Economy Watch: Business Groups Nervous about Debt Ceiling

3 min read

A sizable group of business organizations pleads with Congress to raise the debt ceiling; the JOLTS report shows little job creation; and the FOMC releases less than illuminative minutes.

By Dees Stribling, Contributing Editor

It was another inconclusive day of meetings between President Obama and congressional leaders on Tuesday on the debt ceiling, and at this point inconclusive meetings almost aren’t news. More newsworthy on Tuesday was that a previously quiet party has chimed in publicly on the question–the U.S. business community.

In an open letter to the president and every member of Congress, a sizable group of business organizations and executives urged expeditious action on raising of the debt ceiling and warned of the nettlesome mass of problems waiting for the U.S. economy if it doesn’t happen. Among others organizations, the coalition that put together the letter included the U.S. Chamber of Commerce, the Business Rountable, the Financial Services Forum, the National Association of Manufacturers and the Partnership for New York City.

“We believe that our nation’s economic future is reliant upon their actions and urge them to reach an agreement,” the letter says. “It is time to pull together rather than pull apart.” Interestingly, the letter didn’t mention that hot-button issue that’s keeping a deal from being done, namely taxes, even though most of the organizations signing off on the letter are known to dislike the idea of higher taxes on business especially. Apparently, stout businesspeople that they are, they dislike the idea of economic chaos even more.

No jolt for the job market in JOLTS

The Bureau of Labor Statistics reported on Tuesday in its Job Openings and Labor Turnover Survey (now there’s a snappy acronym) that there were 3 million U.S. job openings on the last business day of May, essentially the same as on the last business day of April. The hires rate, representing people who started a new job, and the separations rate, representing people who were sacked or who quit, were again little changed over the month at 3.1 percent for both.

The number of job openings in May was 862,000 higher than in July 2009–the most recent trough– but remains well below the 4.4 million openings when the recession began in December 2007. The number of job openings has risen over the last 12 months for openings in durable goods manufacturing; transportation, warehousing and utilities; information; and healthcare and social assistance, according to the BLS. The level decreased over the year for the federal government, largely due to a drop in the number of temporary workers needed to conduct the 2010 Census.

As for the hires rate–a closely watched harbinger of the U.S. labor market’s progress–it too was essentially unchanged for all industries and regions in May, the BLS says. At 4.1 million in May, the number of hires is up from 3.6 million in October 2009 (the most recent trough) but remains below the 5 million hires when the recession began in December 2007.

FOMC remains noncommittal on stimulus

The latest minutes from the Federal Open Market Committee were released on Tuesday, and in its usual oblique way, the committee said that more economic stimulus is being considered by the central bank. “Some participants noted that if economic growth remained too slow to make satisfactory progress toward reducing the unemployment rate,” the minutes say. If inflation pressures go away, the minutes continue, “it would be appropriate to provide additional monetary policy accommodation.”

Just don’t call it QE3, since the Fed never did like that flashy QE2 moniker anyway. But the idea of more “monetary policy accommodation” does not, as yet, seem to be favored by most members of the FOMC, just “some.” As for Chairman Ben Bernanke, he’s going to give his semi-annual testimony on monetary policy on Wednesday. Odds are he’s going to be as oblique as the FOMC on the matter of more stimulus.

After a run of panicky days, Wall Street was still a little miffed about the continuing crisis (take your pick as to which one), but the markets didn’t lose as much ground as in recent days. The Dow Jones Industrial Average was down 58.88 points, or 0.47 percent, while the S&P 500 lost 0.44 percent and the Nasdaq declined 0.74 percent.

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