It's the economy, stupid

[Roguish Lawyer]

http://www.latimes.com/business/la-060404economy_lat,1,2062676.story?coll=la-home-headlines

U.S. Economy Adds 248,000 Jobs in May

By Warren Vieth, Times Staff Writer

WASHINGTON — U.S. employers added 248,000 jobs in May and previous months' gains were revised upward today, extending a hiring streak that could provide President Bush with a net increase in payroll employment by election day.

Last month's increase was higher than many economists had expected. It followed revised gains of 353,000 in March and 346,000 in April, the Labor Department reported today. The unemployment rate remained unchanged at 5.6%.

"This is confirmation that a solid economic recovery is here to stay," said Sung Won Sohn, chief economist at Wells Fargo Bank in Minneapolis. "If the economy continues to hum, we should be able to get 250,000 jobs a month. Hopefully, President Bush will see a breakeven point before the election."

After bottoming out in August, payroll employment has posted nine consecutive monthly gains, restoring 1.4 million of the 2.6 million jobs lost during the first 31 months of Bush's presidency.

If hiring continues at its recent pace, it could erase the remaining deficit by November, denying Democrats the opportunity to portray Bush as the first president since Herbert Hoover to finish his term with fewer jobs than when he began.

Yet even if that occurs, the pace of job creation may not be sufficient to bring about a big reduction in the unemployment rate, economists said, leaving voters with a muddled picture of the nation's economic performance.

Bush administration officials celebrated the job numbers, and said the president's tax cuts were contributing to the hiring surge.

"What a difference a year makes," said Commerce Secretary Don Evans. "A wake-up call has been sent that the United States economy is back."

Administration critics insisted that the hiring spree did not get Bush off the hook.

"Any step forward in the job market is good news for workers, but America is still in the worst job recovery since the Great Depression," said Allison Dobson, a spokeswoman for Democratic challenger John F. Kerry. She noted that Bush still has a 1.9 million private-sector job deficit if government employment is excluded from the calculation.

America Coming Together, a pro-Democrat group, said Bush would need to create 1.6 million jobs a month for the rest of his term to match the record of his predecessor, Bill Clinton, or more than 500,000 a month to catch up with Bush's father.

May's job gains were broad-based, according to the monthly survey of employers.

The nation's hard-hit manufacturers added 32,000 jobs, the fourth consecutive increase following a 42-month losing streak. Payroll employment increased by 37,000 in construction, 18,800 in retail, 64,000 in professional and business services, 44,000 in education and health, and 40,000 in leisure and hospitality.

The only major category to post a decline was government, which trimmed 27,000 positions, a one-month reversal that economists said was unlikely to be repeated. Within the services sector, telecommunications employment was down 5,400, suggesting that the high-tech bust has not yet run its course.

Average hourly earnings in the private sector increased 5 cents in May to $15.64.

A total of 138.8 million Americans had jobs in May, and 8.2 million were unemployed, a separate survey of households showed. About 28.9 million working-age Americans have dropped out of the labor force.

Some discouraged workers were expected to begin seeking jobs again as the recovery picked up speed. Their return to the labor force may prevent the unemployment rate from falling much even if employers keep hiring, analysts said.

For five months in a row, the unemployment rate has remained stuck in a range of 5.6% to 5.7%, down from last year's post-recession peak of 6.3%, but considerably higher than the 3.9% rate recorded just before Bush took office.

The May unemployment rate was for 5% for whites, 7% for Latinos, 9.9% for African Americans and 17.2% for teenagers, the Labor Department said.

[Roguish Lawyer]

Originally posted by Roguish Lawyer on March 4, 2004
There is lots of time before the election, but I think Bush is a virtual shoo-in. I say this principally because the economy is coming back very rapidly. This may not be so apparent to the general public yet, but the capital markets are humming and that foreshadows lots of new jobs and happy voters.

Ha! :D

[The Reaper]

You forgot to add, despite the media.

And it isn't a shoo-in yet.

TR

[Roguish Lawyer]

Originally posted by The Reaper
You forgot to add, despite the media.

And it isn't a shoo-in yet.

TR

True. It takes a little while for prosperity to sink in, but I am pretty confident. The current negativity is a short-term thing. Witness the dramatic swing in the numbers when Saddam was captured, for example.

[The Reaper]

Originally posted by Roguish Lawyer
True. It takes a little while for prosperity to sink in, but I am pretty confident. The current negativity is a short-term thing. Witness the dramatic swing in the numbers when Saddam was captured, for example.

All the success in the world means nothing if you can't get your word out.

Even the record amounts the Bush campaign has raised, pales in comparison to the free press provided to the Kerry and more importantly, the anti-Bush effort on the major media outlets every day.

Report the negatives, ignore the positives, when in doubt, spin it as bad news for the administration.

TR

[Roguish Lawyer]

Originally posted by The Reaper
All the success in the world means nothing if you can't get your word out.

Even the record amounts the Bush campaign has raised, pales in comparison to the free press provided to the Kerry and more importantly, the anti-Bush effort on the major media outlets every day.

