President Barack Obama signs a Memorandum of Disapproval regarding a joint resolution providing for congressional disapproval of a rule submitted by the National Labor Relations Board relating to representation case procedures. The joint resolution passed by Congress is a rarely used oversight tool that allows legislators to block regulatory actions
President Obama signs Memorandum of Disapproval, vetoing measure blocking NLRB rules on union elections. http://t.co/BuKbShDWEk
Josh Zumbrun: Job Openings At 14-Year High As Hiring Returns To Pre-Recession Levels
For the first time since January 2001, the U.S. had more than five million job openings at the end of December, a sign of a labor environment shifting in favor of workers. December was also the best month for hiring since before the recession struck more than seven years ago. More than 5.1 million people were hired in December, the most since November 2007, according to the Labor Department‘s Job Openings and Labor Turnover Survey, known as JOLTS.
The report adds to signs that the labor market is strengthening considerably. The Labor Department’s main jobs report, released on February 6, showed that November, December and January comprised the best three-month stretch of hiring since 1997, raising hope that the U.S economy will start delivering stronger wage growth for a wider swath of Americans after more than five years of sluggish recovery from a deep recession.
The U.S. labor market leaped forward in January, capping the greatest three-month jobs gain in 17 years and delivering the biggest wage increase since 2008. Payrolls advanced by 257,000 last month following increases in December and November that were even bigger than previously reported, figures from the Labor Department showed Friday in Washington. The unemployment rate rose to 5.7 percent from 5.6 percent as more than a million Americans streamed into the labor force seeking work. The sustained employment gains are creating a virtuous cycle as Americans spend newfound incomes on goods and services. The growth in jobs will probably help assure Federal Reserve policy makers that the expansion is well-rooted and can withstand an increase in interest rates later this year.
“These are pretty amazing numbers,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, and the top forecaster of payrolls over the last two years, according to data compiled by Bloomberg. “The January number is strong, but then you’ve got sizzling November and December numbers too. And then you’ve got the wage gains.” Average hourly earnings jumped 0.5 percent, the most since November 2008, from the prior month. They were up 2.2 percent over the past year, the biggest advance since August. Payroll gains averaged 336,000 over the last three months, the strongest since a comparable period ended in November 1997. A striking aspect of the report was a revision that added 147,000 jobs to the payroll tally for the previous two months, which also incorporated adjustments back to 2010. Employment in November was revised up to a 423,000 gain, the most since May 2010. Private payrolls, which exclude government agencies, soared 414,000 that month, the biggest advance since September 1997.
The U.S. is back in the driver’s seat of the global economy after 15 years of watching China and emerging markets take the lead. The world’s biggest economy will expand by 3.2 percent or more this year, its best performance since at least 2005, as an improving job market leads to stepped-up consumer spending, according to economists at JPMorgan Chase & Co., Deutsche Bank AG and BNP Paribas SA. That outcome would be about what each foresees for the world economy as a whole and would be the first time since 1999 that America hasn’t lagged behind global growth, based on data from the International Monetary Fund. About 3 million more Americans found work in 2014, the most in 15 years and a sign companies are optimistic U.S. demand will persist even as overseas markets struggle.
The U.S. is breaking away from the rest of the world partly because it has had more success working off the debt-driven excesses that helped precipitate the worst recession since the Great Depression. “The progress has been far greater in the U.S.,” Glenn Hubbard, dean of the Columbia Business School in New York and a former chief White House economist, told the American Economic Association annual conference in Boston on Jan. 3. The U.S. has pulled ahead of other industrial nations partly because its policy-making has been better, according to Paul Mortimer-Lee, chief economist for North America at BNP Paribas in New York. U.S. budget policy also has been more effective than the euro region’s austerity strategy, which undercut the continent’s economy, Mortimer-Lee added.
1. The private sector has added 11.2 million jobs over 58 straight months of job growth, extending the longest streak on record. Today we learned that total nonfarm payroll employment rose by 252,000 in December, mainly reflecting a 240,000 increase in private employment. Private-sector job growth was revised up for October and November by a combined 50,000 so that over the past three months, private-sector job growth has averaged 280,000 per month. Private employment has risen by at least 200,000 for 11 consecutive months, the first time that has happened since the 1990s.
2. Total employment rose by 2.95 million in 2014, the most in any calendar year since 1999. Private-sector employers added 2.86 million jobs last year, the strongest private-sector job growth in any calendar year since 1997. The pace of overall job growth has increased, averaging 246,000 per month in 2014, up from 194,000 per month last year. On a percentage basis, the economy is adding jobs at a rate of about 2 percent per year, also on pace for the largest percentage increase in any calendar year since the late 1990s. Crucially, the pickup in the pace of job growth in 2014 has primarily been in industries with higher wages. For instance, the pace of manufacturing job growth has more than doubled to 16,000 per month this year, from 7,000 per month last year, and average weekly earnings for manufacturing workers are about $170 higher than for all private-sector workers. As discussed in greater detail below (see point #4), overall real average earnings have generally been growing, but there is more work to be done to raise wages and address longer-standing challenges around family incomes.
