Jobless rate up despite employment gains
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What happens when the White House LIES about the economy and hires spinmeisters to "Manage" the news? Remember the Duckert/Gannon fiasco? Well...try this on for size...more people are jobless..and the spin is that this is GOOD....read on....
LIES LIES and MORE LIES from the ADMINISTRATION
"Jobless rate up despite employment gains
Pleasing to investors, not average person
Saturday, March 05, 2005
By Steve Massey, Pittsburgh Post-Gazette
When President Bush arrives in Pittsburgh on Monday, he will do so against the backdrop of an economy that is playing better on Wall Street than on Main Street.
The Labor Department yesterday reported that the nation's employers added a better-than-expected 262,000 workers last month, sending stocks soaring. The gains in jobs cut across all industries, from construction and manufacturing to health care, retail and financial services.
But the jobless rate still rose two-tenths of a point to 5.4 percent, and both the length of the average workweek and average hourly earnings were unchanged. There also were increases in the number of part-time workers and people working more than one job.
The employment news was greeted enthusiastically by stock and bond traders. The Dow Jones industrial average jumped 107.52 to 10,940.55, its highest close since June, 2001, while prices on 10-year Treasury bonds had their biggest gain in a month, sending yields, which move in the opposite direction, down to 4.32 percent.
Investors viewed the report as a sign that the economy is strong enough to sustain job and profit growth but weak enough to keep inflationary pressures at bay and allow the Federal Reserve to continue raising short-term interest rates in quarter-point increments, but no more.
"This is actually a perfect report for the Fed and the markets," said Stuart Hoffman, chief economist at Downtown-based PNC Financial Services Group.
"It's one of those nice, balanced reports that made stock and bond investors happy and, for the Fed, warrants another [quarter-point] increase" in the target rate for overnight bank loans later this month "but nothing to up the ante" with even bigger increases, he said.
For many workers and job-seekers, however, the employment situation portrayed by February's figures was hardly the sort of robust picture that would encourage them to demand fatter paychecks and starting wages, or to expect bountiful job opportunities.
Combined with 122,000 jobs in January, down a revised 24,000 from initial estimates, nonfarm jobs the first two months of the year are growing at an annual rate of 2.2 million -- matching last year's growth but well below the average annual gains of nearly 3 million during the comparable stage in the 1990s' expansion.
While slowing in the past year, productivity -- a broad measure of output per employee -- has surged overall the past three years, allowing companies to boost sales and profits without having to add a commensurate number of workers or to significantly raise workers' pay.
"Productivity growth and wage growth indicate the job market is bad for the ordinary working American," said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.
"In today's economy, the man or woman with a high school education or just a few years of college cannot get ahead and is lucky not to fall behind," he said.
Adding to the average person's frustrations has been a recent spike in crude oil prices.
After settling back to near $40 late last year after hitting $55 in October, prices have run up again, hitting a 19-week high of $53.78 yesterday on the New York Mercantile Exchange.
Unexpectedly strong sales at department stores in February suggest consumers so far have shrugged off the higher prices, but much of the latest spike is only starting to show up at the pump. PNC's Hoffman said he would not be surprised to soon see self-serve gas top $2 a gallon at area stations, a sort of bellwether level that in the past has sent shivers through the economy.
"The one fly in the ointment is the run-up in oil prices," Hoffman said, adding that he has slightly toned down his growth forecast for the economy this year because of oil's climb. He is projecting inflation-adjusted gross domestic product to expand 3.5 percent this year, down from last year's 4.4 percent pace, and businesses to add 2 million to 2.5 million jobs.
Concerns about higher oil prices may have been a factor in a surprise dip in the University of Michigan's index of consumer sentiment to 94.1 in February from 95.5 in January, analysts said. A preliminary reading in mid-February had put the figure at 94.2, and it has averaged 91 since the recession ended in November 2001.
Treasury Secretary John Snow yesterday acknowledged in an interview with WCBS Radio in New York that at some point, the increase in oil prices is bound to have an effect. But so far, he said, the economy is "so strong and resilient, it appears to be blowing through" the run-up.
Snow is part of a White House contingent, led by President Bush, that has been pressing the case for establishing private accounts as a way to stabilize Social Security's future solvency -- an argument that various polls indicate is losing traction with voters.
In testimony before Congress this week, Federal Reserve Chairman Alan Greenspan reiterated support for private accounts but urged the White House to go slow, saying it is not certain how the financial markets may react to the potential massive borrowing that may be required.
A more immediate need, Greenspan said, is to act quickly to shore up both Social Security and Medicare before their future funding shortfalls become a crisis. He suggested benefit cuts before baby boomers start retiring, significantly adding to the burdens of both programs.
Greenspan also called on Congress to begin attacking federal budget deficits that are threatening the nation's long-term economic security. As he has in the past, he pressed for reenactment of pay-as-you-go rules requiring lawmakers to match any increase in spending in one area with spending cuts elsewhere or with tax increases."