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Thread: Payrolls Surge; Unemployment Dips

  1. #1
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    Payrolls Surge; Unemployment Dips

    Reuters Friday, May 07, 2004

    WASHINGTON U.S. employment surged for a second straight month during April, adding another 288,000 to payrolls, as jobs were created in nearly every sector at a pace that handily outstripped expectations, a Labor Department report on Friday said.

    Adding to evidence a revitalized labor market may take some sizzle from the jobs issue ahead of November presidential elections, the government revised up its estimates for job creation in both February and March.

    Labor said 83,000 jobs were added in February and 337,000 in March instead of 46,000 and 308,000 respectively it had previously reported.

    The back-to-back monthly gains in March and April were the strongest in four years, the department said.

    In addition to the surprisingly robust job growth, the unemployment rate dipped to 5.6 percent. Wall Street economists had forecast 173,000 new jobs would be created in April and the unemployment rate would be unchanged at 5.7 percent.

    "Since August 2003, payroll employment has risen by 1.1 million," said Kathleen Utgoff, Bureau of Labor Statistics commissioner. "In April, job growth was widespread for the second consecutive month."

    There were 21,000 new jobs in manufacturing on top of 9,000 in March, a third straight month that this category of employment increased after a long period of decline.

  2. #2
    administrations cannot be held compltely responsible for good or bad ecomonys..
    what ever way you look at it the BEST President we had(CLinton) watched over the greatest economy the US ever had...

  3. #3
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    [img]http://www.tech-sol.net/humor/democratic_seal.jpg[/img]

  4. #4
    republicans can't take credit for the 'so called' good economy right now...
    $2.00 for gas aint so good!

  5. #5
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    [b]Tom Dachle upon hearing the news of the positive jobs report[/b]

    [img]http://users.wi.net/~johnh/dachlegoesdown.jpg[/img]

  6. #6
    [quote][i]Originally posted by bman[/i]@May 7 2004, 10:37 AM
    [b] republicans can't take credit for the 'so called' good economy right now...
    $2.00 for gas aint so good! [/b][/quote]
    I believe this fits in to John Kerrys Catastrophe list.

  7. #7
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    [quote][i]Originally posted by chiefst2000+May 7 2004, 10:39 AM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>[b]QUOTE[/b] (chiefst2000 @ May 7 2004, 10:39 AM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin--bman[/i]@May 7 2004, 10:37 AM
    [b] republicans can&#39;t take credit for the &#39;so called&#39; good economy right now...
    &#036;2.00 for gas aint so good&#33; [/b][/quote]
    I believe this fits in to John Kerrys Catastrophe list. [/b][/quote]
    I thought the same thing this morning :lol:

  8. #8
    when the economy is bad = clinton&#39;s fault

    when the economy is good = because of bush

    makes sense to me ... :blink:

  9. #9
    [quote][i]Originally posted by bitonti[/i]@May 7 2004, 10:53 AM
    [b] when the economy is bad = clinton&#39;s fault

    when the economy is good = because of bush

    makes sense to me ... :blink: [/b][/quote]
    The Bush tax cuts were the main catalyst for the current upswing in the economy. The same tax cuts which Kerry has promised to elliminate.

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    Fact- more Americans are working now than ever before in Her history...

    Rats reaction- This President&#39;s economic policies are a disaster and he&#39;s a failure....


    makes even more sense :blink:

  11. #11
    the economy was the greatest during the Clinton years (w/o the tax cuts)...
    but That was b/c of the Internet&#33;

    bush&#39;s quick fix economics (AKA tax cuts that most middle class people don&#39;t even notice) just puts off the misery for a few more years...it&#39;s very much like the Redskins free agent signings...eventually they will pay dearly&#33;

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    [quote][i]Originally posted by bman[/i]@May 7 2004, 11:02 AM
    [b] the economy was the greatest during the Clinton years (w/o the tax cuts)...
    but That was b/c of the Internet&#33;

    bush&#39;s quick fix economics (AKA tax cuts that most middle class people don&#39;t even notice) just puts off the misery for a few more years...it&#39;s very much like the Redskins free agent signings...eventually they will pay dearly&#33; [/b][/quote]
    of course the internet has shown itself to be a staple of longevitiy of positivity in the economy as opposed to a quick fix hasn&#39;t it? (Just ask those in Silicon Valley or even William Shatner next time you see him strolling down the street :lol: )

