade deficit than first
thought. That ended up shaving a full percentage point from the
GDP. Businesses cut back on inventory investment as they tried to
make sure unsold stocks of goods didn't get out of whack with
customer demand. That lopped off nearly a percentage point to first-
quarter GDP.
Economists, however, were hopeful those negative forces would be
reversed, helping the economy gain speed in the current quarter.
But there are still wild cards, including how consumers will behave
given rising gasoline prices as well as the condition of the
housing sector.
The sour housing market continued to weigh on overall economic
activity.
Investment in home building was cut by 15.4 percent, on an
annualized basis, in the first quarter. However, that wasn't as
deep a cut as the 17 percent annualized drop initially estimated.
And, it wasn't as severe as the 19.8 percent annualized drop seen
in the final quarter of last year.
Consumers, whose spending is indispensable to the economy, boosted
purchases by a 4.4 percent growth rate in the first quarter, the
most in a year.
Some economists wonder how much interest consumers will have in
continued brisk spending, however, given high gasoline prices that
have topped $3 a gallon in many markets. More money spent filling
up the gas tank leaves less to spend on other things.
One of the reasons consumers have stayed so resilient even as the
housing market has been stuck in a rut is because the job market
has been good.
Fewer people signed up for unemployment benefits last week, the
Labor Department reported. New filings dropped by 4,000 to 310,000.
That suggests the employment climate** is weathering well the
economy's sluggish spell.
Another report, meanwhile, showed construction spending edged up
0.1 percent in April, down from a 0.6 percent gain in the previous
month.
Spending by private builders on nonresidential projects and
spending by the government on big projects each climbed to all time
highs in April but that strength was tempered by continued weakness
in residential construction.
Taken together, the latest batch of reports suggest: "The economy
doesn't seem to be at serious risk of a recession," said Lynn
Reaser, chief economist at Bank of America's Investment Strategies
Group.
-------------------
http://www.newsobserver.com/business/story/587481.html
**WHAT WORRIES THE FEDERAL RESERVE -- "GREATEST THREAT" TO ECONOMY
IS JOB GROWTH, INCREASE IN WORKERS' WAGES
... Fed Chairman Ben Bernanke and his colleagues see higher
inflation as a greater danger than slower economic growth.
Fed economists, the minutes show, expect the U.S. economy to return
close to its growth potential by late this year. Since labor
markets are already tight, that could pressure companies to raise
wages -- a key component of inflation. When companies raise wages,
they also must raise the prices of their products or services, and
that has a cascading [inflationary] effect across the U.S. economy.
"All told, for most participants, the apparent tightness of the
labor market remained a significant source of risk for inflation,"
the Fed minutes said, pointing to a preference to hold the line and
being prepared to increase rates if inflation doesn't subside.
------------------
Mixed Employment Bag
for New College Graduates
By Christian E. Weller
June 1, 2007
http://www.americanprogress.org/issues/2007/06/weller_mixed_bag.html
Every month, the Bureau of Labor Statistics releases its new
estimates for employment growth and unemployment over the preceding
month. And every month, economists and analysts try to tell a story
based on the monthly snapshot. But the storyline during 2007 has so
far been murky to say the least, and May’s estimates are no exception.
May numbers show a job gain of 157,000. This is almost twice as
many jobs as the economy created in April of this year, which
reinforces the volatile nature of job creation in 2007. Over the
past five months, job growth has fluctuated between 80,000 and
175,000 with no clear direction one way or the other.
These fluctuations force us to step back and look at employment
data from a longer-term perspective. Two factors emerge when older
data is considered in relation to 2007 employment growth. First,
job gains for this business cycle, which started in March 2001, are
remarkably weak. The annualized average monthly job growth rate is
0.6 percent <not even 1%> for the past 6 years — less than 33% of
the average in prior business cycles. Only 10 months out of 74
during this business cycle —less than one-seventh— had job growth
that was above the average job growth rate of the preceding
business cycle. The most recent such month was March 2006.
