Economy Watch: Employment Trends Still Positive

By Dees Stribling, Contributing Editor

Despite lackluster official employment numbers, hiring is still moving in the right direction, according to the Conference Board on Monday. The organization’s Employment Trends Index increased 0.8 percent in April to 108.04, up from the revised figure of 107.18 in March. The April 2012 figure is 7.1 percent higher than a year ago.

April’s increase was driven by positive contributions from five of the index’s eight components. The improving indicators, in descending order, were Percentage of Firms with Positions Not Able to Fill Right Now; Percentage of Respondents Who Say They Find “Jobs Hard to Get”; Industrial Production; Number of Employees Hired by the Temporary-Help Industry; and Real Manufacturing and Trade Sales.

“The growth in the Employment Trends Index in recent months is signaling moderate improvements in employment,” Gad Levanon, director of macroeconomic research at the Conference Board, noted in a statement. “We did not expect employment growth in December to February, averaging almost 250,000 a month, to continue. However, the disappointing job gain in April is probably below the current trend and should pick up to about 150,000 to 175,000 jobs a month through the summer.”

Consumer credit spikes in March

Consumer credit jumped in March, according to the Federal Reserve on Monday, with total borrowing up an annualized 10.2 percent. In fact, it was the largest one-month increase in borrowing by Americans in about 10 years. For the first quarter of 2012, borrowing was up 7.75 percent, mostly on the strength of March’s increase.

In a break with the past few months, both revolving credit—mostly credit cards—and non-revolving credit—big-ticket credit for cars, boats and tuition—were up for the month. Revolving credit increased at an annualized 7.8 percent in March, after drops in the first two months of the year, as well as the first quarter (down 0.1 percent) and meager growth in 2011. Non-revolving credit, which has seen robust growth lately, continued to grow robustly: up 11.3 percent in March, and 11.4 percent for the first quarter.

Because the government is responsible for most student loans these days, the growth of that segment of non-revolving credit is making the government an ever-larger creditor. By holding about $460 billion in loans as of March, the government is now the number-two non-revolving lender, just behind the commercial banking sector, which has about $500 billion in outstanding loans.

AIG bailout to turn profit

Back during the depths of the Great Recession, the AIG bailout was notorious among bailouts, with conventional wisdom asserting that the government’s efforts were throwing good money not even after bad money, but into a bonfire. One web site of the time consistently illustrated stories about the AIG bailout with a still from The Dark Knight of the Joker burning a mountain of money.

Fast forward a few years. The Government Accountability Office, the investigative arm of Congress, said on Monday that the U.S. government stands to profit by more than $15 billion from the AIG bailout. Over the weekend, the U.S. Department of the Treasury said that it planned to sell roughly $5 billion in AIG common stock that it holds, because the price has been rising so much lately; previously the government has sold more than $10 billion of its AIG shares.

Wall Street apparently wasn’t spooked by the potentially euro-destabilizing results of Sunday’s elections, or by much else on Monday. The Dow Jones Industrial Average edged down 29.74 points, or 0.23 percent. The S&P 500 and the Nasdaq eked out minor gains of 0.04 percent and 0.05 percent, respectively.