Oh, That Miserable Economy!
The strong data on jobs, growth, and even house prices belie the naysayers
MORE PAYCHECKS AND RISING CONFIDENCE
Job growth in November proved strong, with big gains in construction and services. Even manufacturing, long the weak link in the U.S. economy, added a net 11,000 jobs, and monthly job growth returned to its pre-Hurricane Katrina trend, a sign of the economy's resilience. The unemployment rate remained unchanged at 5 percent, though wages are still growing slowly. All in all, it was a solid report that did little to rattle the inflation-obsessed on Wall Street. Indeed, the Dow Jones industrial average has been flirting with 11,000 in recent days. Still, says Joseph Ellis, author of Ahead of the Curve: A Commonsense Guide to Forecasting Business and Market Cycles, "the employment rate shows you where we've been, not where we're going." He looks instead at growth in consumer spending as the primary indicator of the economy's health. Unfortunately, the profligate consumer of the summer months seems to have disappeared, with spending up a meager 0.2 percent in October.
Consumer confidence, however, rose briskly in November, amid falling gas prices. Some investors say that augurs a healthy return to the mall this winter by consumers. Bet the first place you'll find them is in all those jewelry stores.
ROBUST GROWTH
Gross domestic product
[LABELS]
0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0 pct.
2004
Q4
3.3%
2005
Q1
Q2
Q3
4.3%
Revised estimate
Source: Bureau of Economic Analysis
advertisement