Other figures confirm this slow employment growth. The share of the
population that is employed has stayed below the 64.3 percent
employment level that it reached in March 2001, at the end of the
last business cycle. In May 2007, the employed share of the
population was 63.0 percent; had the share of the population
remained the same as in March 2001, an additional 2.8 million
people would have been employed.
The important point about this slow growth is that not all groups
are equally affected. Since May is the month when new college
graduates begin to enter the labor force, it makes sense to
consider the employed share of the population by educational
levels. The employment outlook has improved since March 2001 for
people without a high school degree, but it has worsened for
everybody else.
The employed share of the population without a high school degree
increased by 1.8 percentage points from 41.1 percent in March 2001
to 42.9 percent in May 2007 . The gains were especially strong for
men without a high school degree (see Figure 1). For [the better
educated], the employed share decreased from March 2001 to May 2007.
College graduates saw their employed share drop by 1.4 percentage
points from 77.8 percent in March 2001 to 76.4 percent in May 2007.
As new college graduates are entering the labor force, the economy
is still not providing the same level of opportunity for them that
it did more than six years ago.
The second conclusion is that employment growth has slowed since
2006. The economy added on average about 200,000 jobs each month in
the first five months of 2004, 2005, and 2006. Yet in 2007, the
economy has so far added only 132,800 on average each month — a
drop of 34.2 percent compared to the same period during the
previous three years.
The average monthly employment growth in 2006 was 188,500, down
from a monthly average of 211,800 in 2005. But this is still
substantially higher than the average for 2007 so far. Put
differently, the economy would have to create on average 228,500
new jobs each month for the rest of the year just to pull even with
last year’s monthly employment data. This means that job growth
would have to increase by 72.1 percent in the remaining seven
months compared to the first five months. Since economic growth has
slowed in the wake of a crumbling housing boom and higher gasoline
prices, it seems unlikely that the economy will have sufficient
momentum to generate this kind of job growth acceleration.
The weaknesses in job creation are concentrated in a number of
industries. The construction sector, which was a crucial driver for
stronger job creation, added no new jobs in May 2007. This
reinforces the notion that the housing boom has come to a clear end.
The fear is that the end of the housing boom will spill over into
the economy at large, particularly by dampening consumption.
Today’s employment figures reinforce this notion because retail
employment has declined for the second month in a row with 4,900
jobs lost.
The Bureau of Economic Analysis also reported today that personal
disposable income declined in inflation-adjusted terms by 0.4
percent in April of 2007. At the same time, real consumption
increased by 0.2 percent. Still, inflation-adjusted consumption
growth has slowed on a year-over-year basis for the past six months
and in April saw its lowest 12-month gain since July of last year.
As consumption loses momentum, retail employment [the largest
sector accounting for jobs] may weaken further.
Instead of relying on consumers to drive economic growth, the hope
is that export growth and ultimately investment growth will take
its place. If that were to be the case, we should see stronger
manufacturing employment and more commercial construction
employment. So far, manufacturing employment continues it downward
slide. Manufacturing lost another 19,000 jobs in May 2007, making
it the 11th month in a row of job losses in this sector. And
commercial construction declined by 1,600 jobs in May, making this
the third month this year with employment losses in this sector.
These losses in crucial sectors are obviously offset by gains in
what seem to be perennial job gainers. Health care added another
35,800 new jobs and restaurant employment grew by 34,500 jobs in
May 2007. [Low-paid nursing assistants, security guards, and food
servers accounted for HALF of all job gains reported in May 2007.]
Besides these two sectors, which have grown for quite some time,
professional services, such as accounting and architecture, grew by
only 27,000; education added 18,000 new jobs; and the government
expanded by 22,000 jobs in May.
The labor market remains a mixed bag with an uncertain future for
the time being. Given the large challenges that the economy is
currently facing due to the end of the housing boom and higher
gasoline prices, stronger and broader employment gains in crucial
sectors are necessary to create increasing job opportunities,
especially for college graduates who are beginning their search for
their first job in earnest.
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