BUREAU OF LABOR STATISTICS, DAILY REPORT, MONDAY, APRIL 29, 2002: Relocation among job seekers has fallen to its lowest level in 16 years, according to outplacement firm Challenger, Gray & Christmas. Only 14 percent of new hires relocated in the first quarter, according to Challenger's quarterly survey of 3,000 discharged managers and executives. Over the previous 5 years, the average relocation rate was 22 percent. The firm cites two main reasons for the decline: (1). Recession -- A poor economy forced many companies to cut costs associated with recruiting and relocation. (2). Lingering effects of September 11 - Americans are less willing to move away from their social safety net since the terrorist attacks. "With an average of 171,000 job cuts announced in each of the last 6 months, even recent job winners are not feeling very secure," says Challenger (http://www.csmonitor.com/2002/0429/p16s02-wmgn.html).
Information technology professionals, who were wooed with exorbitant salaries and lucrative perks in the late 1990s, are facing a reality check this year, as their total compensation declines for the first time since 1997. "Every quarter, fewer and fewer companies are reporting that they are having difficulty filling their technical and professional jobs," says Kathryn Kobe, an economic consultant at Joel Popkin & Associates in Washington who tracks wage indicators. "The economy has slowed down enough that there is not as much demand." A new survey of 10,109 information technology professionals by Information Week magazine supports those claims. The trade publication will report today that median compensation for technology managers dropped 8 percent to $89,000 this year, from $97,000 in 2001. Meanwhile, median compensation for information technology staffers dropped 11 percent to $63,000, down from $71,000 last year. The declines are the first since the publication began tracking salaries and compensation 5 years ago. Bill Coleman, senior vice president of compensation at Salary.com in Wellesley Mass, said many companies are avoiding the generous salaries and perks that were used to attract employees a few years ago. Employers have more than enough talented professionals to choose from these days. Morris Green, chairman of Hayward Simone Associates, a staffing and technology management services firm on Wall Street, says "Salaries are down anywhere from 25 to 30 percent." "The hardest hit job functions were application development and networking," says Rusty Weston, author of the Information Week study. "Specialists in the areas of security, groupware, and wireless appear most likely to remain employed" (Boston Globe). Massive inventory rebuilding and modest consumer spending propelled the U.S. gross domestic product to a 5.8 percent annual rate of growth, after adjustment for inflation, in the first quarter, according to the Bureau of Economic Analysis. It was the strongest quarter for the U.S. economy since an 8.3 percent rise in the fourth quarter of 1999. The dramatic improvement sets the stage for what forecasters expect will remain a solid recovery through the year. "the inflation measures in the GDP report were more subdued than we expected," says Richard Berner, Chief U.S. economist at Morgan Stanley in New York. Modest inflation rates will help boost consumer spending and help businesses control costs in the months ahead, he says. "Later in the year we expect inflation to accelerate, as growth picks up." The March employment report from the Bureau of Labor Statistics showed that job growth resumed last month, although nonfarm payrolls increased by only 58,000. Many economists expect payroll expansion to pick up in the second half of the year, with monthly additions of at least 100,000. BLS is scheduled to release April employment and unemployment figures on May 3 (Daily Labor Report, page D-1). The United States economy is showing signs of life. So why is the stock market still acting the part of the deadbeat? Investors shrugged off the otherwise good news, indicating their concerns about the report's hints of consumer skittishness and their continuing unease over corporate profits and investigations into Wall Street practices. However, the economic growth in the first quarter was more than had been expected, and well above the 1.7 percent rate of the fourth quarter of 2001 (The New York Times, April 27, page A1). The economy grew this winter at its fastest pace in more than 2 years, delivering a clear sign that the recession has ended and that a new expansion has started briskly. But analysts said that growth was unlikely to continue at the 5.8 percent pace of the first 3 months of the year, pointing to signs that the economy has already weakened slightly in April. The Federal Government gave the economy a big push by increasing military spending at the fastest rate since the Vietnam War. Few economists doubt that the recent downturn deserves to be called a recession, largely because the country lost 1.4 million jobs over the last year as industrial production plunged. Even though consumers continue to increase their spending, they are still flocking to low-priced goods, making it difficult for many companies to raise prices and profits (David Leonhardt, The New York Times, April 27, page B1). The economy roared out of recession in the first quarter, but signs of fragility still linger. The vitality of the recovery depends on a rebound in business spending on equipment, software, and buildings, and that fell at a 5.7 percent rate in the first quarter. Businesses are also keeping a tight rein on hiring. Unemployment insurance rolls remain high. Help-wanted advertising fell in March (The Wall Street Journal, page A1). The Wall Street Journal's feature "Tracking the Economy" (page A8) predicts that nonfarm payrolls for April, to be released by the Bureau of Labor Statistics Friday, will show an increase of 55,000, according to the consensus forecast, a bit less than the 58,000 actually recorded in the previous month. The unemployment rate for April, also to be released by BLS Friday, will move slightly up, to 5.8 percent, compared to the actual March figure of 5.7 percent. U.S. businesses added workers and manufacturing expanded in April after the economy grew in the first quarter at the strongest pace in more than 2 years, report this week are likely to show. About 60,000 jobs were added this month, after an increase of 58,000 in March, according to a survey of economists by Bloomberg News. The Labor Department's report on Friday may show April's rise in payrolls to be the biggest since February 2001, a month before the economy slipped into recession. Manufacturing grew for a third straight month, the Institute for Supply Management is expected to report on Wednesday. Production is picking up to meet demand at a time when businesses have reduced inventories by record accounts. Statistics on Tuesday from the New York-based Conference Board are likely to reinforce expectations that consumer won't increase their spending in coming months (Bloomberg News, Los Angeles Times). The economy has hit a patch of pessimism, writes Robert L. Barley in the feature "Thinking Things Over" in The Wall Street Journal (page A19). The recession-dating committee at the National Bureau of Economic Research put the start of recession at March 2001, the peak in employment. Industrial production peaked in June 2000, and continued down until its first upturn in February 2002. While we haven't experienced "the usual sustained drop in real GDP," the committee says, "we believe that there has unquestionably been a recession, even though it was not quite severe enough fully to offset the powerful special force of productivity growth...." We are experiencing a historic surge in economic productivity, says Bartley. Economists, led by Dale W. Jorgenson at Harvard, have attributed much of this to the impact of information technology and the rapid decline in the price of IT equipment. The surge in productivity even in recession means that the "new economy" remains with us, that the fruits of technology investment have not been fully harvested. Consumers increased their spending in March by 0.4 percent. Incomes rose by the same amount. The solid gains -- on target with many analysts' expectations -- show that consumers, the lifeblood of the economy, were in a position to spend and they did, bolstering the economic recovery. Consumers, whose spending accounts for two-thirds of all economic activity in the United States, bought throughout the slump, preventing the economy from sinking deeper into recession last year. But higher energy prices and rising unemployment -- which jumped 5.7 percent in March -- probably made people more cautious in their spending. Spending on durables -- such as cars and appliances -- rose 0.5 percent in March, down from a 1.4 percent gain. For nondurable goods, such as food and clothing, spending edged up 0.2 percent, compared with a 0.4 percent increase the month before. Spending on services rose 0.5 percent, slightly less than the 0.6 percent increase in February (Jeannine Aversa, Associated Press, http://www.nandotimes.com/business/story/384373p-3064135c.html; Reuters, http://www.bayarea.com/mld/bayarea/business/3160704.htm).
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