Friday, September 03, 2004

Job picture and economy 

The latest job figures contained more good news than expected. The headline number of 144,000 new jobs added in August is about what we expected. But the number buried in the lede is that the June and July figures were revised upward -- June from 78,000 to 96,000, July from 32,000 to 73,000. Those additional job figures should signal some strength, though the retail employment sector lost an additional 11,000 in August. I'm beginning to think I need to revise the consumption figure for third quarter down, though it will still beat the second quarter numbers. Worth noting as well: unlike last months where the household survey indicated much stronger growth than the payroll survey, this time the situation was reversed. The household survey estimate showed only an increase of 21,000 jobs in August. As the folks at Northern Trust pointed out in today's daily commentary (click the link for 9/3), labor force participation rates are running low so that the unemployment rate, at 5.4% currently, is probably too optimistic a view of the state of the labor market.

After last night's acceptance speech, which to me was a little light on economics and with Bush seeming less animated about that part of the speech than he was later on foreign policy (I think Elder's liveblog was about right), I would have to think this number lets the Republican campaign breath a sigh of relief. There's little question that this was the one report that could take the wind out of their sails going into the Labor Day weekend. I don't think the GOP should brag about this report, but neither do I think they have to worry about any negative spin from the Kerry campaign (particularly this weak stab.)

Elsewhere this week the news was mediocre. The Conference Board's latest reading on consumer confidence showed a drop, though again the overall trend is up. There's a curious paragraph in the report I'd like you to read:
Consumers expecting fewer jobs increased to 15.4 percent from 13.5 percent. Those anticipating more jobs to become available fell to 16.2 percent from 19.5 percent. Consumers expecting their incomes to improve in the months ahead rose to 19.3 percent from 18.0 percent last month.

Now think about this: When asked about their own situtions, more people thought their income would go up in August than did in July. But when asked to forecast what happens to other people's job situation, they think the economy is doing worse. How can those both occur? And, more to the point of the previous paragraph and previous post, what matters more -- your view of your own pocketbook or your view of other people's pocketbooks?

It might be due to poor journalism -- it always comes down to this, doesn't it? The ISM purchasing managers survey showed that "Economic activity in the manufacturing sector grew in August for the 15th consecutive month, while the overall economy grew for the 34th consecutive month." But because the rate of increase was a little slower in August over July, what does CBS Marketwatch run as its headline? "U.S. service sector slower in August." That's not what the index says. Backlogs continue to increase, though they didn't increase as much in August as they did in July. To the media, that looks like the sector is slowing down. It's not: you're still falling further behind each month.

It doesn't really matter that much since none of the other data will catch anyone's attention except the job report, which contained mostly good news, particularly for a Bush campaign that now might be up double-digits. Boy, won't that make those political scientists below unhappy!