Man Without Qualities

Friday, August 06, 2004

Not The Best News For An Incumbent, But ... II

This report is likely more politically significant than today's ambiguous employment release:

Consumer confidence surged during the past month to its highest level since the beginning of the year, with Americans feeling better about their own finances and more optimistic about the future despite renewed terror threats and rising oil prices. .... Consumer confidence has been rising for the past four months amid signs of economic recovery. .... While months of steady improvement in the job market until Friday's announcement of a slowdown has fueled optimism, the AP-Ipsos index found the increase this time was based more on people's improved perceptions of their own personal finances, and their view of how their local economy will be doing six months from now. The snapshot of consumer sentiment found Americans considerably more upbeat about the economy than a year ago, when the index was at 89.0. Much of the improvement came during the past month, however.

As noted in the prior post:

Voters will not make their choices in November by referring to abstract government economic numbers. If that were the way voters acted, Mr. Bush's poll numbers would be a good deal higher than they are. As noted here often, voters will choose in November mostly on the basis of the domestic economy - which means how prosperous and economically secure they feel at the time. In the past, that feeling has had more to do with the current unemployment rate than almost anything else - just ask Grey Davis, who was drummed out of office during a period of relatively high state unemployment while shouting that a lot of "new jobs" had been created on his watch.

That's still true.


"We do not think that this report marks a weakening in the economy. One interpretation of these data, which would be consistent with the ISM reports, is that productivity growth is fueling the acceleration in economic activity in July. However, it is difficult to put too much weight on the employment data when there is a divergence of almost 600,000 between the two measures of job creation in July."

-- John Ryding, chief market economist, Bear Stearns

"The true rate of job growth is probably somewhere between the two" -- the numbers shown by the household survey and those shown by the establishment survey." The increase in average hourly earnings coupled means the paltry payroll growth "masked an increase in demand for labor services. … It's the growth of weekly earnings … which might allow consumer spending to grow despite July's stalling of payrolls."

-- John Lonski, economist, Moody's Investors Service

Let's see, there were 32,000 new jobs according to the payroll survey, and the household survey increased by 629,000. Mr. Lonski thinks that the real number is somewhere between the two. Wall Street had expected roughly 240,000 new payroll jobs. By my figuring, 240,000 is very much between 32,000 and 629,000.

Just a thought!

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