Is the Economy Growing at 6%?
Final thoughts on the April NFP report, via Barron's Alan Abelson. He cites Merrill Lynch economist Daid Rosenberg, who like us, feels that "strange things are afoot at the Circle-K:"
"Alas, we came across David Rosenberg's take on April jobs, and it was pretty gloomy. Right off the bat, David, who's Merrill Lynch's top economist, casts doubt on the seemingly glowing numbers, which were, as it happens, much higher than the Street was forecasting (there's always a first for everything).
"Do you believe the economy is growing at a 6% annual rate right now?" he asks rhetorically. "Because if you don't, in my view, there is no way you can believe the strength in today's nonfarm payroll report."
April's jobs data, he feels, "vastly overstated economic conditions last month." The gains that supposedly occurred in retail, construction and telecom just don't square with what has been happening in those sectors. He notes that the economy is undergoing a classic inventory correction and the trend in the leading economic indicator is down.
All of which means, he contends, job additions in the months ahead closer to 130,000 than 170,000. Dementia, shmentia, we'll just have to postpone being bullish."
I am trying not to be guilty of my own biases in selective perception and interpretation. Still Rosenberg's take is very consistent with my own. Food for thought.
Up and Down Wall Street: Car Crazy
Barron's Monday, May 9, 2005
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If you look back over the last few years you see several examples of a big one month jump in employment that just seemed to be outliers
and that is what this one looks like. In particular,
it is in sharp contrast to both the ISM manufacturing and services surveys that showed employment growth weakening last month
Interestingly, even with the surge in employment average weekly earnings growth is still only 2.6% on
a year over year basis versus its peak of 3% last November. In other words real wage growth probably is still negative.
Posted by: spencer | May 7, 2005 8:46:34 AM
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