Good Morning –
BREAKING – ADP has private-sector jobs up 201,000; 185,000 of that in new service jobs. For a more solid read, we’re looking for the employment number in the non-manufacturing ISM out at 10 AM.
Over the next 24 hours as President Obama addresses the Democrat convention, consequential numbers on non-manufacturing ISM, weekly jobless claims, and national unemployment will be released, undoubtedly having an effect on the national dialogue.
On a another note, REMINDER: Today is the deadline under the Sequestration Transparency Act of 2012 where the Administration is required to detail the cuts scheduled to take place under the sequester on January 2, 2013.
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Doug’s Daily Economic Outlook
The defining characteristic of this era is policy uncertainty. Firms must navigate a potential future littered with unsustainable debt, unknowable entitlement reforms, an outdated tax system that needs annual extension, and — at the end of the year — the fiscal cliff. Today will provide important information on both the resilience of those firms and the policy uncertainty. Data released today include the non-manufacturing ISM (10 AM) and the ADP employment report. Prior to these data, the economy appears to have created 100,000 jobs in August — and estimate that I will update after the data. Today the Sequestration Transparency Act of 2012 requires that the Administration reveal the precise cuts in the $109 billion sequester that will occur on January 2, 2013. Stay tuned….
Predictions in the Press
Survey Says: Modest U.S. Growth (Maybe) – Tuesday’s ISM manufacturing survey for August was troubling, at 49.6, but not enough to change markets’ tone or even dampen forecasts for Thursday’s nonmanufacturing report. Consensus expectations call for a rise in this survey to 52.8 from 52.6 in July, which itself was a positive surprise. Readings below 50 signal contraction, above it expansion. (WSJ)
Growth In U.S. Service Industries Probably Eased in August – The pace of expansion in U.S. service industries probably eased in August, showing the biggest part of the economy is having trouble gaining traction, economists said before a report today. The Institute for Supply Management’s non-manufacturing index, which covers about 90 percent of the economy, is projected at 52.5 last month following July’s 52.6, according to the median forecast of 76 economists in a Bloomberg survey. (Bloomberg)
Jobs growth seen lackluster in August, Fed action eyed – Jobs growth likely cooled in August with the elevated unemployment rate remaining stuck as businesses worried over an uncertain economic outlook, an outcome that could potentially seal the case for further easing of monetary policy. (Retuers)
What We’re Reading
The United States Has a Credit Problem – The Treasury Department has confirmed that the national debt exceeded $16 trillion at the end of August. This figure is so large as to be almost an abstraction, a figure divorced from any tangible context. However, under current fiscal policies, this unprecedented degree of national indebtedness is only expected to grow, both in absolute terms and as a share of the economy. (AAF’s Gordon Gray in Yahoo! Finance)
Second quarter productivity raised, wage inflation muted – Nonfarm productivity increased at a much faster clip than initially thought in the second quarter as businesses largely held the line on hiring even as output rose, helping to keep inflation pressures tamped down. Productivity increased at a 2.2 percent annual rate, the Labor Department said on Wednesday. A month ago it estimated that productivity, which measures hourly output per worker, rose at 1.6 percent pace. It fell at a 0.5 percent rate in the first three months of 2012. (Retuers)
Clinton Nominates Obama, Rebuts Romney Criticism on Jobs – Bill Clinton said President Barack Obama deserves re-election because he contained the economic crisis and put the nation on a path to recovery, casting the 2012 election as a choice between “shared opportunities and shared responsibility” and a “winner-take-all, you’re on your own society.” (Bloomberg)
Oil rises to above $96 on hopes European Central Bank plan will ease region’s debt crisis – The ECB is expected to announce a bond-buying program to reduce high borrowing costs in Spain and Italy. That could lower their chances of needing an emergency bailout, ease concerns about their economies and translate into growth and more demand for energy. (WaPo)
U.S. and China Yield Little Ground in Talks – China and the U.S. made little visible progress in resolving thorny diplomatic disputes during a visit by Secretary of State Hillary Clinton as both sides stuck to long-standing positions on issues from regional territorial claims to violence in Syria. (WSJ)
Student Loans: Debt for Life – In 2010 student debt exceeded credit-card debt for the first time. In 2011 it surpassed auto loans. In March, the Consumer Financial Protection Bureau announced that student debt had passed $1 trillion. It grew by $300 billion from the third quarter of 2008 even as other forms of debt shrank by $1.6 trillion, according to a separate tabulation by the Federal Reserve Bank of New York. (Bloomberg Businessweek)
Also From the Forum
$16 Trillion and Counting – In a time when gross debt is spiraling out of control and about to breach $16 trillion, an assessment of the regional distribution of federal indebtedness is appropriate. Distributing this individual share of the national debt provides a more localized perspective on the magnitude of the national debt, and necessarily, the urgent need to address its unsustainable growth. (Full breakdown here)
Debt and Deficits: The Obama Factor – The total Public Debt stands at over $16 trillion, with FY2011’s $1.3 trillion deficit, 8.7 percent of GDP, having contributed significantly to our nation’s credit card bill. (More Debt Facts here)