Economy Watch: Employment Treads Water in March

The U.S. Bureau of Labor Statistics shows the labor market holding on, despite international nervousness; an ISM report is not as optimistic; a suit against Freddie Mac is dismissed; and new information comes to light regarding Fed lending in 2008.

The U.S. Bureau of Labor Statistics said on Friday that employment increased by 216,000 in March, which wasn’t a bad showing considering how nervous businesses are these days over international events and commodity inflation, but it wasn’t enough to reduce overall unemployment much. The total number of unemployed persons in the United States remained about the same (13.5 million), and the unemployment rate edged down to 8.8 percent from 8.9 percent.

On Thursday, the BLS had said that the number of people seeking unemployment benefits dropped 6,000 to 388,000 for the week ending March 26. That marked the second decline in three weeks. The four-week moving average, however, was up slightly to 394,250.

Also, the Monster Worldwide Inc. said on Thursday that its employment index, which is based on online job postings, rose 5.4 percent from February to March, meaning that more employers were looking for employees. The index was also up 8.8 percent year-over-year in March. Monster attributed much of the growth to demand for healthcare workers.

ISM reports mixed economic data

Other economic indicators on Thursday were mixed. The Institute for Supply Management-Chicago reported that its Business Barometer (formerly known as the Chicago purchasing managers index, or Chicago PMI) dropped to 70.6 in March from 71.2 in February, which was the highest reading in more than two decades. But the employment component of the index spiked to 65.6, the highest reading since late 1983.

The Institute for Supply Management-New York reported that New York City business activity expanded at the slowest pace in three months. The Current Business Conditions index dropped to a still-elevated level of 66.4 in March, down from February’s 77.5, which was a nine-month high.

Pension fund suit against Freddie Mac dismissed

On Thursday, Judge John Keenan of the U.S. District Court, Southern District Of New York, dismissed a suit against Freddie Mac by a band of pension funds that asserted that the GSE pulled a fast one on the funds regarding the risks posed by some of its mortgage products during the real estate bubble. The plaintiffs included Central States, the National Elevator Industry Pension Plan, and Southeast and Southwest Areas Pension Fund.

The funds lost $2 billion in the third quarter of 2007, and attributed the decline to Freddie Mac’s “misrepresentations” (lies, to take it out of legal parlance). The judge did not agree: “These claims fail because plaintiffs have not plausibly alleged that these misrepresentations proximately caused them economic harm,” he said in his ruling. Tough luck, to take it out of legal parlance.

Fed’s discount window buzzing with activity in ’08

During the height of the Panic of 2008, the Federal Reserve was one busy central bank, according to documents that Bloomberg and Fox Business have pried loose using the Freedom of Information Act and reported upon by those news outlets on Thursday. The Fed maintains a loan program called the discount window that generally isn’t used all that much–but it was during the fall of 2008, when financial institutions big and small, American and otherwise, queued up to stave off disaster, with an aggregate borrowing of up to $100 billion during some weeks that fall.

Of particular interest to the media right now are the names of some of the Middle Eastern financial entities that borrowed from the Fed back then–in particular, Bahrain-based Arab Banking Corp., which borrowed $1.1 billion during Oct. 2008. It so happens that that bank is majority owned by the Libyan Investment Authority. But it was only one of many banks from around the world that accessed the discount window during the darkest of the credit freeze, including such familiar U.S. banking survivors such as J.P. Morgan Chase and Bank of America, as well as some of the panic’s losers, such as Washington Mutual and IndyMac.

Wall Street had a tepid day on Thursday ahead of the jobs numbers, and ended mixed. The Dow Jones Industrial Average lost 30.88 points, or 0.25 percent, while the S&P 500 was down 0.18 percent. The Nasdaq, on the other hand, gained 0.15 percent.

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