What Booming Economic Recovery?
Hold the presses. The ďAll Is Well With the Economy Thanks To MeĒ Bush Tour may have to be toned down a bit. Today the Labor Department reported that the unemployment rate fell to 5.9%, but fewer new jobs were created than analysts had expected.
U.S. companies added 57,000 new jobs in November, boosting payrolls by 328,000 during the past four months following a half-year hiring drought. But analysts had predicted that about 150,000 new jobs would be added in November.
The jobs market "is not improving as fast as we thought it was," said David Wyss, chief economist at Standard and Poor's DRI. "It's true we've had four consecutive months of payroll growth, which is a start. But it's only a bare start."
Economists are looking for monthly payroll gains of 200,000 to 300,000 to significantly lower the unemployment rate and sustain a labor market recovery.
The dollar sold off sharply early Friday in New York following the weaker-than-expected report.
Plus, retailers are reporting that Christmas sales are weaker than expected.
"By and large, the analysts' estimates had been fairly reasonable, but the retailers didn't perform," said Ken Perkins, a research analyst at Thomson First Call, which tracks analysts' predictions. "It doesn't mean that definitely December will be bad, too, but I bet you'll see a lot of December estimates pared down."
Generally, however, merchants fell short of estimates for October as well as November, Mr. Perkins said, "and that doesn't usually bode well for sales in the holiday period."
Over all, luxury goods stores continued to rally. Analysts said that President Bush's tax cuts, a strengthening stock market and improving job security, as well as pent-up demand, drove affluent shoppers into stores like Saks Fifth Avenue, where $1,000 watches with diamond-studded bezels and green crocodile bands were big sellers.
Most stores, however, are no longer benefiting from the tax cuts or from the extra cash that many homeowners had after a wave of mortgage refinancings earlier in the year, Mr. Perkins of Thomson First Call said. "The benefits of the tax refunds are drying up," he said, "and the re-fi wave is ebbing."
Oops. Thatís not what George said last week in taking credit for the recovery.
And Daniel Gross of Slate points out that it isnít necessarily good news that interest rates remain low. Why? It could be a sign that industries arenít sold on the recovery yet.
So the effects of the tax cuts and housing refinancings have dried up, jobs are not being created as strongly as expected, businesses arenít borrowing yet, and retail sales for the critical Christmas season are not meeting expectations. Can we expect Bush to barnstorm the country with this news? And will the media report that things aren't going as well as they have been cheerleading lately?
Probably not on both counts.