Two Pieces of GOOD Economic News!!

07 January 2012 / Uncategorized / Comments Off on Two Pieces of GOOD Economic News!!

Dare we say the glass is half...full?

200,000 Jobs Added Last Month!

Employers in the United States added 200,000 jobs last month, the Labor Department said Friday, a report that came on the heels of a flurry of heartening economic news and signaled gathering momentum in the recovery. Consumer confidence lifted, factories stepped up production and small businesses showed signs of life. The nation’s unemployment rate fell to 8.5 percent, its lowest level in nearly three years.   It was the sixth consecutive month that the economy showed a net gain of more than 100,000 jobs.

Even with this good news, there are reasons for caution. Many economists do not expect growth in 2012 to keep up the pace of the fourth quarter of last year. Expectations are generally positive, but very modest.   But economists like Markus Schomer of PineBridge Investments, now have a much rosier view than they had back in August, after a spring and summer of lost economic ground and a demoralizing political debate over the nation’s debt ceiling. At that time, Mr. Schomer thought, as many did, that government dysfunction was paralyzing the economy. Now, he is ratcheting up his growth forecast for 2012. “The improving trend in the U.S. labor markets is not just a temporary blip, but seems to be something quite sustainable, which is not to say that there are no potential headwinds — last year’s signs of momentum were dashed by global factors like gas prices and the earthquake in Japan.  I’m a little bit concerned that Iran could be this year’s Japan,” Mr. Schomer said.

Among the pieces of good news in Friday’s report:  The drop in the jobless rate came largely from real gains, not from discouraged workers giving up the job hunt. The new jobs were spread broadly across industries, with transportation and warehousing, retail, manufacturing and restaurants all adding jobs.  In addition, average wages on private payrolls ticked up by 4 cents an hour, though over the year wages have not kept pace with inflation. And government downsizing, which has been a drag on the jobs numbers, slowed in December, with only 12,000 public jobs lost. The private sector added 212,000 jobs.


 Manufacturing Is Surprising Bright Spot in U.S. Economy

For the first time in many years, manufacturing stands out as an area of strength in the American economy.

When the Labor Department reports December employment numbers on Friday, it is expected that manufacturing companies will have added jobs in two consecutive years. Until last year, there had not been a single year when manufacturing employment rose since 1997.  And this week the Institute for Supply Management, which has been surveying American manufacturers since 1948, reported that its employment index for December was 55.1, the highest reading since June. Any number above 50 indicates that more companies say they are hiring than say they are reducing employment.

As stores have filled with inexpensive imports from China and other Asian countries, the perception has risen that the United States no longer makes much of anything. Certainly there has been a long decline in manufacturing employment, which peaked in 1979 at 19.6 million workers. Now even with hiring over the last two years, the figure is 11.8 million, a decline of 40 percent from the high. But those numbers obscure the fact that the United States remains a manufacturing power, albeit one that has been forced to specialize in higher-value items because its labor costs are far above those in Asia.

The value of American manufactured exports over a 12-month period peaked at $1.095 trillion in the summer of 2008, just before the credit crisis caused world trade volumes to plunge. At the low, the 12-month figure fell below $800 billion, but it has since climbed back to $1.074 trillion. Those figures are not adjusted for inflation.   In total exports, including manufactured goods as well as other commodities like agricultural products, the United States ranked second in the world in 2010, behind China but just ahead of Germany. For the first 10 months of 2011, Germany is slightly ahead of the United States.

The United States is particularly strong in machinery, chemicals and transportation equipment, which together make up nearly half of the exports. Exports of computers and electronic products are growing, but are well below their precrisis levels. Production of cheaper computers and parts shifted to Asia long ago.

We at Widget Bookkeeping and Tax are hoping a recovery is already occurring and will bring profitability to all of us in 2012!! Happy New Year!!

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