Report the negatives, ignore the positives, when in doubt, spin it as bad news for the administration.

TR

Well, he won last time. So did his father, and so did Ronald Reagan. The media didn't like them either.

Believe me, that fundraising advantage is going to be very important.

[The Reaper]

Originally posted by Roguish Lawyer
Well, he won last time. So did his father, and so did Ronald Reagan. The media didn't like them either.

Believe me, that fundraising advantage is going to be very important.

I am sorry, G.H.W. Bush WON the last time he ran?

I seem to recall a Dem residing at 1600 Pennsylvania Ave. for eight years or so.

TR

[Roguish Lawyer]

Originally posted by The Reaper
I am sorry, G.H.W. Bush WON the last time he ran?

I seem to recall a Dem residing at 1600 Pennsylvania Ave. for eight years or so.

TR

He won when the economy was good and lost when it was bad. Tends to work that way.

You know I hate the media. My point was only that they don't rule the world.

[The Reaper]

Originally posted by Roguish Lawyer
He won when the economy was good and lost when it was bad. Tends to work that way.

You know I hate the media. My point was only that they don't rule the world.

1. That was not what you said, Sir.

2. Don't deny that, but it takes a LOT to overcome their natural advantage. I hope that he has whatever is required.

TR

[Airbornelawyer]

Moving the goalposts:

From his perch on the New York Times editorial page, Bush-hating liberal Princeton economist Paul Krugman on Oct. 31, 2003 pooh-poohed the 2nd quarter 2003 economic growth numbers. He did raise the valid point that brief spurts aren't the same as sustained recovery. He stated that, among other things, sustained high employment growth would be necessary. The benchmark? "And unless we start to see serious job growth — by which I mean increases in payroll employment of more than 200,000 a month — consumer spending will eventually slide, and bring growth down with it."

On April 9, 2004, he finally got around to addressing the report of 308,000 jobs created in March, calling the growth "nothing special." So in October 2003, serious job growth was 200,000 new jobs, while by April 2004, 300,000 new jobs was nothing special. Sustained growth of 300,000 per month apparently is the new baseline (for comparison, during the Clinton Administration's 96 months, there were 26 with greater than 300,000 job growth).

Of course, now the 308,000 has been revised upward to 353,000. Maybe 350,000 will be the new baseline, and Bush will get credit for only one good month.

Assuming the 248,000 doesn't get revised upward (not a bet I'd take, given earlier revisions), that's almost a million new jobs in three months. Several months back, Bush was pilloried in the media for predicting 2.6 million new jobs in 2004, the high end of Labor Department economic forecasts. 2.6 million might end up being low. We are already at 1,189,000 - if job growth slips back to that measly 200,000 per month, we hit 2.6 million this year.

Regarding revisions upward this year:

Jan. 04 - initial: 112,000 revised: 159,000 (+47,000)
Feb. 04 - initial: 21,000 revised: 83,000 (+62,000)
Mar. 04 - initial: 308,000 revised: 353,000 (+45,000)
Apr. 04 - initial: 288,000 revised: 346,000 (+58,000)
May 04 - initial: 248,000 revised: ?

[DoctorDoom]

x

[Roguish Lawyer]

http://apnews.myway.com/article/20040630/D83HGP780.html

Fed Boosts Interest Rate a Quarter Point

Jun 30, 2:55 PM (ET)

By JEANNINE AVERSA

WASHINGTON (AP) - The Federal Reserve boosted a key short-term interest rate by a one-quarter percentage point Wednesday, its first rate increase in four years, in an attempt to keep the economy and inflation on an even keel.

Fed Chairman Alan Greenspan and his Federal Open Market Committee colleagues - the group that sets interest rate policy in the United States - increased the federal funds rate to 1.25 percent. The funds rate, the Fed's primary tool for influencing economic activity, had been at 1 percent, a 46-year low, for a year.

As a result of the Fed's unanimous decision to push up the funds rate, commercial banks' were expected to increase by a corresponding amount their prime lending rate for many short-term consumer and business loans. The prime rate, which has been at 4 percent, the lowest level in more than four decades for a year, is expected to rise to 4.25 percent.

The economy has been a hot topic in the presidential campaign with President Bush insisting things are rebounding and Sen. John Kerry talking about a squeeze on the middle class. Analysts said voters will likely see little impact on the economy between now and November from the Fed's action.

On Wall Street, the Dow Jones industrials gained around 8 points after the Fed's announcement.

Fed policy-makers, wrapping up a two-day meeting Wednesday, also held to the view that they could gradually raise rates to head off inflation. The Fed said it believes any rate increases can be "at a pace that is likely to be measured."

Economists said hints at further, modest one-quarter point rate increases in the future, including one at the next meeting on Aug. 10.

The Fed made clear, however, if will take more aggressive action if needed. This restated a position that Greenspan had articulated earlier.

"The committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability," the Fed policy-makers said.

Their latest assessment of the state of the economy was upbeat. The Fed said the economy is expanding at a solid pace and that labor markets are improving. On the inflation front, the Fed said that "although incoming inflation data are somewhat elevated, a portion of the increase in recent months appears to have been due to transitory factors."

