The Daily Dish 2.1.13
After two years and four meetings the administration announced yesterday the end of its jobs council. With unemployment still at 7.8 percent (latest report out at 8:30 AM today), it’s tough to see the council’s success. The Wall Street Journal reports that “recommendations that were implemented include retrofitting government buildings to be more energy-efficient, taking steps to create construction jobs and making it easier for Americans to start small businesses, White House officials said.”
Meanwhile Gallup reports that “more U.S. small-business owners say they let employees go than hired them on average over the past 12 months, for a net hiring index of -10 in January, according to the Wells Fargo/Gallup Small Business Index.” Why? Aside from “overall business conditions,” “61% of owners pointed to worries about the potential cost of healthcare, 56% to worries about new government regulations, and 55% to worries about cash flow or the ability to make payroll.”
Ahead of the jobs report, let’s take a look back at the last month of economic data. Last month the economy created 155,000 jobs and the unemployment rate was 7.8 percent. In the first month of 2013 we learned that:
- Non-durable factor orders fell 0.6 percent, the steepest decline since June;
- The trade deficit expanded to $48.7 billion from $42.1 billion in October;
- The producer price index dipped 0.2 percent in December;
- Retail sales gained 0.5 percent after a 0.4 percent rebound the previous month;
- Consumer Price Index for All Urban Consumers was unchanged in December, on a seasonally adjusted basis;
- Housing Starts increased 0.3 percent in December;
- The Philadelphia Fed Survey showed manufacturing activity declined slightly;
- Consumer Confidence fell to 58.6 from 66.7 in December;
- ADP shows private sector employment increased 192,000 from December to January;
- Fourth Quarter GDP contracted 0.1;
- Personal income increased 2.6 percent and disposable personal income increased 2.7 percent;
- The House and Senate voted to extend the debt ceiling until May 19. DHE makes his prediction for the 8:30 AM report below.
Get our full analysis in the U-6 Fix or by following @djheakin.
Doug’s Daily Economic Outlook
Today is jobs day -- the Department of Labor will release the latest temperature check on the tepid U.S. recovery. High frequency indicators have been mixed since the December report and, importantly, the ADP employment report on Wednesday was essentially unchanged since December In light of that, the best guess is that January will be much like the December report and I'm expecting that there will be 150,000 new jobs, and an unemployment rate that ticks up to 7.9 percent.
The real question will be the details inside the report. December saw some relatively silver linings -- wage and hours growth, widely dispersed job gains, and increases in the labor force. Will this trend continue and bode well (at least in the subdued, "new normal" sense) or will the employment report revert to its recent tradition of mixed messages? The foundations of income growth are especially important in light of the weak trend growth in the economy and the need for a stronger household and business sector in 2013.
What We’re Reading
Income surge puts consumers in better shape – American income growth surged in December as companies rushed to make dividend payments before higher tax rates set in, while buoyant wage growth also gave a lift to households. U.S. personal income rose 2.6 percent last month, the biggest increase in eight years, the Commerce Department said on Thursday. While much of the gain was due to special payments aimed at beating tax increase due to begin this month, wages still grew at one of the faster rates seen last year. (Reuters)
Senate votes to temporarily suspend federal debt limit – Congress gave final approval Thursday to a plan to temporarily suspend the legal limit on the national debt, permitting the Treasury Department to keep borrowing and lifting the threat of a government default until August. The measure, approved by the Senate 64 to 34, now goes to the White House for President Obama’s signature. Without congressional action, the administration had been warning that the Treasury would run out of money to pay the nation’s bills by early March. (WaPo)
Gasoline Prices Get Early Start on Spring Surge – Gasoline prices are getting an early start on their annual spring march higher. The average U.S. retail price rose 13 cents over the past two weeks to $3.42 per gallon, and within a few days it will likely set a record for this time of year. The culprits: Rising crude oil prices, slowing output at refineries that are undergoing maintenance, and low supplies of gasoline. (AP)
Report warns of US state inactivity on consumer health reforms – Only 11 of the 50 states have moved to implement new consumer safeguards under President Barack Obama’s healthcare law, raising questions about how major health insurance reforms will be enforced, a report released Friday says. The report by the nonpartisan Commonwealth Fund found 39 states have yet to pass laws or issue regulations on seven reforms, including coverage for people with preexisting medical conditions, a ban on coverage waiting periods and limits for out-of-pocket consumer costs. (Reuters)
Fannie Mae: Book of mortgage business declines – Fannie Mae’s book of mortgage business decreased at a compound annualized rate of 4.8%, compared to 4% last month, according to GSE’s monthly summary. For the full year of 2012, Fannie Mae’s gross mortgage portfolio totaled about $633 billion, down from $708 billion a year prior. (Housingwire)
Also From the Forum
What Should We Expect From the Next Senate Budget? – For the first time in more than three years the Senate has said it will produce a budget through regular order. So let’s get to the prediction. To make an educated guess, we look at votes the Senate has taken, in the absence of a budget proposal of their own, and the statements of incoming Budget Committee Chairman Patty Murray since assuming her new role. (Op-Ed on Yahoo! Finance)
