Bending the Third Rail
Because We Should, We Can, We Do
Friday, December 08, 2006
There's much buzz in the business world today about the labor report. Here's the headline info:
Nonfarm payroll employment rose by 132,000 in November; Unemployment Rate was essentially unchanged at 4.5 percent. Gains came primarily in services, health care and retail. Employment declined in construction and manufacturing.
As usual, new jobs barely, if at all, kept up with population growth. You'll being hearing reports, and huzzah's, of wage growth but when you break it down, hourly wage growth dropped. As has been the case for years, the rich get richer and the poor get poorer.

The interesting thing in all this is the Fed. They may interpret the data as suggesting a "robust" economy when in fact much of the economy is slowing. An interest rate cut may be needed ... the bond market thinks so ... but the Fed may interpret the data as inflationary and do nothing, or even increase rates. We shall see, but this is the stuff of stagflation.

The economy is bifurcated between the rich and poor much more than in recent history, yet those making policy may not yet recognize that. If the wisemen of the Fed don't get it right, we'll all pay.
Blogger Lynne said...
Big deal, that's businesses hiring Christmas help.