Friday, April 01, 2005

Everybody seems to be dissing the March employment numbers released today, but we should instead be celebrating the fact that Bush is now on a pace to supercede the total number of private sector jobs when he first came into office in just four months!
America's employers, hit by high energy bills, turned more cautious in March and boosted hiring by just 110,000 jobs, the fewest in eight months. . . .

"America is not flicking on the hiring switch," said Richard Yamarone, economist at Argus Research Corp. "Right now businesses have to contend with skyrocketing energy and commodity costs, but there is little they can do about that. The one big cost that they can control is labor. That is being done by tightening the hiring reins." . . .

All told, March's payroll gain of 110,000 was roughly half the number economists expected.
Over the last twelve months the US economy has added an average of 164,000 private sector jobs per month. That's barely over the rate needed simply to keep up with population growth, and the Bush administration is still 446,000 private sector jobs short of where it was in January 2001.

And if that's not enough, real private hourly earnings fell again in March. From November 2003 (the recent real high) to March 2005, nominal private hourly earnings are up 3.2%. Over the same period, CPI inflation has risen over 4.0% (we don't have the March CPI numbers in yet) and PCE inflation over 3.1% (same story here). So at best, real wages have been stagnant for over a year; at worst, they're sinking like a wet washcloth.

The Brits are rightly worried today over news that average home prices in the UK fell in March by their largest relative amount in nearly ten years, pushing the rate of home inflation to its lowest point in almost four years. More to the point,
the Bank of England said mortgage equity withdrawal - used for purposes other than buying a home - in the final three months of last year was �6.9bn, half the amount in the previous quarter and the lowest for three years.

Analysts said the falls had made it more likely that interest rates would stay on hold for the foreseeable future and warned it could point to further pain for high street retailers as consumers cut their spending plans. . . .

John Butler, a UK economist at HSBC, said yesterday's figures provided a good explanation for the decline and warned there could be more pain to come. He said there was strong evidence that the strength of retail sales in recent years had been driven by the boom in the housing market.

"The relationship is very strong, which suggests that now we are getting the slowdown in house prices and equity withdrawal drying up, that retail sales growth could decline to zero," he said.
Americans are in an even worse pickle than Brits, since Americans have had no real income growth in well over a year, their housing bubbles in California, Florida and parts of the East Coast are bigger and growing larger every day, and their current account deficit is gargantuan compared to Britain's.

Time to refocus attention on the UK housing market as a harbinger for America's Joe and Jane Homeowner-Consumer (a liberated couple indeed).

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