Job seekers wait in line in Queens, N.Y., in May 2012. The job market has greatly improved since then.
(Stan Honda, AFP/Getty Images)
The sharp retreat in hiring last month to the slowest pace in more than a year reflects lost economic momentum in the U.S. — and may make the Federal Reserve more reluctant to start raising interest rates as early as June.The Labor Department report Friday showing just 126,000 new jobs were added in March surprised analysts, who were expecting almost twice that number.
But neither did it raise alarm bells. Economists figured that cold weather and heavy snows exaggerated the decline and that hiring was bound to ease after unsustainable, heady job growth in some recent months.
The unemployment rate held steady at 5.5% and, in a sign that the job market is getting tighter, workers’ average wages rose at a faster pace last month.
“Payrolls are always volatile even at the best of times, and we are coming off a run of almost unbelievably strong employment growth stretching back to last summer,” Paul Ashworth, an economist at Capital Economics, said in a note to clients.
Other labor market indicators, including jobless claims and new openings, are looking good, he said, so “this is most probably another temporary blip.”
Other analysts, however, said it was hard to dismiss the latest report because it was bad on many fronts.
Manufacturing jobs contracted for the first time in 20 months, weighed down by a strong dollar that has hampered exports. Mining employment dropped again, the result of plunging oil-drilling activity. The labor force shrank. Workers put in fewer hours on the job in March.
Moreover, Labor Department officials revised down job growth in January and February by a combined 69,000 positions. That’s a large enough number that, taken together with the weak March hiring, paints a different picture of the labor market than before Friday’s news, Georgetown University economist Harry Holzer said.
With those revisions, job growth in the first quarter averaged a little less than 200,000 a month, down from 324,000 in the fourth quarter and 260,000 for all of last year.
Though a little concerned about the downward trend, Holzer noted that the revised numbers are more consistent with the underlying performance of the U.S. economy.
Economic output most likely slipped to a sluggish 1% annual rate in the first quarter, partly because of the weather. Most experts see growth picking back up in the spring and ending the year up a moderate 2.5%, similar to 2014.
Stock markets in the U.S. were closed for Good Friday, but Dow Jones and Standard & Poor’s 500 futures fell on the employment news. The dollar weakened and the yield on the 10-year Treasury note, a benchmark for mortgages, slipped to 1.84% on Friday from 1.91% on Thursday.
For the Federal Reserve, which is contemplating lifting interest rates from near zero as soon as June, the latest employment report isn’t decisive but important. An improving labor market is one of the key conditions the Fed has set for a rate hike, and policymakers will see two more monthly jobs reports before their meeting in mid-June.
Fed Chairwoman Janet L. Yellen has “not been anxious to raise rates,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “If it had a been a stronger [job] growth last month, there would be more pressure for her to move in June. I think this buys her some room.”
Baker said he expects payrolls to expand by about 170,000 a month over the rest of the year; many other economists are forecasting growth of more than 200,000.
Just how many jobs the economy generates depends on various factors, including productivity gains and overall economic growth, which in turn hinges largely on consumer spending.
Analysts are expecting businesses to ramp up investments, which should help lift productivity in the future. Productivity numbers have been unusually weak in the last couple of years, and some economists think that may reflect employers opting to add workers on the cheap rather than buy new machinery and equipment.
Household spending, meanwhile, has been unexpectedly tame so far this year, despite significant savings from lower gas prices. But the March employment report suggests that workers may have more money in their pockets to support spending.
Average hourly earnings for all private-sector workers went up 7 cents last month to $24.86, after a 3-cent bump in February.
With that, the average hourly earnings over the last three months rose at an annual rate of 2.8% compared with the fourth quarter — a significant increase from the sluggish 2% average in recent years.
Wage increases over the last year have been led by workers in the restaurant and hotel industry, boosted by higher minimum wages in a number of states and possibly rising social pressure that this week prompted McDonald’s to raise the pay floor for employees at its company-owned outlets.
“Fundamentally, they did this to improve retention,” said Sophia Koropeckyj, a labor economist at Moody’s Analytics. She expects smaller restaurants and retailers to follow suit as the economy gets closer to full employment.
