Current Statistics (8-29-2003)

                    Unemployment Rate (6.4% Jun – 6.2% July)

The recent report from the Bureau of Labor Statistics showed the unemployment dropping from 6.4% in June to 6.2% of the labor force in July – this constitutes the first drop in the monthly unemployment rate since January 2003. 

                         GDP (2nd Quarter 2003 Real GDP: 3.1% - Revised from 2.4%)

The second quarter of 2003 showed continued positive growth in real GDP.  The Commerce Dept. reported a 3.1% growth rate for the 2nd Quarter 2003 (on an annualized basis), revised upward from last month’s initial estimate of 2.4%.  It marked the 7th consecutive quarter of economic expansion, allaying fears of a double dip recession.  At this rate, indicators argue that the 3rd Quarter of 2003 will confirm continued economic expansion.

…given the fact that indices overstate the inflation rate due to quality-blindness, isn’t it quite possible, looking at the following table, that there was never a recession at all?

…to reduce unemployment, most of that is structural, an even higher rate of expansion will be needed.  This marks a departure from past cyclical trends of unemployment tracking closely to real GDP (but in and inverse manner).  Since 2001 this has not held true because the nature of the unemployment was structural, not cyclical – hence, it has remained very high.

                       Jobless Claims (4-wk rolling avg: 395,750 Aug-16 to 396,250 Aug-23)

Department of Labor data indicate that the new jobless claims are trending slightly downward and there have been four consecutive weeks of claims below the 400,000 mark, generally viewed as the level signifying economic expansion.  On a further note, a Department of Labor spokesman said about 2,000 to 3,000 new claims had been delayed because of the power blackout two weeks ago in the Northeast, offsetting the slight rise in the reported numbers.  Again, given the large number of structurally unemployed workers, this is heartening news.  This continues to hammer home the point that unless the structurally unemployed workers are re-employed/redeployed, the productivity dividend realized by society as a whole is delayed.

                    Leading Indicators (5.2% up tick in U.S. for June 2003)

According to figures released by the Organization for Economic Cooperation and Development (OECD), “Moderate growth lies ahead in the OECD area and the United States according to latest composite leading indicators (CLIs).  June data signal strongly improved performance in the United States and slightly improved performance in the Euro area and Japan.”

                    Durable Goods (June - July +1.0% Consumer Durable Goods; Machinery + 1.8%; Computers and Electronics +1.9%)

Durable Goods have trended downward from their peak in 1999, but have more or less flattened since then.  However, Durable Consumer Goods, which reached a trough at the end of 2000, have been trending upward.  Over the same period of time, non-Consumer Durable Goods has remained relatively flat with an up tick in the last few months. 

                    Trade                  

Despite the fact that the OECD Leading Indicators show the U.S. expanding more rapidly than other countries, it does not appear that a significant “locomotive effect” (rising GDP associated with an increase in imports rising faster than exports) has occurred.  This can be seen by the recent improvement in the U.S. Trade Balance - rise in Net Exports).

                   Price Indices   (CPI – Urban Consumers: July 1.3% annualized rate; PPI – Finished Goods: June – July 0.1% monthly rate)

The silence attributable to inflation continues to be deafening...yawn.

                  10-year U.S. Government Bond Rate

In the government securities market, despite the ongoing expansion, the 10-year rate still remains between 4.4% and 4.5%. 

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