We are starting to approach what many economists call “full employment.” The point at which the people who are unemployed really are “just between jobs.” There is little long term unemployment. Jobs are plentiful. There is upward pressure on wages. In short, general prosperity.
Can’t you feel it?
It is possible that the economy has slogged its way through all the central planning and manipulation in the wake of 2008 and the real economy is emerging a bit despite the central planners. I figure that’s part of the equation. But an unemployment rate of 5.6% would indicate a nearly rip roaring economy, but I don’t see much of that.
I see something which somewhat resembles “not horrible” but it’s not like happy days are here. Add that Europe and Asia are slowing again (from already pretty darn slow), and that lower oil prices – though probably pushed down by the Saudis for geopolitical reasons – probably reflect this slowing world economy. Add that there seems to be no upward pressure on wages. And that housing has taken yet another dip. I can’t celebrate. And we should be celebrating an unemployment rate of 5.6%.
Of course the unemployment rate is not really 5.6%. In reality it’s at least a few points higher if one accounts for the workers (especially older workers) who have just fallen off of the unemployment rolls after years on them. And don’t forget the vast sea of underemployed people.
As far as many of the establishment economists are concerned these 2 groups no longer really count “officially.” So hey, why even consider them? Better to do everything possible to conjure the “animal spirits.” Create the illusion of prosperity to create actual prosperity. The permanently unemployed and the underemployed are such a buzz kill.
The older workers will be dead soon anyway, so problem solved there. The underemployed? Well, that’s stickier. But that’s just life in the underclass.
Below is an upbeat and chipper report on the economy. But proceed with caution and keep a general skepticism as you read it. As the markets over the past week have shown us they are still addicted to “stimulus” and will swoon if money isn’t pumped in by central banks. (The pumper de jure is the ECB.) Gas prices likely won’t remain like this for long and interest rates won’t remain low forever.
So we’re running on low priced oil, artificially low interest rates, and occasional megadoses of printed money. Wages are not rising. These things my friends are not reflective of a healthy economy.
(From The AP)
American businesses have been largely shrugging off signs of economic weakness overseas and continuing to hire at solid rates. The U.S. economy’s steady improvement is especially striking compared with the weakness in much of the world.
Europe is barely growing, and its unemployment rate is nearly double the U.S. level. Japan, the world’s third-largest economy, is in recession. Russia’s economy is cratering as oil prices plummet. China is straining to manage a slowdown. Brazil and others in Latin America are struggling.
Fears about significantly cheaper oil spooked investors earlier this week before financial markets recovered. But most economists remain optimistic that lower energy prices will benefit U.S. consumers and many businesses.
The drop in average hourly pay last month to $24.57 followed a downward revision to November’s average pay gain. Hourly pay over the past two months has now risen just a penny.
During 2014, average wages rose just 1.7 percent, not much above the inflation rate, which was 1.3 percent. As hiring ramps up and the unemployment rate falls, those pressures should, at least in theory, compel employers to raise pay to attract workers. But that trend has yet to emerge.