Economy Watch: President Reiterates Economic Proposals

As expected, much of President Obama's State of the Union address on Tuesday focused on the economy, and in particular what he wants to do about the nervous economic state of the American middle class.

As expected, much of President Obama’s State of the Union address on Tuesday focused on the economy, and in particular what he wants to do about the nervous economic state of the American middle class. The president used the term no fewer than six times over the course of the speech, beginning with the assertion that “It is our generation’s task… to reignite the true engine of America’s economic growth—a rising, thriving middle class.”

The sequester, which is most immediate economic conundrum—and one entirely of the divided government’s making—came up in a paragraph in which the president said the cuts would “jeopardize our military readiness [and] devastate priorities like education, energy and medical research. They would certainly slow our recovery, and cost us hundreds of thousands of jobs.” He further nixed the idea of “preventing only the defense cuts by making even bigger cuts to things like education and job training; Medicare and Social Security benefits.”

Regarding deficit reduction, President Obama posited that “broad-based economic growth requires a balanced approach to deficit reduction, with spending cuts and revenue,” which is what he’s been saying for some time. He did, however, say that he’s “prepared to enact reforms that will achieve… health care savings by the beginning of the next decade as the reforms proposed by the bipartisan Simpson-Bowles commission,” something he’s not explicitly endorsed before. Other economic proposals in the State of the Union included calls for raising the minimum wage, spending more on infrastructure, tax loophole closing and putting pressure on colleges and universities to keep costs down.

Job openings unchanged in December

The Bureau of Labor Statistics reported in its Job Openings and Labor Turnover Summary (JOLTS) on Tuesday that there were 3.6 million job openings on the last business day of December, little changed from November. The number of openings decreased in retail trade and didn’t change much in all remaining industries for the month.

Job openings increased year-over-year for retail trade, real estate and rental and leasing, educational services, and healthcare and social assistance, but decreased in professional and business services. Total job openings were 2.4 million at the technical end of the recession in June 2009, so as an indirect indicator of economic healthy, there’s been moderate improvement over three and a half years.

Another JOLTS measurement, the quits rate, was unchanged month-over-month in December at 1.6 percent. A quit is a voluntary separations initiated by the employee, so in aggregate, they’re something of a measure of workers’ willingness or ability to leave jobs. The number of quits was 2.2 million in December 2012, compared to 1.8 million at the end of the recession in June 2009.

Wall Street meandered around on Tuesday ahead of the SOTU, with the Dow Jones Industrial Average gaining 47.46 points, or 0.34 percent. The S&P 500 gained 0.16 percent but the Nasdaq lost 0.17 percent.