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    [quote][i]Originally posted by bitonti[/i]@May 7 2004, 10:53 AM
    [b] when the economy is bad = clinton&#39;s fault

    when the economy is good = because of bush

    makes sense to me ... :blink: [/b][/quote]
    Bit,

    We all know that teh Prseident effect on an economy is not what people make it out to be. To be honest, I thionk both Clinton and Bush handled the economy well. That may seem like a contridiction, but at the time, it was what the doctor prescribed. Unfortunately, most people see the president as being too large of a factor in the economy. While I do think Bush&#39;s policies have helped the economy, to give him credit for the rebound is unfair. These things are largely cyclical.

    I am highly critical of the fed&#39;s current actions. Inflation is starting to creep up. While Unit labor costs are still historically low, they are increasing. Inflation is also present in commodities and energy, but commodities and energy are not as signioficant to GDP and they were just thirty years ago as the nature of economy has changed. While I think the fed plan of gradual increase of rates is the correct one, I dont think they should wait til inflation is full blown. Rate increases lag significantly interms of their effects. Waitng til inflation is here is just plain silly, IMO. All signs are inflation is on thje horizon and I would rather keep it in check by starting to raise rates. Money will still be cheap at 2.25%. Policy would still be accomidative. I really just dont understand why we need interest rates as low as we do. To use an anology, when a person is getting better, you lessen the dosage of medication. Our economy is relatively heathly right now and doesn&#39;t need a full dose.

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    [quote][i]Originally posted by bitonti[/i]@May 7 2004, 10:53 AM
    [b] when the economy is bad = clinton&#39;s fault

    when the economy is good = because of bush

    makes sense to me ... :blink: [/b][/quote]
    I have to agree with Bitonti here. Business cycles fluctuate and often politicians are their victims or benefactors, largely through no fault or merit of their own. Especially since the Fed is (at least ostensibly) independent. Fiscal policy, like tax cuts, can offer stimulus, which Bush&#39;s clearly have. But when fiscal policy is used [i]and[/i] montary policy, like keeping rates down and increasing the money supply, of COURSE we should see real GDP growth in the short term. It&#39;s almost impossible NOT to with this amount of stimulus. Soon, we will HAVE to tighten the money supply, or else inflation will rise. Rates will go up and growth will slow...there are always lags, so who knows what the emloyment situation will be like in a long time.

    However, the business cycle goes on and, while the direction (and perception of the direction) can help or hurt an incumbent, YOU and I are responsible for the state of the economy, truthfully, at lkeast in the long term. Politicians have to be concerned with the short term, by definition. I still maintain that the market is far above fair value and that this is merely a "sucker&#39;s rally" on the long, painful trip down back to fair value from the heights of the irrational exuberance of the late 90&#39;s. This recovery is all based on asset appreciation, not improvements in real wages or income. Our public and private debt levels are way too high. The low rates have been exacerbating the fall of the dollar. The market is over-valued. We are at a risk of inflation.

    If you give Bush credit for cuts spurring short-term growth, you need to rip him for allowing spending to balloon to unsustainable levels. 9-11 and the war are reasons, but even ignoring those costs we see that spending is out of control. There&#39;s no free lunch. You have to cut butter supplies if you spend more on guns...especially with reduced tax revenue. It&#39;s basic stuff.

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    [quote][i]Originally posted by jets5ever+May 7 2004, 11:09 AM--></span><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>[b]QUOTE[/b] (jets5ever @ May 7 2004, 11:09 AM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin--bitonti[/i]@May 7 2004, 10:53 AM
    [b] when the economy is bad = clinton&#39;s fault

    when the economy is good = because of bush

    makes sense to me ... :blink: [/b][/quote]
    I have to agree with Bitonti here. Business cycles fluctuate and often politicians are their victims or benefactors, largely through no fault or merit of their own. Especially since the Fed is (at least ostensibly) independent. Fiscal policy, like tax cuts, can offer stimulus, which Bush&#39;s clearly have. But when fiscal policy is used [i]and[/i] montary policy, like keeping rates down and increasing the money supply, of COURSE we should see real GDP growth in the short term. It&#39;s almost impossible NOT to with this amount of stimulus. Soon, we will HAVE to tighten the money supply, or else inflation will rise. Rates will go up and growth will slow...there are always lags, so who knows what the emloyment situation will be like in a long time.

