Jobs on track?
But it’s not all gloom and doom apparently. Slowing GDP growth points toward recession sure, but the jobs market seems still to be growing better than expected:
The labor market may not be in weak shape after all. The latest forecast by payroll firm Automatic Data Processing shows job creation soaring in January.
Nonfarm private employment surged by a seasonally adjusted 130,000 during the month, ADP said. Adding in 22,000 government jobs (the average gain over 12 months), total nonfarm payroll gains are estimated at 152,000 for the month. That’s more than double most economists’ estimates for Friday’s Labor Department report. It would also represent a huge rebound from the 18,000-job increase the government reported for December. (ADP revised its December down to a gain of 37,000.)
The figures are compiled by the forecasting firm Macroeconomic Advisers using ADP payroll data covering about 24 million workers. The report said service-sector employment grew by 141,000, while employment in the goods-producing sector declined by 11,000, the fourteenth straight monthly decline. Manufacturing employment was flat during January, following 18 consecutive monthly drops.
One is left to wonder, though many economic statistics are deteriorating, why is the Fed cutting so aggressively when perhaps the most important economic statistic–i.e. unemployment–is still hovering around all-time lows? Even after last month’s jump from 4.7% to 5.0%, unemployment is still very low by historical standards.
Bernanke’s a smart guy, though, and likely sees storm clouds in the financial sector that WILL impact the jobs market more significantly. Still, such aggressive rate cutting even before the economy has fallen into recession seems like an overreaction. One that will only serve to blow up a new credit bubble…..