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Job growth illusory

Reuters 12/2/5, by Tim Ahmann

 

Job growth rebounds after storms

 

WASHINGTON (Reuters) - The U.S. job market sprung back last month from a hurricane-induced slowdown as non-farm employers added 215,000 workers, according to a government report on Friday that showed the economy on solid ground.  In its monthly employment report, the Labor Department also said the unemployment rate held steady in November at 5 percent.

"This fits with an economy which is just humming along here at close to potential," said Kathleen Stephansen, director of global economics at Credit Suisse First Boston in New York.  The report nearly matched expectations in financial markets, which showed little reaction. Wall Street economists had expected payrolls to expand by 210,000 workers in November, with no change in the jobless rate.  It leaves the Fed right on course," said Steven Wieting, senior economist at Citigroup in New York. "There's really nothing here to dissuade them from bringing rates up to at least neutral levels" that neither spur nor inhibit growth.  The Fed has raised benchmark overnight rates 12 times over the past 17 months, bringing them to 4 percent from a basement level 1 percent.

The jobs report was the latest in a string of data that economists said underscored the resilience of the economy.  "Despite the disruptions of Hurricanes Katrina, Rita, and Wilma, economic activity appears to be expanding at a reasonably good pace as we head into 2006," Fed Chairman   

 

Alan Greenspan said in taped remarks to a conference in Philadelphia.

CATCHING UP

While the November employment gains were robust and widespread across industries, the report showed the job market has yet to fully recoup the ground lost since a series of hurricanes battered the U.S. Gulf Coast in late summer.  The department revised up its measure of employment for hurricane-ravaged September, saying payrolls expanded by 17,000 workers. Previously, it had reported they had shrunk 8,000.

However, job growth in October was a bit weaker than first thought as employers brought on only 44,000 new workers, not the 56,000 the department had reported a month ago.  Over the past three months, job growth has averaged just 92,000 a month, well below the 196,000 average for the first eight months of the year.  "The employment total is more or less fine but other indications were on the soft side," said Pierre Ellis, senior economist at Decision Economics in New York.  One weak spot was a decline in the length of the average workweek, which dipped to 33.7 hours from 33.8 hours in October.  {Thus real income can decline as wages go up, both for a reduction in benefits and also from a reduction in the work week—jk}.  Average hourly earnings rose 3 cents to $16.32 in November, building on an upwardly revised 10-cent gain in October.

While the latest data suggested October's pay spike was an aberration, the year-on-year earnings increase moved up to 3.2 percent, the biggest 12-month rise since March 2003.  Manufacturers added 11,000 workers in November after adding 15,000 in October to mark the first back-to-back gains in factory employment in more than a year.  Construction firms added 37,000 new workers last month after adding 35,000 in October.  "Some of the recent job gains in construction reflect rebuilding and clean-up efforts following hurricanes Katrina, Rita, and Wilma," Bureau of Labor Statistics Commissioner Kathleen Utgoff said in a statement.

 

 

 

Thoughts on the economy—jk

 

National wealth increases when what the nation possessions increases faster than what is destroyed.  A better number is the per capita income, which is a measure of the wealth of a nation divided by the number of citizens (visitors, those with work visas, and illegal immigrants are not counted).   

 

How do you expand the economy and increase national wealth?

 

1)  Increase productivity.  This has been continuing for decades. 

 

2)  Increase the supply of money.  Under a capitalist system how much funds is available determines buy power (corporate, government, & personal spending).  Thus the quality of housing is determined not by need but upon how much money is available to spend on it.  Constrict the money supply during a recession and construction goes down. 

 

3)  Streamline the economy

 

The Republicans have increased the money supply by increasing the foreign debt which has dire consequences, including a projected devouring of 18 plus percent of the federal budget to cover treasury bill dividends including those owned by foreign investors when they park the payments from our trade deficit in our country. 

 

From 1975 until 2004, real income for the bottom 90% has fallen 7% (however the top 0.1% has grown 600%, and their tax burden keeps getting cut) and this is contrary to the increase in productivity amounting to over 40% for those years.  An ideal economy would pass on to all its citizens the fruits of increased productivity. 

 

Moreover, our government has acted in a number of ways to weaken unions, reduce benefits, and promote a pool of cheap labor.    

 

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For the best account of the Federal Reserve  (http://www.freedocumentaries.org/film.php?id=214).  One cannot understand U.S. politics, U.S. foreign policy, or the world-wide economic crisis unless one understands the role of the Federal Reserve Bank and its role in the financialization phenomena.  The same sort of national-banking relationships as in our country also exists in Japan and most of Europe.