Lynn Reaser, chief economist at Banc of America Capital Management, said: "We are now at a very important turning point for monetary policy. The Fed is now acting to ensure that the economy can continue to expand at a good pace but that success in restraining inflation can be retained."

Hours before the Fed's announcement, White House, spokesman Scott McClellan said: "It's not unexpected that as the economy continues growing stronger that interest rates may rise some. That's not something at this point that is a concern."

A one-quarter point increase would not deter the economic recovery, but it will put the Fed on a course of higher borrowing costs, geared in part to head off inflation, economists said.

For the first five months of this year, consumer prices rose at an annual rate of 5.1 percent, exceeding the 1.9 percent increase for all of last year. Excluding volatile energy and foods costs, "core" prices increased at a rate of 2.9 percent, compared with a 1.1 percent advance registered for 2003.

Although the current rate of inflation is still low by historical standards, businesses are finding it easier to raise prices now than during the economic slump.

Some economists predict the funds rate could rise to 2 percent by the end of this year, which would mean the prime rate would move up by a corresponding amount to 5 percent.

The economy, which was knocked down by the 2001 recession and jolted by the Sept. 11, terror attacks and corporate accounting scandals, finally staged a material rebound in the second half of last year.

The economy grew at a decent 3.9 percent annual rate in the first quarter of this year. But projections for the current quarter are wide-ranging, from a 2.5 percent rate to just over a 4.5 percent pace. Economist say estimates would be stronger if not for the expectations that higher energy costs will probably dampen consumer spending, a key force in the economy.

Companies, meanwhile, have stepped up hiring in the last several months, signaling a long-awaited turnaround in the labor market. The economy added 248,000 jobs in May, compared with a loss of 28,000 for the same month last year.

The Labor Department will release the employment figures for June on Friday.

[Roguish Lawyer]

http://www.reuters.com/printerFriendlyPopup.jhtml?type=bondsNews&storyID=5555716

More U.S. jobs seen in June, buoying Bush
Wed Jun 30, 2004 12:38 PM ET

By Andrea Hopkins
WASHINGTON, June 30 (Reuters) - U.S. employment likely surged again in June, taking gains this year to some 1.4 million jobs and bolstering President George W. Bush's economic record ahead of the November election, analysts said onWednesday.

Economists believe 250,000 jobs were created this month, virtually matching May's jump of 248,000, though the unemployment rate probably will not budge from 5.6 percent because newly hopeful job-seekers are returning to the job market.

"I think the gains will be quite widespread again, and as we saw in April and May, we are likely to create slightly more higher-paying than lower-paying positions," said Lynn Reaser, chief economist at Banc of America Securities.

Even if the unemployment rate does not decline, analysts expect the Labor Department's closely watched payrolls report, due on Friday, to confirm broad strength in what months ago was still only a tepid economic recovery.

The creation of nearly a million jobs in the last three months ended years of worry about the slow recovery from the 2001 recession and cemented expectations the Federal Reserve will begin raising interest rates to head off inflation.

While 1.2 million jobs have been lost since Bush took office, that deficit could easily be erased if hiring continues at its recent pace, and talk of Bush being the president with the worst job record since Herbert Hoover has faded.

"The economy has turned very sharply in Bush's direction, so his biggest weakness is becoming a strength," said Cary Leahey, senior U.S. economist at Deutsche Bank Securities.

GOOD NEWS, BAD NEWS

The shift in political rhetoric from the "jobless recovery" lament of the Democrats to "nearly a million jobs in 100 days" of the Bush administration appears to have reached consumers, whose confidence levels hit the highest level in two years in June, according to a Conference Board report this week.

"They get the feeling that things have turned the corner and that's making them much more hopeful," said Joel Naroff, president and chief economist of Naroff Economic Advisors.

"They're beginning to focus more on the idea of fundamental economic and consumer confidence rather than the Iraq war that had been driving confidence previously," he added.

Friday's report is also expected to show a sixth straight monthly rise in hourly earnings, though the workweek will likely be unchanged at 33.8 hours, according to a Reuters survey of economists.

Longer hours and fatter paychecks are seen by experts as evidence the economy is on the threshold of even stronger job gains in the months ahead.

"The next step after increasing the length of the workweek, paying perhaps more overtime (or) hiring more temporary workers ... (is) hiring back some of the previously laid off workers or ramping up staffing in general," Reaser said.

But the improving job market and higher wages also herald a shift in the stance of the Federal Reserve, which is expected to raise official interest rates several times this year to prevent price increases from overheating the economy.

The market is betting the Fed will raise rates a quarter of a percentage point on Wednesday and by another 25 or 50 basis points in August -- a politically sensitive move because higher rates are unpopular with America's debt-ridden voters.

"(Another strong job report) will, at least in the eyes of the market, increase the pressure on the Fed that they need to do 50 in August and they're behind the curve," Leahey said.

"I just don't think the Fed is ready, in a political election year, to pick up the pace that rapidly, but it is possible," he said.