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Friday, September 12, 2003

US Economy Roundup

Various bits and pieces of data as the week draws to a close. The main news of the day is probably the slight drop in consumer sentiment. At the same time producer prices, excluding food and energy, are not only tame, but hovering nervously round the !% inflation mark. August retail sales didn't rise as much as expected, but the big news of this week is undoubtedy the continuing high level of new unemployment signings. In fact the Labor Department report said 422,000 people filed for benefits in the week ended Sept. 6, that's considerably over the 'magic' 400,000, and way beyond the 350,000 or so Brad reckons the US needs just to stand still. Now while we have to wait a little bit to see how this develops, it has to be a very preoccupying situation for the US.

I was sufficiently puzzled by all this as to go over to the BLS site and check out the details. I found, going back to the August numbers, that employment in the information sector fell by 16,000 over the month. In fact since the peak in March 2001, the number of jobs in this sector has declined by 459,000, or about 12 percent. At the same time computer systems design lost 8,000 workers during August and, since peaking in March 2001, employment in this industry has declined by 232,000. I was puzzled why the sum of manufacturing job loss and service job loss was more than the net job loss, and I found, logically enough, that two areas gained employment. There was a gain of 25,000 jobs in health care and social assistance in August, which was about in line with its average monthly employment increase over the prior 12 months. Construction employment also went upwards over the month, and since February, the industry has added an average of 20,000 jobs per month. (This rise in construction would have nothing to do with the low interest rates and mortgaging boom, now would it?) Apart from the rise indebtedness in housing, can anyone notice anything else interesting about these numbers? (Hint, there are more old people).

I also went over to the BEA to look at services in the trade balance and found that the surplus on services decreased to $14.4 billion in the first quarter from $16.1 billion in the fourth of last year. Services receipts decreased to $74.6 billion from $75.3 billion. Large declines in travel and passenger fares, reflecting concerns about the war in Iraq and the SARS virus, were partly offset by increases in "other" private services (such as business, professional, and technical services, insurance services, and financial services) and in royalties and license fees. At the same time services payments increased to $60.2 billion from $59.2 billion. Declines in travel and passenger fares, largely reflecting concerns about the war in Iraq and the SARS virus, were more than offset by increases in all other services categories combined.

Bottom line: looking this over across the board, it looks like the US has sprung a leak and it needs fixing. I think the point is not so much where we are now, as where we might be going. How do you protect high-value jobs in the US from becoming cheaper high-value jobs outside? Saying no to globalisation? That sort of about-turn on the part of the US would look even more silly than the current Iraq one. I think we need to understand Roach's point and start to think think about how to correct global imbalances without sending everything to hell on the way.

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