More Americans Working...But Are They Buying More?
Nonfarm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday. January and February employment figures were revised to show 7,000 more jobs than previously reported.
The strong job gains come amid indications the economy suffered a minor setback early in the year as bad weather and rising energy prices dampened activity.
"All the evidence is pointing to a strengthening labor market," said Bill Cheney, chief economist at John Hancock Financial Services in Boston.
Now, the Not-So-Good News (granted, this was written two days ago):
Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.
The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.
Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.
What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016.
But isn’t the economy growing again – by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent.
Bottom Line: We're pass the point where just getting people working again will "make everything better," we need to get people to start buying again as well. Supply and Demand, Employment Rates...they mean little if people are consuming goods and services. People are saving to pay for the essentials (like food and shelter) and they're anticipating another recession (regardless of what they're hearing in the news).
how do we get people to start buying things again? Well, the easiest way is for the prices of gasoline to drop (the less expensive it is to fill your tank, the more likely you are to drive/travel to places other than work and home), but that's not going to happen anytime soon.
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