Employment Report Good, but with Nagging Doubts
- Mar 07, 2011
The fact that employers hired 192,000 workers in February counts as good news, but other details from Friday’s monthly jobs report by the Bureau of Labor Statistics speak of lingering problems in the labor market. For instance, the number of persons employed part time “for economic reasons,” as the BLS puts it (sometimes referred to as “involuntary part-time workers”), was essentially unchanged at 8.3 million in February. Those are people who work part time not because they want to–some people do–but because they’re unable to find a full-time job.
BLS also keeps track of “persons marginally attached to the labor force” and says that there are 2.7 million of them. Essentially, members of this group looked for work in vain at some point during the last 12 months, but not in the four weeks preceding the BLS survey that tracks unemployment. Some 1 million people among the marginally attached have given up looking because they believe there are no jobs for them; the other 1.7 million offer other reasons for not looking for work recently, such as starting (or re-starting) school or taking care of a family member.
Still, growth in jobs has been upward, if not skyrocketing, since an employment trough in February 2010. Total payroll employment has grown by 1.3 million since then, or about 106,000 a month. A few industries have even seen hiring spurts, such as manufacturing, which has added 195,000 jobs since its most recent trough in December 2009, and healthcare, which has added 260,000 in the last 12 months.
Green Street sees uptick in CRE values
Green Street Advisors said on Friday that its Commercial Property Price Index edged up by 1 percent in February. According to the real estate research firm, the index is a “time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted.”
The company posits that, including the most recent increase, U.S. CRE properties have gone up in value by more than one-third from the 2009 trough, which means that half of the decline that occurred from 2007 to ’09 has been erased. Also, prices are back to where they were about five years ago.
“Over the last 18 months, sellers have felt little pressure to act, the outlook for fundamentals has improved, and well-capitalized buyers have been plentiful,” Mike Kirby, Green Street’s director of research, notes in a statement. “Prices have returned to early-’06 levels, a fact that should lessen, but not eliminate, the adverse consequences as aggressively underwritten 2005 to ’07 vintage mortgages come due.”
The inflation question
Is the economy suffering inflation or isn’t it? The price of gas has certainly spiked lately. The most recent Lundberg Survey quantified what every driver knows, reporting on Sunday that the national average price of a gallon of gas stood at $3.51 on Friday, a jump of more than 37 cents since the survey only two weeks earlier, and up nearly 82 cents since September 2010. Oil is only one commodity, but it does touch on many others, as buyers of milk and eggs (among other foods) discovered in the summer of 2008, the last time oil spiked.
So far, the Fed–one of whose responsibilities is to tamp down inflation–seems to be unalarmed at the prospect of inflation (or worse, ’70s-style stagnation combined with inflation). “The most likely outcome is that the recent rise in commodity prices will lead to, at most, a temporary and relatively modest increase in U.S. consumer price inflation,” Fed Chairman Ben Bernanke said last week before the Senate Committee on Banking, Housing, and Urban Affairs. “That said, sustained rises in the prices of oil or other commodities would represent a threat both to economic growth and to overall price stability, particularly if they were to cause inflation expectations to become less well anchored.”
Presumably fretting about the price of oil, Wall Street disregarded the fairly positive jobs numbers on Friday. The Dow Jones Industrial Average retreated 88.32 points, or 0.72 percent, while the S&P 500 lost 0.74 percent and the Nasdaq was down 0.5 percent.