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| 2004-02-06 |
| title changed from the Reuters one; efl U.S. stocks rose on Friday as investors took the view that lukewarm jobs data should keep the Federal Reserve from raising interest rates any time soon... The government reported 112,000 nonfarm jobs were created in January, below Wall Street’s average estimate of 150,000. That indicated that the recovery is moving in the right direction, but not too quickly that the Fed will be forced to hike interest rates to cool an overheating economy. "The positive is that interest rates are probably going to remain low for a longer period of time than people were expecting because you didn’t see the job growth people expected," said Jay Finkel, senior equity trader at fund firm Lord Abbett & Co. The Dow Jones industrial average was up 82.52 points, or 0.79 percent, at 10,578.07. The broader Standard & Poor’s 500 Index was up 10.83 points, or 0.96 percent, at 1,139.42. The technology-laced Nasdaq Composite Index was up 28.09 points, or 1.39 percent, at 2,047.65. The odds of the Federal Reserve increasing short-term U.S. interest rates this summer for the first time since May 2000 lengthened after the jobs data. Stock investors like lower interest rates as they tend to spur consumer spending and boost corporate profits by keeping down the cost of borrowing. "The news is good, but not as good as everyone had hoped for," said Edgar Peters, chief investment officer at PanAgora Asset Management Inc. "Overall, it points to a continued, stable recovery, although it is not overwhelming." stable is good, it implies sustainability The Labor Department also said the unemployment rate fell to 5.6 percent last month, the lowest in two years, from 5.7 percent in December. |
| Posted by:rkb |
| #5 A couple of econobloggers had an interesting theory, what if the Bush tax cuts brought more people into the workforce since there was more takehome? |
| Posted by: Anonymous2U 2004-2-6 3:31:27 PM |
| #4 Or as my macro eco-prof once said... "Well technically this is a big ass country, so who knows?" |
| Posted by: Shipman 2004-2-6 2:50:25 PM |
| #3 Damn Proud, Actually, the labor force has barely increased in the past year and, in fact has decreased since Oct. based on the household survey: http://www.bls.gov/news.release/empsit.t01.htm A problem with your 'more new companies' hypothesis is that this is not easy to understand quantitatively. A single person may be a sole proprietor in 3 or 4 companies each doing a slightly different business. Furthermore, a lot of people are contract workers rather than payroll workers (my daughter for example). Whether she is working or not, she would respond to the household survey that she is a contract worker. Also the household survey has discontinuities in it because of adjustment for census estimates. I'm not that confident of either survey frankly. There isn't a good survey that measures the 'difficulty of finding a job' or the 'worry about getting laid off' either in a way that correlates well to either the employer or the household survey. Bummer. |
| Posted by: mhw 2004-2-6 12:41:39 PM |
| #2 mhw, that's because the employer report is inaccurate. People make the claim that it represents more people than the household survey but they are missing the point. It doesn't represent the country it only represents the companies that are being polled. With more new companies being started in the US as time goes on and the churn of leadership in business due to technology advances affecting every industry you cannot judge the economy by a group of companies anymore. You are simply missing what has become a huge part of our payrolls... new companies and independent consultants. The past 15 years have dramatically changed our economy. As it stands the household survey is the one that gives the true picture. It's obvious this is true even on a personal level. Ask yourself this... if there are barely anymore jobs today than a year ago (according to employer survey) and the labor pool has grown it should actually be harder to find a job. Now look at your own and your friends situation... 1 year ago I had a few unemployed friends and everyone was worried about getting laid off. Now I have no unemployed friends and some are looking at better job offers. On a personal level it's clear to me which report is giving the accurate picture. |
| Posted by: Damn_Proud_American 2004-2-6 11:54:06 AM |
| #1 the gap between the household and the employer reports was even worse than usual this month -- the imputed job increase based on the household survey was about 500k as opposed to the increase based on the employer report of about 100k. |
| Posted by: mhw 2004-2-6 11:34:12 AM |