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Yesterday's jobs report was lame: a mere 51,000 new jobs created in the month.
Here's how Christopher Convey accurately played it in the Wall Street Journal:
Job creation sputtered in September, in a sign that the economy is cooling, but other data suggested that the labor market is still producing enough jobs to boost wages.The Labor Department Friday released the mixed data, which economists said made any interest-rate changes by the Federal Reserve unlikely before year's end. Speaking ahead of congressional elections next month, Bush administration officials said the figures pointed to a healthy economy.
Payrolls of nonfarm employers increased by 51,000 in September after a gain of 188,000 in August, according to the data. Last month's tepid pace of hiring -- the weakest since the aftermath of Hurricane Katrina last fall -- is fresh evidence that the economy is still slowing under the weight of higher interest rates and a weakening housing market.
And here's how Nell Henderson and Peter Baker inexplicably played it in the Washington Post:
U.S. Job Numbers Remain Strong Bush Promotes September Totals, But Markets FallBy Nell Henderson and Peter Baker
Washington Post Staff Writers
Saturday, October 7, 2006; Page A01Unemployment went down and paychecks went up last month, the government said yesterday, and it added that job growth for the year ending in March may have been far stronger than previously thought.
The announcements were greeted warmly by the White House -- and less so by the financial markets. Stock and bond prices fell amid fears the tight job market, by adding to inflation, will compel the Federal Reserve to hold interest rates steady or even raise them to slow economic growth. Many traders had convinced themselves that the Fed would cut rates early next year, but that looks increasingly unlikely. . .
The Labor Department's employment report -- and other figures released last week -- depict an economy that remained generally healthy in September outside of the slumping housing market. Workers found jobs and got paid more, while consumers hit the stores and auto showrooms to spend some of the extra cash gained from falling gasoline prices. . .
Demand for labor helped drive workers' average hourly wages, not including those of most managers, up to $16.84 last month. That's a 4 percent increase from September 2005, the fastest wage growth in more than five years.
So, lets see: wages have risen by 4.0 in the past 12 months, while inflation has risen by 3.8 percent in the past 12 months. And that means hourly wages are rising impressively? Sadly, that .2 percent growth in real wages may just be the best wage growth in the past five years. The economy created a mere 51,000 in jobs, the weakest total in a year and not enough to keep up with population growth, and yet the job numbers remain strong? Ok.
Posted by dan at 06:43 AM
My latest in Slate, on Wal-Mart's effort to encourage employees to vote.
Posted by dan at 05:13 PM
Jack Abramoff managed a neat trick: he ripped off gambling interests in the two sovereign nations that opposed the expansion of American sovereignty in the northeastern U.S. in the late 18th century: Native Americans and England. Stephanie Kirchgaessner reports in the Financial Times:
PartyGaming, SportingBet and other online gaming companies paid millions of dollars to Washington lobbyists linked to Jack Abramoff, the notorious super-lobbyist, to help them thwart US anti-gambling legislation.Mr Abramoff's highly-public fall from grace and conviction on criminal corruption charges earlier this year - and the downfall of many of his associates - opened the door for the passage last weekend of a law that heand the companies staunchly opposed.
The passage by Congress of the Unlawful Gambling Enforcement Act has drawn accusations of US protectionism and the suggestion that the law was driven through by conservative Republicans.
However, lobbying records analysed by the Financial Times show that the companies were closely connected to Mr Abramoff and his team - the same men whose political ties, for years, played a central part in helping insulate the gambling industry from laws and regulations.
The demise of Mr Abramoff and his colleagues substantially weakened the gambling companies' political hand in Washington, paving the way for the bill's passage.
SportingBet spent $2.2m (£1.17m) from 1998 to 2005 lobbying Washington lawmakers on issues involving online gaming, according to figures compiled by the Center for Public Integrity, which tracks lobbying, and other public filings.
Among other lobbyists, the company hired: Tony Rudy, a former aide to ex-congressman Tom DeLay and who has pleaded guilty to bribery charges in connection to the Abramoff scandal; and Neil Volz, a former congressional chief of staff who has also pleaded guilty to bribing his former boss, Congressman Bob Ney. SportingBet declined to comment.