DEFINITION OF ‘WAGE PUSH INFLATION’
A general increase in the cost of goods that is preceded by and results from an increase in wages. In order to maintain corporate profits after an increase in wages, employers must increase the prices they charge for the goods and services they provide. The overall increased cost of goods and services has a negative effect on the wage increase, and eventually, higher wages will be again needed to compensate for the increased prices for consumer goods.
The number of people working two jobs for economic reasons dropped by 118,000 in December
Bloomberg: Corporate U.S. Healthiest In Decades Under Obama With Lower Debt
Steve Wynn, founder of the Wynn Resorts Ltd. (WYNN) casino empire, once called President Barack Obama’s administration “the greatest wet blanket to business and progress and job creation in my lifetime.” Barry Sternlicht, chief executive officer of Starwood Property Trust Inc. (STWD), said Obamacare was driving down wage growth and “affecting spending and the desire to buy houses and everything else.” Corporate and economic statistics almost six years into his administration paint a different picture. Companies in the Standard & Poor’s 500 (SPX) Index are the healthiest in decades, with the lowest net debt to earnings ratio in at least 24 years, $3.59 trillion in cash and marketable securities, and record earnings per share. They are headed this year toward the fastest average monthly job creation since 1999, manufacturing is recovering and the U.S. has returned as an engine for global growth. The recovery, which stands in contrast to weak growth in Europe and Asia, has underpinned an almost threefold gain in the Standard & Poor’s 500 Index since March 2009.
“The U.S. is leading the way — we’re the only major economy with accelerating growth,” said Mark Zandi, chief economist in West Chester, Pennsylvania, for Moody’s Analytics Inc. and a registered Democrat who has advised both the Obama administration and Senator John McCain, a Republican. “Obama deserves some credit for that, but he probably won’t get it.” Barring any major disruptions, the economy is setting up for Obama to leave office on a high note, said Douglas Brinkley, a presidential historian and professor at Rice University in Houston. “History will eventually show that Obama inherited the Great Recession and resuscitated the economy,” Brinkley said in an interview. One example is General Motors Co. (GM), which last week regained its investment-grade debt rating from Standard & Poor’s only five years after the government-backed bankruptcy. Obama’s $49.5 billion bailout of the automaker in exchange for taxpayers owning 61 percent of the company kept it from being liquidated, an outcome that could have crippled parts suppliers and economies throughout most of 50 states, not just the Midwest. In the broader economy, consumers are buying again and homebuilding is increasing. The unemployment rate has declined to 6.1 percent, the lowest since 2008. The economy expanded at a 4.6 percent annualized rate in April through June. Obama’s 2010 health-care program will hold down consumer prices for years to come as millions of Americans obtain coverage, BNP Paribas SA and Credit Suisse Group AG said. The “Medicare cost miracle” resulted at least in part from Obama’s Patient Protection and Affordable Care Act, Nobel-Prize winning economist Paul Krugman wrote in a Sept. 1 New York times article.
The preliminary figures on second-quarter GDP looked good; the revised tally looked better; and the final report looks even better still. The U.S. economy grew at a 4.6% annual pace in the second quarter, matching the best performance since the recession ended in mid-2009. The increase in real gross domestic product was revised up from 4.2%, mainly because of higher exports and business investment, the Commerce Department said Friday. Americans also spent more on health care, but the gain was offset by lower spending on other services. Economists polled by MarketWatch had predicted GDP would be revised up to a seasonally adjusted 4.7%. Consumer spending, the main source of economic activity, was unchanged at 2.5% growth. The biggest gains came in business investment, a good sign for the economy in the months ahead. To provide some additional context, 4.6% growth is tied for the best quarter since the start of the Great Recession.
NYT: Business Spending, Exports Spur Big Bounce In U.S. Economy
The U.S. economy grew at its fastest pace in 2-1/2 years in the second quarter with all sectors contributing to the jump in output in a bullish signal for the remainder of the year. The Commerce Department on Friday raised its estimate of growth in gross domestic product to a 4.6 percent annual rate from the 4.2 percent pace reported last month. The United States is bucking a spate of weaker overseas growth with the euro zone and Japan slumping, and growth in China slowing as well. the expansion in consumer spending, combined with strong business investment,
was nevertheless enough to push domestic demand ahead at its fastest pace since 2010. That suggests the economy’s recovery is becoming more durable after output slumped at a 2.1 percent rate in the first quarter because of an unusually cold winter. So far, data covering manufacturing, trade and housing suggest that much of the second quarter’s momentum spilled over into the third quarter. Growth estimates for the July-September quarter range as high as a 3.5 percent pace. When measured from the income side, the economy grew at a 5.2 percent pace during the second quarter…export growth was raised to an 11.1 percent pace, the fastest since the fourth quarter of 2010, from a 10.1 percent rate.