    However, the business cycle goes on and, while the direction (and perception of the direction) can help or hurt an incumbent, YOU and I are responsible for the state of the economy, truthfully, at lkeast in the long term. Politicians have to be concerned with the short term, by definition. I still maintain that the market is far above fair valuem and that this is merely a "sucker&#39;s rally" on the long, painful trip down back to fair value from the heights of the irrational exuberance of the late 90&#39;s. Our public and private debt levels are way too high. The low rates have been exacerbating the fall of the dollar. The market is over-valued.

    If you give Bush credit for cuts spurring short-term growth, you need to rip him for allowing spending to ballon to unsustainable levels. 9-11 and the war are reasons, but even ignoring those costs we see that spending is out of control. There&#39;s no free lunch. You have to cut butter supplies if you spend more on guns...especially with reduced tax revenue. It&#39;s basic stuff. [/b][/quote]
    well said and I agree with you on the most part. I am not as bearish on you in terms of the market. I dont see a meaningful rally, but I dont see the gloom you are predicting either.

    As Friedman says, the best way to cut spending is to cut taxes. I hope this is the case for us. Id rather see spending cut than taxes increased.

    I think we both agree the Greensapn is dropping the ball right now.

    Consumer debt doesnt scare me right now, except for the cases I alluded to in the other thread earlier this week where people are using cheap money to make risky investment. I read an article today where the fed shares a similar concern. Somew people are going to feel the hurt.

  16. #16
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    [quote][i]Originally posted by bman[/i]@May 7 2004, 11:02 AM
    [b] bush&#39;s quick fix economics (AKA tax cuts that most middle class people don&#39;t even notice) [/b][/quote]
    I am not getting into this debate. But I think that statement is unfair. You can argue all day over the long term ramifications...I was personally against the new tax cuts. But to say that they were not noticed is not true. I am middle class and I am loving the new tax rates. I do taxes on the side for some people and they all seemed to enjoy the tax cuts as well.

  17. #17
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    Lawyers -

    First of all, Friedman is the MAN&#33; Secondly, yes, Greenspan needs to step it up.

    I enjoyed reading your post as well, as I do all of your posts, especially on economics. You&#39;re taking the CFA in a few weeks, right?

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    [quote][i]Originally posted by jets5ever[/i]@May 7 2004, 11:39 AM
    [b] Lawyers -

    First of all, Friedman is the MAN&#33; Secondly, yes, Greenspan needs to step it up.

    I enjoyed reading your post as well, as I do all of your posts, especially on economics. You&#39;re taking the CFA in a few weeks, right? [/b][/quote]
    Im putting it off again. I really need to take a course or use one of the guides. Ive been trying to do it on my own and its just too much, especiallly all the accounting. Hopefully will take it in December.

  19. #19
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    5

    Saw this article yesterday that pretty much merges your view and my view on the market.


    The Big Picture About this page | Print version

    Analysis of major issues.
    Posted 8:30 ET Monday and Thursday. Archive



    Updated: 10-May-04 08:37 ET

    Sit or Sell?

    [Briefing.com - Dick Green] The interest rate fears have become pervasive. This morning, the stock market is indicated sharply lower. This is understandable, but from a longer-term view, the market is over-anticipating the probable increase in rates. Trading might warrant a near-term bearish stance, but the longer-term perspective for investing has not changed.

    Interest Rates are Critical
    Interest rates drove this market up, and are now driving the market down. Beginning in May of last year, Briefing.com turned bullish largely because low interest rates supported stock valuations. The bearish argument was based largely on the belief that the economic upturn was not sustainable, or not even real. That proved wrong.

    Now that the economic argument is over, the bearish argument has turned to interest rates. Finally, the bears have something legitimate to latch on to.

    Briefing.com has long said on Page One that interest rates would send a warning flag if the 10-year note yield went above 4.50% and then through 4.75%. This morning, the 10-year yield went to 4.76%. Higher interest rates significantly impact stock valuations, and raise the prospect of selected weakness in the economy. As a result, Briefing.com has been advocating a defensive and cautious approach to the market the past several months. This is still our view.

    For traders, the market action is very poor, and might suggest selling positions or even shorting. For investors, however, a little perspective is needed. The Fed hasn&#39;t even raised interest rates once, and the 10-year note still has a 4 at the front of its yield. It is very premature to suggest that rising interest rates are about to kill the economic upturn. The Fed hasn&#39;t even talked about taking away the punch bowl yet, but some analysts are ready to declare the party over.