Higher-paying business and professional services and information industry workers also have seen larger-than-average hourly wage increases. The earnings laggard has been manufacturing.
Judging by their stepped-up hiring, many merchants appear to be more optimistic of stronger sales ahead, too. Retailers took on almost 26,000 new employees last month, with general merchandise stores leading the way. That pushed total employment in the sector above the previous high reached in December 2007 at the start of the Great Recession.
“As the year progresses I do expect the job market to continue to strengthen,” said Jack Kleinhenz, chief economist at the National Retail Federation.
“The recent healthy job growth, better household balance sheets and elevated confidence should be just the formula consumers need to continue to spend and help propel economic growth even further,” he said.
http://www.latimes.com/business/la-fi-jobs-20150404-story.html
Writers for the national media continue to be dumbfounded why retail sales continue to be weaker and getting weaker and why job creation is not consistently on the uprise. The solution should be obvious: the vast majority of Americans need a stronger source of income beyond or as a replacement for income earned from a JOB, and a strong growth economy that builds a future society that can support general affluence for EVERY child, woman, and man. If we do not act, jobs will continue to be destroyed and the worth of labor devalued by tectonic shifts in the technologies of production and global low-wage cost development, and people will find it harder to secure a job that pays a true living wage. What is needed is to reform the system to put us on the path to inclusive prosperity, inclusive opportunity, and inclusive economic justice.
Conventional economists, who always put forth the same old non-workable solutions entailing some form of redistribution (open or disguised) continue to be oblivious to generating capital income as a stronger source of earned income and instead ONLY advocates for higher wages for people who are employed while constantly avoiding the word OWNERSHIP when they call for a more equal distribution of “equity” and “wealth.” But NEVER do they put forth actual solutions that would broaden wealth-creating, income-producing capital asset OWNERSHIP and grow the economy, which simultaneously would result in better job opportunities.
America’s economic growth is pathetic and will remain so as long as the system remains unreformed, and continue to facilitate concentrating capital ownership among a tiny minority who already OWN America.
While the rich ownership class spends money just like ordinary people, because they have more disposable income they can support purchasing finer quality products that are far more expensive than the ordinary American can afford––thus the luxury products market. But because their income exceeds even the cost of their wants and desires for luxury products, they constantly re-invest and further grow their capital asset portfolios, which in turn produces even more income, which then again is re-invested. This cycle is perpetrated over and over again. They effectively use savings derived from their withholding of further consumption (because they already have purchased what they want). The system, as construed, requires savings or withholding from consumption as equity asset security is pledge to finance the formation of new capital assets or to speculate in the trading of stock, which represents the asset value of the capital assets of corporations, to realize capital gains. Yet trading secondary stock does not grow the economy, only investing in the formation of new capital assets grows the economy and results in job creation and wage boosts for the masses, and the opportunity for a new capital income source, who in turn spend to consume more products and services, causing demand for further growth.
The problem is the wealth-building system is restricted to those with past savings due to withheld consumption. Equal opportunity to finance and acquire newly formed wealth-creating, income-producing capital assets is non-existent. Yet, those educated in capital asset acquisition know that capital acquisition takes place on the logic of self-financing and use their asset-backed (savings) credit for productive uses.
People invest in productive capital ownership (i.e. land, structures, tools, machines, robotics, super-automation, computerization, software programs, etc, used to produce products and services) on the basis that the investment will pay for itself. This reality is the reason the system needs to be reformed to provide ordinary Americans, without savings, access to insured, interest-free capital credit to acquire new capital assets that grow the economy. The basis for the commitment of loan guarantees (insurance) is the fact that nobody who knows what he or she is doing buys a physical capital asset or an interest in one unless he or she is first assured, on the basis of the best advice one can get from company management and banks, that the asset in operation will pay for itself within a reasonable period of time––5 to 7 or, in a worst case scenario, 10 years (given the current depressive state of the economy). And after it pays for itself within a reasonable capital cost recovery period, it is expected to go on producing income for its owner indefinitely with proper maintenance and with restoration in the technical sense through research and development.
