5
Optimism?
This could be a big week for gauging the economy's turnaround prospects. Friday's jobs report could be the most positive in many months. And a report out today suggests consumer spending is picking for real.
The Commerce Department reported that personal spending rose 0.3 percent in February, the fifth straight month of increases. Christian Science Monitor has this analysis:
"Overall, real consumer spending is on track to rise just above 3 percent [annualized] in the first quarter, which would be the strongest increase in three years and much better than the fourth quarter's 1.6 percent," economist Nigel Gault of IHS Global Insight says in a written analysis of the numbers.
Economists are predicting the possibility of a net gain of jobs for March, perhaps plus 200,000 or even 300,000 jobs.
Economist Peter Morici at the University of Maryland is pretty upbeat:
Finally, it is happening!
The economy needs to create about 140,000 jobs each month to keep pace with labor force growth, and it is a long way from getting back the 8.4 million jobs lost during the Great Recession.
If Americans can manage down their trade deficit with China and cut gasoline consumption, gradually, the economy can get back those lost jobs.
Increased consumer spending is usually a leading indicator of employment. The more consumers spend, the more likely companies are to start hiring.
One troubling statistic is that inflation-adjusted incomes have remained flat for about six months or so, continuing a decade-long trend of incomes not growing.
But overall, are you finally starting to feel a bit more optimistic?
No one week can be extrapolated to future weeks in such a complex economy. The commerce department is not auspicious. Beneficiaries of the Bernanke Bubble drive the bulk of the spending.
Those not in the upper class are in debt deflation mode. Housing is still losing value (see Minneapolis Fed report) and prime mortgages have yet to join the foreclosure binge. Then there is commercial real estate.
Insiders are not investing nor is idle capacity being brought back on line so unemployment will continue. Goldman Sachs believes it could be over 10 percent by year end.
Jobs continue to be offshored even service jobs (see Dallas Fed economic letter) and most investment will likely be offshored as well because it will deliver a greater return in “developing†countries.
But in America errant boosterism is a social virtue.
High Income Disparity Leads to Low Savings Rates
http://www.nakedcapitalism.com/2010/03/high-income-disparity-leads-to-lo...
I'm still nervous. Friends I know still can't get jobs, and everything I've read says that Wall Street is still running amok, meaning that the fundamental problems that led to the crisis still haven't been addressed. If anything, we're maybe on the upswing of the latest boom and bust cycle -- which I suppose is better than being on the downside, but still doesn't really give me any hope that the problems in corporate governance and economic inequality are being addressed.
