Economy Watch: Employment Disappointing, Possible Fannie and Freddie Merger, Debt Ceiling Looms
- Jul 08, 2011
The Bureau of Labor Statistics reported on Friday that the U.S. economy produced a piddling 18,000 jobs in June. That’s a lot worse than expected, even worse than the miserable May total of 54,000. The official U.S. unemployment rate inched up to 9.2 percent.
But there was hiring within some categories, with professional and technical services jobs increasing in June by 24,000, and health care adding 14,000. But these totals were more than offset by governments at all levels laying off 39,000 people. The weak showing means that the numbers of unemployed persons–by BLS reckoning, those actively looking for work–was 14.1 million, essentially unchanged over the month.
On Thursday, ADP anticipated the official jobs numbers by reporting that employers created 157,000 jobs in June, a significant uptick from ADP’s revised figure for May, 36,000. This was one of those times when ADP was off the mark.
Bill to Merge Fannie and Freddie Floated in Congress
Two members of the House Financial Services Committee, Carolyn McCarthy (D.-NY) and Gary Miller, (R-Calif.) introduced a bill on Thursday to merge Fannie Mae and Freddie Mac into one new entity that would not be a GSE, but would in fact be run by the government. The bill faces an uphill struggle, since the leadership of the current Congress wants to replace the GSEs with nothing.
On the other hand, alarmed at the prospect of no government safety net for their industry, the residential real estate industry has been marshaling its considerable lobbying clout since the spring to press Congress not to replace Fannie and Freddie with a yawning void. It was no coincidence that Miller and McCarthy were joined by leaders of the National Association of Realtors and the National Association of Homebuilders at the press conference announcing the bill. These organizations have consistently argued that if the government cuts anchor and completely withdraws from the housing market, things are only going to get worse in that depressed sector.
The Miller-McCarthy proposal would establish a “secondary market facility” that would buy residential mortgages, pool them, and provide insurance for their principal and interest payments. An independent board appointed by the president would oversee the entity. Miller said that board structure was to prevent “Congressional meddling.”
The Loud Ticking of the Debt Ceiling Clock
President Obama and various members of Congress spent Thursday jawboning about the debt ceiling, and various reports emerged from the proceedings, none of them specific about what the deal might ultimately be. That thing called “compromise” still seemed to be elusive, however.
According to the president, the two sides will meet again on Sunday. The debt ceiling clock is ticking rather loudly now, with the Aug. 2 deadline fast approaching.
Wall Street seemed to like the unofficial jobs numbers on Thursday. The Dow Jones Industrial Average spiked 93.47 points, or 0.74 percent. The S&P 500 gained 1.05 percent and the Nasdaq advanced 1.36 percent.