Slowing Data or Economic Rebound?
Its funny how these headlines all arrive at the same time: I came across 3 items this weekend, which taken together make you go hmmmm.
In the order they arrived:
Let's start with the Wachovia piece -- a mainstream bulge bracket Wall Street firm (Over the years, Wachovia has absorbed Prudential and First Union).
In his Outlook 2006 year-in-preview, Chief Equity Strategist Doug Sandler included this chart:
click for larger graphic
courtesy of Wachovia
That reflects an across the board slowing in most key sectors. Job growth slowed in December, a sign the economy may have lost some steam, but the labor market was still healthy enough for wage growth to pick up. This past week also saw a slow down in job creation and manufacturing activity -- both unexpected developments in December.
At the same time, the White House has begun Touting U.S. Economic prospects:
"President Bush traveled to Chicago to talk up what he views as America's rosy economic future. To make sure no one missed the point, the White House dispatched 23 other administration officials to do the same thing around the country.
The extraordinary traveling shows were aimed at closing what the White House views as a troubling disconnect between the robust U.S. economy and many ordinary Americans' wariness. That is especially worrisome to Republicans as they head into a congressional election year when jobs, immigration, health care and pensions are likely to be big issues . . . But as their itineraries suggested, there are still a lot of sources of concern, despite strong growth and employment numbers."
The disconnect between official spin and consumer uneasiness may be a key for how strong the economy really is, and the prospects for the stock market.
One last, related item: Mike at Melduke points out some oddities in the hours worked in December; Looking at the longer term chart of index of aggregate weekly hours index, it appears that hours worked keeps rising:
INDEXES OF AGGREGATE WEEKLY HOURS (BLS)
click for larger charts
Intriguing . . .
Wachovia - Outlook 2006
Job Growth Slows In Sign Economy Might Be Cooling
THE WALL STREET JOURNAL, January 7, 2006; Page A3
Bush, Other Officials Take to Road To Tout U.S. Economic Prospects
JOHN D. MCKINNON
THE WALL STREET JOURNAL, January 7, 2006; Page A4
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"Given the huge productivty improvements we have seen over the past 10 years, why are hours worked in the U.S. going up? "
This may help to explain what commentators call the 'jobless recovery'. Hiring new workers can be quite costly, especially if firms are not sure about the sustainability of an economic recovery. Instead, firms may prefer to capitliase the extra productivity of existing workforce. Indeed, perhaps the firms themselves are playing a hand in improving productivity by making their workers work harder and faster.
Posted by: Abobtrader | Jan 9, 2006 8:02:22 AM
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