    The Math
    If the stock market drops 10% from now until the end of the year, and earnings rise as consensus forecasts call for (about 15% growth) on the S&P 500, the price/earnings ratio on the S&P for as-reported earnings through the fourth quarter of 2004 will be about 16.5.

    That is not only no longer high, it would prove to be a steal. After all, interest rates at that time are not likely to be higher than 2 1/2% on the fed funds rate and 5 1/2% on the 10-year note yield at that time. Economic growth is likely to continue at a strong enough pace such that further growth will be expected in 2005.

    A 16.5 price/earnings multiple equates to a 6% earnings yield, and would represent real value even with the 10-year note as high as 5 1/2%. Thus, the downside risk to the market is limited so long as the earnings growth outlook remains strong. And, the earnings momentum is a long way from slowing down. The Fed still has an extremely accommodative policy in place and will be moving toward a neutral stance over the year ahead. It will not be attempting to slow down an overheating economy for at least a couple of years.

    A Little Perspective
    Right now, all the market sees is that interest rates are going higher. The way the markets work, that means taking a ruler, drawing a straight line up, and voila&#33;, rates keep going up forever.

    This has already led to talk that the housing market will crash, that consumer spending will be stopped dead in its tracks, and that business will have to cut back on investment.

    All this even before the Fed has even raised rates once. It is amazing that just six weeks ago (prior to the March employment report), there was still a prevalent argument that the jobless recovery indicated that economic growth was unsustainable. Now, the same people that tried that argument are suggesting that the economy is so strong that rates will go up so much that the economic upturn will be stopped dead in its tracks. The Fed simply is not going to let that happen.

    Briefing.com&#39;s view is that rates definitely need to rise over the year ahead to at about 2 1/2% in the short end, and perhaps 5% to 5 1/2% on the 10-year note. That is not dramatic enough to curtail the very strong momentum in the economy or to cause financial dislocations.

    The Fed does need to eliminate the excessive stimulus that is now in place, and move to a neutral stance. The means putting short-term interest rates near the rate of inflation, with a more normal slope to the yield curve. As this occurs, economic growth for 2005 will likely come in close to 3%, consistent with the longer-term secular trend plus a small dose of higher productivity.

    That will allow earnings in 2005 to proceed at a mid-single digit rate. Reports of the death of this economic upturn, shortly after its perceived birth, are greatly exaggerated.

    What it All Means
    Short term, interest rate fears are ruling the market. Depending on how active a person one wants to trade, this might mean betting on a lower market over the weeks ahead.

    For longer term investors, however, a cool head is needed. The market is over-anticipating the impact of Fed tightening. The downside risk to the market, given the strong earnings growth, is not huge. This is not a bubble about to burst as in 2000.

    Rather, the stock market is attempting to adjust to where rates might be a year from now. In our view, the math suggests the stock market has already adjusted to all of the tightening the Fed will enact and has overreacted to where the 10-year note is likely to settle. This doesn&#39;t mean the market can&#39;t go down over the month ahead. It very well might.

    However, market valuations are very reasonable at this level for the S&P 500. For a 401k or long-term portfolio, this remains a time to stay defensive, but not to panic. Many investors overreact to market fluctuations, and end up following the traders, rather than staying ahead of them. The math still strongly suggests that the S&P 500 will end the year higher than current levels.

    It is too early to take advantage of this market dip to add to positions, so we aren&#39;t advocating buying. However, for investors it is more of a hold situation than a sell.

  20. #20
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    Great article Lawyers. Some interesting stuff in there. He assumes a lot about the Fed, though, and about how far stocks will fall. On one hand, he seems to say that people are ALREADY over-reacting to just the [i]perception[/i] of higher rates, and yet then says that growth will continue even after they go to 2.5%. We&#39;ll see, he may even be right about 2005, and probably is if the Fed takes the prudently incremental steps he thinks they will. Higher rates [i]should [/i]make the dollar stronger. Housing prices may dip, consumers may spend less...who knows in the short-term? But the market is still very over-valued and becoming more so. The pain is coming, IMO. If not 2005, then certainly by 2006, I&#39;d imagine.

    But hey - opinions are like a-holes, you know?

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