Posted by dan at 05:05 PM
And Howard Fineman can't be far behind. Sheila McNulty reports in the Financial Times:
BP’s popularity among key decision-makers has fallen to all-time lows following problems at its Alaskan oilfield, according to documents sent to staff and obtained by the Financial Times.A Leadership Brief from BP chief executive Lord Browne, issued two weeks ago, included a survey by PSB Research, which noted that “BP’s unfavourable ratings are at an all-time high.’’
The briefing noted that reputation affects value and cited the fall in BP’s share price, which has dropped 10.6 per cent since mid-July to 575p.The research showed that the favourability ratings, which BP said were a “high level measure” of its reputation, were at 42 per cent with “DC Elites”, which it defined as elected officials and opinion formers.
Its rating with “Broad Elites”, or national opinion formers, was 39 per cent. It cited a margin of error on all numbers at plus or minus seven. Since July, BP said its favourability rating had fallen 14 points among DC Elites and 13 points among Broad Elites. In August, BP was forced to close half of Prudhoe Bay, the biggest US oilfield, after discovering “severe corrosion’’ in pipelines.
Posted by dan at 05:02 PM
The September sales figures are out:
Toyota's hybrid sales: 18,734
Honda's hybrid sales: 2,916
Ford's hybrid sales: N/A
GM's hybrid sales: 0
Posted by dan at 04:58 PM
The slow-motion fall in housing prices is slowly impacting all sorts of other markets. Jim Carlton reports in the Wall Street Journal:
Lumber prices have fallen to their lowest weekly level in nearly five years as the slowdown in the U.S. housing market dries up demand for building products.As of Friday, weekly composite prices per thousand board feet of framing lumber had fallen to $274 from $401 a year earlier, according to Random Lengths, an industry newsletter. On an average monthly basis, prices are at their lowest levels since mid-2003.
The 32% plunge is far steeper than industry executives predicted, resulting mostly from a sharper-than-expected falloff in housing activity. The Commerce Department reported last month that housing starts dropped 6% in August from a month earlier to a seasonally adjusted annual rate of 1.665 million units. That was the fifth decline in construction starts in the past six months and the slowest rate of starts since April 2003.
Posted by dan at 04:55 PM
It happened with the Woodward book, and now it's happened with Carly Fiorina's memoir: a media embargo imposed by the publisher is broken because a reporter went out and bought the book at the bookstore. Either publishers aren't in total control of their supply chains, or there's some savvy, deep game of p.r. going on. John Markoff reports in the New York Times:
The former Hewlett-Packard chief executive Carleton S. Fiorina, once the most prominent female executive in the United States, ordered the first of a series of leak investigations into contacts by board members with journalists in January 2005, she says in a long-anticipated memoir.Ms. Fiorina was hired as chief executive in 1999 and led the company through a merger battle that family members of the company’s founders and some directors bitterly resisted. She was fired in February 2005 when the resulting company failed to meet business goals.
Her book, “Tough Choices” (Portfolio Hardcover), which is embargoed for release on Tuesday and has been made available to reviewers only if they sign a nondisclosure agreement, was purchased at a bookstore yesterday by a reporter for The New York Times.
Posted by dan at 08:10 AM
My latest in Slate, on gas-price conspiracy theories.
Posted by dan at 08:08 AM
David Brooks today puzzles over why it is that Americans are so outraged over the predatory same-sex actions of Rep. Mark Foley and yet seem to be less than outraged over the predatory same-sex actions of a female adult in an Eve Ensler play. Um, could it be that one is fact and the other is fiction? In his next column, Brooks will wonder over the strange dichotomy that Americans rush to indict and condemn individuals who engage in organized conspiracies to gun down innocent people on the streets of big cities and yet sit rapt through The Godfather.
Posted by dan at 08:02 AM
Rising home prices + stagnant wages = :(
So shows a good article by Janny Scott and Randal Archibold in today's New York Times:
The burden of housing costs in nearly every part of the country grew sharply from 2000 to 2005, according to new Census Bureau data being made public today. The numbers vividly illustrate the impact, often distributed unevenly, of the crushing combination of escalating real estate prices and largely stagnant incomes.While many of the highest home values were on the coasts, in places like Southern California and Manhattan, many of the biggest jumps in the percentage of people paying a burdensome amount of their income for housing occurred in the Midwest and in suburbs nationwide, making it clear that the housing squeeze has reached deep into the middle class.
