The raison d’être of economic analysis and data collection is enhancing the clarity of the broad trend and drawing conclusions about the future. That’s a tough assignment under the best of circumstances, although sometimes the game is unusually confusing, as it seems to be with Friday’s update on January’s employment numbers. At issue is the odd sight of the jobless rate dropping to 9.0% from 9.4% in December without a commensurate gain in jobs. Nonfarm payrolls rose by a scant 36,000 last month (or +50,000 if you ignore the shrinking ranks of government workers). That’s down sharply from December’s 121,000 gain. January’s rise is the worst month for jobs since last September’s loss of 29,000.
BOOK BITS FOR SATURDAY: 2.5.2011
● Why the West Rules–for Now: The Patterns of History, and What They Reveal About the Future
By Ian Morris
Review via New Statesman
Ian Morris describes how western pre-eminence came about through accidents of geography, technology and social change, and how these factors are universal. Yet what he presents is not a credible science of history, but a myth.
DID SNOW FREEZE JOB GROWTH LAST MONTH?
There’s mixed news on the labor front today, according to this morning’s payrolls report for January from the Labor Department. The unemployment rate fell to 9.0% last month from 9.4% in December—that’s good. But January’s private sector growth in nonfarm payrolls rose by a slim 50,000, down sharply from December’s revised 139,000 gain—that’s bad. Analysts say that snow kept a lid on stronger job growth. Perhaps, but the crowd is stuck singing a familiar refrain once again: Next month’s job report will be better.
STRATEGIC BRIEFING | 2.4.2011 | FOOD PRICES
Global food prices rise to new highs, not expected to fall in coming months – UN
UN News Centre/Feb 3
Food prices around the world surged to a new historic peak in January, for the seventh consecutive month, the United Nations Food and Agriculture Organization (FAO) reported today, adding that the prices are not likely to decline in the months ahead. According to the FAO, its latest Food Price Index, a commodity basket that tracks monthly changes in global food prices, averaged 231 points in January and was up 3.4 per cent from December last year – the highest level since the agency started measuring food prices in 1990. It added that prices of all monitored commodity groups surged in January, except the cost of meat, which remained unchanged.
World entering era of food price volatility: WFP
Reuters/Feb 3
“We are entering an era of food volatility and disruptions in supplies. This is a very serious business for the world,” Josette Sheeran, executive director of the World Food Programme (WFP), told Insider TV on the sidelines of a U.N. Conference in London. “If people don’t have enough to eat they only have three options: they can revolt, they can migrate or they can die. We need a better action plan,” she said.
DATA POINTS | 2.3.2011
RBC U.S. Consumer Outlook Index Posts Slight Decline
U.S. consumer confidence for February declined slightly for a second month as consumers await a definitive signal on the direction of the economy, according to the monthly RBC Consumer Outlook Index. The Index for February declined to 44.5, down 0.4 points from January’s 44.9 but still above the 42.6 points recorded a year ago. In line with the volatility in the municipal bond market, the survey also found that a majority of Americans are not confident in municipal bonds as an investment. “Although the RBC Consumer Outlook Index has done nothing but move sideways since hitting a post-recession high in December, it’s surprising that consumer confidence didn’t fall even more, given recent events,” said RBC Capital Markets Chief U.S. economist Tom Porcelli. “The survey was conducted in the midst of daily headlines about unrest in Egypt, rising fuel prices and a sharp decline in the markets – all of which historically weigh on confidence. It appears that the Index was backstopped by future expectations, which reached their highest level in a year. This suggests that consumers view current events as transitory and are willing to look past them.”
RBC (Royal Bank of Canada)/Feb 3
STILL WAITING (AND HOPING) FOR A STRONGER LABOR MARKET
You can’t squeeze blood out of a stone and apparently you’ll grow old waiting for initial jobless claims to fall far enough, fast enough to inspire something more than fleeting confidence about the prospects for job creation. Ok, we’re exaggerating, but anyone who’s been watching the labor market these last several years understands the sentiment.
Today’s update on weekly claims for new unemployment benefits sets us up once again for thinking that better days are just around the corner for payrolls. New claims dropped by a hefty 42,000 last week on a seasonally adjusted basis, according to the Labor Department. That’s one of the biggest weekly declines in recent history, but it’s not likely to bring many cheers from the crowd. One reason is that it comes directly after the previous week’s huge gain. Even worse, the progress that was evident for a time in jobless claims late last year seems to have stalled.
IS THE SLUMP IN COMMERCIAL LENDING OVER?
Commercial and industrial loans appear to be on the rise again. For the first time since the Great Recession slammed the economy, lending is increasing, according to Federal Reserve data. Banks are also loosening their lending standards, according to the latest Fed survey. It all adds up to evidence that another variable in the business cycle is no longer creating a drag on the forces of economic recovery. It’s far from a sea change, but even a marginal shift is good news because it adds brings one more critical data point back from the dark side.
ADP EMPLOYMENT REPORT: MODEST JOB GROWTH IN JANUARY
Private-sector jobs increased by a modest 187,000 in January, according to this morning’s release of the ADP Employment Report. That’s a sharp slowdown from December’s 297,000 surge, which has since been revised down to 247,000.
THE JOBLESS RECOVERY ROLLS ON
Yesterday’s Institute for Supply Management’s survey of manufacturers for January delivered a strong dose of optimism for thinking that the expansion has a head of steam. As an early look at how the economy fared last month, this index’s rise to its highest level in seven years signals that the growth is still bubbling in the new year. The U.S. stock market took the hint and posted a strong rally yesterday. In fact, equities have more or less regained all the losses suffered during the Great Recession.