Bloomberg Businessweek: 07. December 2014
US President Barack Obama announces the resignation of US Secretary of Defense Chuck Hagel (L) in the State Dining Room of the White House in Washington, DC, Nov. 24, 2014.
So much for secular stagnation.
In the wake of November’s surge in employment and stronger wages, even skeptics of the U.S. economic recovery are turning into optimists.
The 321,000 advance in payrolls followed a 243,000 increase in October that was stronger than previously reported, Labor Department figures showed yesterday. It marked the 10th straight month that employment has increased by at least 200,000, the longest stretch since the 19 months that ended in March 1995. The jobless rate held at a six-year low of 5.8 percent, and earnings rose by the most since June of last year.
In his weekly address, President Barack Obama said today that the job gains aren’t a “fluke” and they are found in high-wage industries.
“Overall wages are on the rise, and that’s some very welcome news for millions of hardworking Americans,” Obama said. “Because even though corporate profits and the stock market have hit all-time highs, the typical family isn’t bringing home more than they did 15 years ago. And that still has to change. And a vibrant jobs market gives us the opportunity to keep up this progress and begin to undo that decades-long middle-class squeeze.”
Improved Outlook
From factories to offices and retailers, employers took on more staff last month, giving American consumers the bump in pay needed to drive holiday spending. Economists including former U.S. Treasury official Brad DeLong, Nobel Prize winner Paul Krugman and Stephen Stanley of Amherst Pierpont Securities say the hiring surge shows the outlook has finally improved.
It was “the first good monthly report of the recovery,” DeLong wrote yesterday on his blog and in a Twitter post. That’s because it’s the first since before the recession in which payroll growth exceeded 300,000 with unemployment below 6 percent, he said.
The breadth of industries hiring last month was the broadest since 1998, a sign the benefits of the expansion were rippling through the economy. Factory payrolls rose by the most in a year, professional and business services companies took on more employees than at any time since November 2010, financial firms boosted payrolls by the most since early 2012 and hiring at retailers picked up.
Seasonal Job
Venus Bryan is among Americans seeing an improvement, even as it’s been slow to develop. After a three-month search, Bryan, 24, will start a seasonal job next week at J.C. Penney Co. in Roanoke, Virginia, where she’ll be creating displays and changing signs and price tags on merchandise.
While she’d like to be able to put her sociology degree to use one day, Bryan said she needed to get work experience on her resume. Her new full-time job is “a starting point,” she said.
“It may not be exactly what you want at that moment, but I think the job market is getting better,” Bryan said. “It just may not be improving fast enough for some people.”
Treasury yields rose as traders bet the improvement in the labor market will help reassure Federal Reserve policy makers that the economy is strong enough to withstand an increase in borrowing costs next year. The yield on the benchmark 10-year Treasury note climbed to 2.31 percent in New York late yesterday from 2.24 percent the prior day.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 trading partners, gained 0.9 percent, and the Standard & Poor’s 500 Index advanced 0.2 percent to close at a record 2,075.37.
Topping Forecasts
The November gain in U.S. payrolls was the biggest since January 2012, and exceeded the median forecast in a Bloomberg survey of 100 economists, which called for a 230,000 increase. Estimates ranged from increases of 140,000 to 306,000.
Revisions added 44,000 jobs to payrolls in the previous two months. To calculate the data, the Labor Department surveys businesses and households for either the pay period or week that includes the 12th of the month.
“The underlying strength is definitely there and that’s evidenced by the fact that the September and October numbers were also revised up,” said Nariman Behravesh, chief economist for IHS Inc. in Lexington, Massachusetts, and the second-best forecaster of payroll gains over the last two years, according to data compiled by Bloomberg. “We have a very strong labor market.”
Secular Stagnation
The term secular stagnation, coined by economist Alvin Hansen during the Great Depression, refers to an extended period of little or no economic growth. It has recently been revived by former Treasury Secretary Lawrence Summers and others to describe the state of the economy after the last recession.
Summers stuck with his warning that the economy could be mired in an era of low.
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