RE: [Futurework] It's the economy, stupid!

[Karen Watters Cole]

Thanks for posting this Ed.  Interesting how I can read the same data in the media here, but framing it as Little did in his opening paragraph certainly puts another perspective on it.  How would an everyday person remember that?     As you may have noticed, the POTUS made reference to the ‘huge’ loss, the “enormous cost” of what happened 9/11 several times Thursday night, finally mentioning the airline industry specifically.  Rove doesn’t want us to remember this week’s numbers, or last month’s numbers, just those after madmen attacked us.   Distraction is the name of the game.  The Thursday pm speech in prime time successfully knocked Blix off the front pages Friday morning.  Maybe there will be another surprise press conference the night before Greenspan announces the next Fed move so that the morning headlines are all about Bush, not the Fed and more bad news.  It is worth it in the image game to circulate speculative rumors and then have to work to deny them, about arresting sons of bin Laden just to get the headlines off the bad news at home.   Karen Is there a rabbit in the hat?  If so, is it real? Ed Weick Jobs flee U.S. in wake of war fears, bad weather Bruce Little, Globe and Mail, March 8, 2003 In a crushing combination, weather and war jitters teamed up to eliminate more U.S. jobs in February than were lost after the September, 2001, terrorist attacks, kindling fresh speculation that the U.S. Federal Reserve Board will cut interest rates again soon. Employers slashed 308,000 jobs from their payrolls in February -- the biggest decline in 15 months -- and nudged the unemployment rate up to 5.8 per cent from 5.7 per cent in January. In a pattern that became familiar during 2002, but flipped briefly in January, the dreadful showing in the United States found its mirror image in Canada. When Mr. Bush took office in 2001, the budget office predicted cumulative 10-year surpluses of up to $5.6-trillion, but most of those disappeared in tax cuts and higher spending. Yesterday's twin reports were not happy news for a President who will face his campaign for re-election next year. In recent polls, U.S. voters, traditionally more influenced by the economy than foreign policy, have signalled their disquiet about Mr. Bush's performance. The President's father, George H. W. Bush, hugely popular after the first Persian Gulf war, lost the 1992 election to Bill Clinton because of slow economic recovery from a recession. That was when Clinton strategist James Carville famously coined the phrase: "It's the economy, stupid." The latest plunge in U.S. employment -- which can only raise fears of even bigger deficits -- stunned analysts who were expecting a small increase in the number of jobs. Harsh weather and the call-up of armed-forces reservists contributed to the slide, but the looming war in Iraq -- now regarded as a sure thing after Mr. Bush's news conference on Thursday night -- appears to have played a role, too. "Like deer caught in the headlights, American businesses continue to postpone hiring decisions until the uncertainty surrounding the Iraq issue is resolved," Bank of Montreal economist Sal Guatieri said. Economist Avery Shenfeld of CIBC World Markets Inc. said special factors cannot hide the "fragility of the past year's expansion." "Sure, the weather was bad, but the worst storm actually hit after the survey week for these data. Sure, war fears have kept hiring in check, but some of the losses -- such as those in manufacturing -- are merely an extension of a trend dating back several months." Reservists had some impact, he added. But "the rest of the blame lies on a recovery that has failed to gather sufficient momentum, and a global economy that has kept pricing power in check, leaving businesses trying to restore profits on the back of cutbacks in hiring and spending." The job report focused new attention on the Fed, which will meet in 10 days to decide whether to keep its target federal funds rate at 1.25 per cent -- a four-decade low -- or reduce it further. For the time being, financial market trading indicates that investors think there is only a 50-per-cent chance that the Fed will move on March 18, economist St�fane Marion of National Bank Financial Inc. said. But the chance of a rate cut at its May 6 meeting vaulted to 80 per cent from 50 per cent after yesterday's job report, he added. Economist Pierre Ellis of Decision Economics Inc. in New York called the payrolls figure "catastrophically weak." "Barring some fluke element to it, which does not seem apparent, the Fed is going to have to think very seriously about cutting interest rates," Mr. Ellis said. "This kind of job loss translates into potential serious damage to consumer spending. A decline in consumer spending would put the economy into double-dip recession very quickly." Although there have been a few positive signs recently that the U.S. economy is getting through its slowdown without too much damage, some high-profile data released recently have been dreadful. The Institute for Supply Management's monthly readings indicate that business activity slowed in January and February, especially in U.S. factories where a revival that was budding in late 2002 appeared to be slipping away. Consumer confidence plunged in February for a third consecutive month as war fears, weak job growth and rising fuel prices sapped the optimism of Americans. Those declines and "the general background of rising uncertainty" suggest that the Fed will cut its key rate by 0.25 percentage points to 1 per cent on March 18, economist Paul Ashworth of London-based Capital Economics Ltd. said yesterday. "We continue to believe that interest rates will end the year at no higher than 0.5 per cent." Royal Bank of Canada joined those expecting the Fed to cut at its next meeting. Bank economist Allan Seychuk said that little in yesterday's data suggests consumers can keep spending, especially because demand for autos and housing is almost exhausted after months of surprising strength.