Jason Furman: Third Estimate of GDP For The Second Quarter Of 2014
1. Real gross domestic product (GDP) increased 4.6 percent at an annual rate in the second quarter of 2014, the fastest pace since the fourth quarter of 2011, according to the third estimate from the Bureau of Economic Analysis. The strong second-quarter growth represents a rebound from a first-quarter decline in GDP that largely reflected transitory factors like unusually severe winter weather and a sharp slowdown in inventory investment. Growth in consumer spending and business investment picked up in the second quarter, and residential investment increased following two straight quarters of decline. Additionally, State and local government spending grew at the fastest quarterly rate in five years. However, net exports subtracted from overall GDP growth, as imports grew slightly faster than exports.
Real gross domestic income (GDI), an alternative measure of the overall size of the economy, was up 5.2 percent at an annual rate in the second quarter. 3. Over the past four quarters, real GDP has risen 2.6 percent, faster than the 2.0 percent annualized pace observed over the preceding eight-quarter period. Looking at four- and eight-quarter changes to smooth some of the quarter-to-quarter volatility, it is clear that many components of GDP are showing improvement. The growth rates of consumer spending, business investment and exports have all picked up, and the pace of declines in the Federal sector have moderated a bit. In addition, the State and local government sector has turned positive, after several years of steady cutbacks. One area that has slowed over the last four quarters is residential investment, although it did rebound in the second quarter.
Yahoo: Economy In U.S. Expands 4.2%, More Than Previously Forecast
The biggest gain in U.S. business investment in over two years helped the world’s largest economy expand more than previously forecast in the second quarter, raising expectations for the rest of 2014. Gross domestic product, the value of all goods and services produced, rose at a 4.2 percent annualized rate, up from an initial estimate of 4 percent and following a first-quarter contraction, Commerce Department reported today in Washington. Other reports showed the outlook for home sales improved in July, fewer people filed claims (INJCJC) for jobless benefits last week and consumer confidence climbed. Recent data showing American factories are receiving more orders and employment is picking up indicate companies such as General Electric Co. (GE) will probably see demand sustained into the second half of the year. “The recovery is becoming more well-entrenched,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida, who correctly projected the gain in GDP.
“There is more optimism among businesses about increased demand. The drop in firings is probably helping Americans feel more secure in their jobs. The Bloomberg Consumer Comfort Index rose in the week ended Aug. 24 to the highest level in more than a month as views of household finances advanced to an almost four-month high, another report showed. Household consumption, which accounts for about 70 percent of the economy, grew at a 2.5 percent annualized rate, the same as previously estimated. Automobile sales near an eight-year high bode well for consumer spending and factory production. Consumers’ purchasing power improved, with disposable income adjusted for inflation rising at a 4.2 percent from April through June after a 3.4 percent gain in the first quarter. Gross domestic income, which reflects all the money earned by consumers, businesses and government agencies climbed at a 4.7 percent annualized rate in the second quarter, the most since early 2012. More hiring and stock-market gains that are boosting confidence also are healing household finances, which will help consumer spending. Payrolls in July marked the sixth month of gains exceeding 200,000, the longest such stretch since 1997, according to the Labor Department.
Jason Furman: Second Estimate Of GDP For The Second Quarter Of 2014
1. Real gross domestic product (GDP) increased 4.2 percent at an annual rate in the second quarter of 2014, according to the second estimate from the Bureau of Economic Analysis. The strong second-quarter growth represents a rebound from a first-quarter decline in GDP that largely reflected transitory factors like unusually severe winter weather and a sharp slowdown in inventory investment. Growth in consumer spending and business investment picked up in the second quarter, and residential investment increased following two straight quarters of decline. Additionally, state and local government spending grew at the fastest quarterly rate in five years.
3. Over the last four quarters, real GDP has risen 2.5 percent, faster than the 2.0 percent annualized pace observed over the preceding eight-quarter period. Looking at four- and eight-quarter changes to smooth some of the quarter-to-quarter volatility, it is clear that many components of GDP are showing improvement. The growth rates of consumer spending, business investment and exports have all picked up, and the pace of declines in the Federal sector have moderated a bit. In addition, the State and local government sector has turned positive, after several years of steady cutbacks. One area that has slowed over the last four quarters is residential investment, which is discussed in greater detail in the next point.