skippy the bush kangaroo

Friday, July 30, 2004

happy end of july from the bush economic team

things are looking great for the economy, if you don't count...well, the economy!

initial unemployment claims are up, and cost of benefits on the job (health insurance and pension) rose much more than wages in the last 12 months, says the kancitystar.

wages and salaries, stymied the past three years by a weak economy and lackluster job growth, climbed 0.6 percent in the second quarter, the same increase as the first quarter of this year.

over the past 12 months, wages rose by 2.5 percent, down from a 2.7 percent increase for the 12 months ended in june 2003 and far below the 4 percent rise for the 12 months ended in june 2000, when the country was still in the midst of a record 10-year economic expansion.

however, benefit costs have risen much more rapidly, climbing 7.2 percent for the 12 months ended in june, the biggest 12-month gain since early 1990. benefit costs include health insurance and pension benefits for employees who have pension coverage in their jobs.

“though wages remain under control, benefit costs are still soaring at an unacceptable pace,” said joel naroff, head of a holland, pa., forecasting firm.

in a second report thursday, the government said new claims for unemployment benefits edged up last week, climbing 4,000 to 345,000, indicating the labor market is improving after three years of lackluster job creation.

last week's increase followed a drop of 9,000 the previous week. claim figures have been volatile in the past month because auto plants shut down earlier than normal for retooling, which skewed the department's seasonal adjustments.

and as if that wasn't bad enough, the gross domestic product also slowed, because nobody was spending any money. (here's a hint: nobody had any money!) bloomberg:

the u.s. economy grew at a 3 percent annual rate from april through june, the slowest rate in more than a year, as rising energy prices led to the weakest pace of consumer spending since the 2001 recession.

the change in gross domestic product, the value of all goods and services produced, followed a 4.5 percent rate in the first quarter that was faster than the previously reported 3.9 percent, the commerce department said. u.s. treasury notes rose.

consumer spending slowed to a 1 percent annual rate after a 4.1 percent gain in the first three months. gasoline prices above $2 a gallon crimped sales at retailers such as wal-mart stores inc. consumer confidence and chicago-area manufacturing rose this month, signs the economy may emerge from what federal reserve chairman alan greenspan called a ``soft patch'' in june.

we're beginning to think the real soft patch is in greenspan's head.

posted by skippy at 8:51 AM |