jueves, 11 de febrero de 2016

jueves, febrero 11, 2016

Rumors of Recession

The overriding economic problem is a lack of business confidence and investment.

 
 The January jobs report wasn’t as bad as the markets seemed to take it on Friday, with the Nasdaq diving 3.25%. But then it wasn’t stellar either, with payroll additions of 151,000 for the month well off the average of the previous year. Investors will again have to puzzle over whether this is one more temporary slowdown in this slow-growth expansion or evidence of a new recession.

We’ll hope for the best, and the report did offer some encouragement. The labor participation rate moved up to 62.7%, the highest in eight months. Average hourly earnings increased by 12 cents to $25.39, and they are up by 2.5% in the last year. Wage gains finally seem to be appearing as the labor market tightens in many parts of the country, especially for more skilled workers.

The jobs numbers tend to be a lagging economic indicator, and other recent growth signs have been weak. Productivity growth fell out of bed in the fourth quarter, declining 3%, which if it continues will make wage gains impossible to sustain. The overriding problem continues to be a lack of business confidence and investment, which leads to slower growth, which gives the U.S. economy a lower margin for absorbing growth shocks from around the world. Is it too much to ask the GOP presidential candidates to debate how they’d fire up growth?

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