In New York City, more than half of all renters now spend at least 30 percent of their gross income on housing, a percentage figure commonly seen as a limit of affordability. In Staten Island, the percentage paying at least 30 percent of income rose to nearly 60 percent, up from 40.
Among suburban homeowners, there were big increases in the percentage of people with mortgages spending at least 30 percent in places like Loudon County, Va.; Morgan County, Ind.; Nassau County, on Long Island; and Bastrop County, Tex.
“Housing prices have gone up much more than incomes have,” said Christopher Jones, vice president for research at the Regional Plan Association in New York City. “Clearly, you can’t sustain that sort of imbalance over the long run. There’s only so long that housing prices can go up without sustained increases in income to support them.”
Posted by dan at 09:22 AM
Allan Hubbard, director of the National Economic Council, and Edward Lazear, chairman of the president's Council of Economic Advisers, take to the op-ed page of the Wall Street Journal as part of an effort to convince Americans their wages haven't been falling--and that if they haven't, it's not the administration's fault, anyway. From Hubbard, one expects such junk. But Lazear, a respected academic economist, now shows signs of succumbing to the same tendency that struck his respected-academic-economist predecessors Gregory Mankiw and Glenn Hubbard: retailing intellectual garbage in an effort to make their boss look better.
First, we hear the saw that we've been hearing, going on several years now, that real wage growth, a lagging indicator, is just around the corner.
A pattern that prevails as the economy moves from recession to recovery, and then into a sustained expansion, is that productivity grows first. The higher productivity growth means higher profits for businesses, which induce them to expand output and then employment. Later, as fewer workers are available for hire, wages grow, profit rates fall, and workers' share of the gains rises. This is what we observed during the last expansion. After the recession in the early 1990s, wage growth was flat. It did not pick up until the last few years of the decade.We are seeing the same pattern in this economic expansion. Productivity growth has been exceptionally strong in the past five years, well above the historical average. And now employee compensation per hour has also picked up. Over the first half of this year, compensation growth has averaged a remarkable 6.3%, at an annual rate adjusted for inflation. This growth is much faster than in previous years.
Second, the argument that people are really getting paid more, it's just that they're demanding more of their compensation in benefits. (Never mind that (a) fewer workers, on a percentage basis, are getting health benefits; and (b) workers are paying more out of pocket for basic coverage)
As has been the case for many years, higher health-care costs mean much of the growth in compensation goes to benefits. Although benefits are important, workers also naturally care about whether their paychecks are going up.
And finally, there's this one: if you just ignore inflation, or the cost of the things whose cost has been rising, everything is hunky-dory.
Recently, nominal wages of production workers have also grown considerably. At an annualized rate, nominal wage growth has been about 4% so far this year, faster than at this point in the last economic expansion. Nominal wages are now growing faster than the past couple of years and are growing at about the same rate as they were in the late 1990s.The difference between this economic expansion and the last expansion is that higher-than-expected energy prices have consumed much of this strong nominal wage growth. Inflation-adjusted wage growth without the increase in energy prices is similar to past economic expansions. The issue here is energy prices, not wage growth. Workers' paychecks are going up, but they have had to use much of that increase for energy purchases like gasoline.
The recent news on energy prices is good for workers. Nationwide gasoline prices have fallen by about 65 cents per gallon since early August and market data suggest that inflation will fall below the levels of the past few months. This decline, coupled with the nominal growth rates that we see in both compensation and wages, means that workers should enjoy more real earnings in the months ahead.
This last bit is the most pernicious and intellectually dishonest one. What's the point in comparing nominal wage growth in an economy where inflation is growing at 3.8 percent (i.e. today's) to nominal wage growth in an economy where inflation was growing at 2 percent or less? Do people pay their bills and mortgages with nominal dollars or with real ones? I'm wondering if you asked Hubbard and Lazear whether, they'd prefer (a) having a 4 percent nominal raise in a year when inflation rose 3.8 percent; or (b) having a 3.6 percent nominal raise in a year when inflation rose 1.6 percent; they'd choose (a) as being equivalent or better. But that's precisely what they're asking their readers to do.
Oh, and last Friday, the government reported that in August, personal income rose by the smallest amount since November 2005.
Posted by dan at 03:01 PM
My latest in the New York Times, on the massive growth in federal debt interest payments--a story that has been hugely underreported.
Posted by dan at 06:57 AM