Still, there is at least a theoretical chance, and sometimes a very real chance, that the investment might not pay for itself, or it might not pay for itself in the projected time period. So, there is a business risk, which can be absorbed by capital credit insurance or commercial risk insurance. Thus, in order to achieve national economic democracy, we need a way to handle risk management in finance by broadly insuring the risks. Such capital credit insurance would substitute for the past savings (equity) security demanded by lenders to cover the risk of non-payment, thus enabling the poor and others with no or few assets (the 99 percenters) to overcome the collateralization barrier that excludes the non-halves from access to productive capital.
One feasible way is to lift ownership-concentrating Federal Reserve System credit barriers and other institutional barriers that have historically separated owners from non-owners and link tax and monetary reforms to the goal of expanded capital ownership. This can be done under the existing legal powers of each of the 12 Federal Reserve regional banks, and will not add to the already unsustainable debt of the Federal Government or raise taxes on ordinary taxpayers. We need to free the system of dependency on Wall Street and the accumulated savings and money power of the rich and super-rich who control Wall Street. The Federal Reserve System has stifled the growth of America’s productive capacity through its monetary policy by monetizing public-sector growth and mounting Federal deficits and “Wall Street” bailouts; by favoring speculation over investment; by shortchanging the capital credit needs of entrepreneurs, inventors, farmers, and workers; by increasing the dependency of with usurious consumer credit; and by perpetuating unjust capital credit and ownership barriers between rich Americans and those without savings. The Federal Reserve Bank should be used to provide interest-free capital credit (including only transaction and risk premiums) and monetize each capital formation transaction, determined by the same expertise that determines it today––management and banks––that each transaction is viably feasible so that there is virtually no risk in the Federal Reserve. The first layer of risk would be taken by private sector commercial credit insurers, backed by a new government corporation, the Capital Diffusion Reinsurance Corporation, through which the loans could be guaranteed. This entity would fulfill the government’s responsibility for the health and prosperity of the American economy.
Once people become educated about this opportunity, EVERY American will want to participate, especially since their participation requires no loss of their wage income or benefits and the new, economy-expanding capital asset investments are insured. That to me is a no-brainer. I never met a person who owns income-producing capital assets that said “I hate capital income.
Everyone, generally, is interested in having a decent lifestyle, but the reality is they are restricted to the extent of the income they produce. We all have wants and desires for finer quality products, travel, better education for our children, etc, etc., etc., but without the necessary income these are just that, unfulfilled wants and desires, and always will be.
Furthermore, the wealth-building programs I am advocating do not deny people the opportunity to work. In fact, they provide far more REAL job opportunities than our current anemic economy does, as investment in growth results in our building a future economy, which is broadly owned by the citizenry as individuals, that can support general affluence for EVERY child, woman, and man. The short-term result will create massive new job opportunities as this new economy is being built.
How we get to build this “affluence-for-all” future economy is already figured out. If the author of this articles and Reuthers as well as academia and the politicians really want America and all of its citizens to succeed and create a new inclusive economy that can support general affluence for EVERY child, woman and man, they ALL and you, the reader, should be advocating the call for “Every Citizen An Owner” and support the proposed Capital Homestead Act, the Just Third Way, and Monetary Justice.
If you agree, then step us and support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, http://www.cesj.org/resources/articles-index/the-just-third-way-basic-principles-of-economic-and-social-justice-by-norman-g-kurland/, http://www.cesj.org/wp-content/uploads/2014/02/jtw-graphicoverview-2013.pdf and http://www.cesj.org/resources/articles-index/the-just-third-way-a-new-vision-for-providing-hope-justice-and-economic-empowerment/.
Support Monetary Justice at http://capitalhomestead.org/page/monetary-justice
Support the Capital Homestead Act at http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-a-plan-for-getting-ownership-income-and-power-to-every-citizen/ and http://www.cesj.org/learn/capital-homesteading/capital-homestead-act-summary/. See http://cesj.org/learn/capital-homesteading/ and http://cesj.org/…/uploads/Free/capitalhomesteading-s.pdf.
