{October 12, 2010}

Weekly Economic Update

(WASHINGTON, DC)
 
 
This document includes a compilation of materials regarding recent positive economic data as well as media reporting and commentary regarding economic news.  It is important to note that individual data series often move substantially from period to period and that economic data is best interpreted looking across data series and for multiple periods. 
 
Key Points
 
·    The latest jobs report is another reminder of how far we’ve come in reversing the failed economic policies of the past decade, but also a reminder that it’s going to take a lot more hard work to clean up the mess those failed policies left behind.

·    At the end of the last Administration, the economy was losing 750,000 jobs a month and was in the middle of 22 straight months of job loss.

·    This year, the economy has created 863,000 private-sector jobs, and has now experienced 9 straight months of private-sector job growth.

 

·    But even though we’ve reversed the trend of massive job losses, and the economy has created more private-sector jobs in 2010 than were created in the entire 8 years of the last Administration, we still have a long way to go before we can fully recover from the 8 million jobs lost in the Great Recession.

·    That’s why the President is proposing a bold six-year plan to put people to work rebuilding America’s roads, railways, runways, and schools.  This plan will build on our investments in the Recovery Act – investments that are already fueling 14,000 infrastructure projects across the country that are employing hundreds of thousands of workers – by rebuilding an additional 150,000 miles of roads, laying and maintaining 4,000 miles of railways, and reducing delays and travel time for airline passengers.  This plan will also create an Infrastructure Bank to leverage federal dollars and focus on the smartest investments. 

·    Investing in infrastructure is something that unites business and labor, and something that both parties have supported.  But now, Republican leaders in Washington are saying “no” to the bipartisan idea of rebuilding America’s infrastructure.

·    Instead of helping America move forward and supporting efforts to create jobs, Republicans have announced a pledge to return to the same special-interest policies that led to the economic crisis in the first place.

·    For nearly a decade, Washington followed those failed policies – policies that cut taxes for millionaires and billionaires, cut regulations for Wall Street and big corporations, and cut the middle class loose to fend for itself. 

·    Between 2001 and 2009, the incomes of middle-class families fell by 5 percent.  It was a lost decade in wages – the worst for families in at least a half a century.    

·    The President and Democrats in Congress are fighting to reverse the special-interest policies of the past decade and replace them with polices that help the middle class.

·    That’s why we passed Credit Card Reform and Wall Street Reform to crack down on the reckless practices of the big banks; protect consumers from predatory lending; and make sure Main Street never again has to pay for Wall Street’s mistakes.

·    And that’s why, while Republicans were announcing an economic plan that a corporate lobbyist helped write – a plan that would drag America backwards by putting the special interests back in charge and by borrowing $700 billion to give tax cuts to millionaires and billionaires – we passed a bill that will move America forward by helping small businesses create middle-class jobs.

·    This jobs bill is the most significant step on behalf of our small businesses in more than decade, but it was needlessly delayed for months by Republican leaders in Congress.

·    Now, those same Republican leaders are holding middle-class tax cuts hostage so they can give more tax breaks to millionaires and billionaires, and they are defending tax loopholes that encourage corporations to create jobs overseas.

·    Despite constant Republican obstruction over the past 20 months, we’ve put the interests of ordinary Americans ahead of the special interests and we’ve made historic new investments in American education, infrastructure, and clean energy.

·    We’ve come a long way in the past year and a half, but it took a decade of failed economic policies to get us into this mess, and we have a lot more work to do before we will fully recover. 

·    That’s why we passed a bill to help states save the jobs of hundreds of thousands of teachers, nurses, police officers, and firefighters who were about to be laid off.  And we did it without adding to the deficit; the bill was fully paid for, in part by closing tax loopholes that encourage corporations to ship jobs overseas.

·    And that’s why the President has laid out a series of additional proposals to both accelerate job growth in the short-term and strengthen the economy in the long run.

·    In addition to key investments in infrastructure, these proposals include a new Skills for America’s Future initiative that will make it easier to connect workers looking for jobs with businesses looking to hire; a proposal to expand the Research and Experimentation Tax Credit in order to help companies create good jobs in America; and a proposal to allow businesses to fully deduct qualified capital investments through the end of 2011 as an incentive to invest in the United States.

·    These initiatives are all part of our core commitment to moving America forward by rebuilding and growing the middle class.


Economic Activity

Employment

·    Private employment grew by 64,000, the ninth straight monthly gain.  (BLS).

·    The unemployment rate was unchanged at 9.6% in September, and the employment-to-population ratio was also unchanged at 58.5%.  (BLS).

·    The four-week moving average of initial unemployment insurance claims (which smoothes weekly volatility) was 455,750 for the week ended October 2, down 23,500 from four weeks earlier.  (BLS).

Production

·    Real GDP grew 1.7% at an annual rate in 2010:Q2, the fourth quarter of positive growth following four quarters of decline.  GDP grew 3.0% from 2009:Q2.  (BEA)

·    Non-manufacturing supply managers continued to report growth in September, at a faster pace than in August, according to a survey by the Institute for Supply Management.  The overall non-manufacturing index registered a stronger-than-expected 53.2, up 1.7 points from August.  (ISM).

Business Investment

·    Shipments of core capital goods (nondefense capital goods excluding aircraft) increased a solid 1.7% in August, following a series of generally strong gains that began in February.  Shipments of core capital goods are directly linked to the equipment and software investment component of GDP.  (Census).

Housing

·    The Mortgage Banker Association mortgage applications purchase index increased 9.3% for the week ending October 1.  The index is a measure of the volume of mortgage applications for home purchases.  (Mortgage Banker Association).


Recent Economic Reporting and Commentary

“Obama’s $50 Billion Transportation Plan Would Boost Economy, Report Says” Bloomberg News

“President Barack Obama’s proposed $50 billion transportation spending program would boost jobs in the construction, manufacturing and retail industries and help bolster a struggling economy, a new administration report says.  The study by the Treasury Department and White House Council of Economic Advisers said that about 90 percent of the new jobs in those three segments of the economy would fall in middle-class range…  The study also said a $50 billion program now would provide a larger return on investment because construction costs are low, due to unused capacity.”

“Big-name companies to help colleges train workers,” AP

“As the White House stages a first-of-its-kind community college summit Tuesday, the Obama administration is proposing that stronger partnerships between two-year public colleges and big-name U.S. employers such as McDonald’s and The Gap will help better match workers with jobs during the economic recovery and beyond.  Community college officials welcomed the new initiative, ‘Skills for America’s Future.’”

“Service Industries in U.S. Expanded at Faster Pace,” Bloomberg News

“Service companies in the U.S. expanded at a faster pace than projected in September, indicating the economic recovery is picking up.  The Institute for Supply Management’s index of non- manufacturing businesses, which covers about 90 percent of the economy, rose to 53.2 from 51.5 in August.  The gauge, where readings greater than 50 signal growth, averaged 55.3 during the six-year expansion that ended in December 2007….

“The International Council of Shopping Centers on Oct. 1 projected sales for November and December will climb 3 percent to 3.5 percent, the best performance since 2006.”

“Unemployment claims drop for 4th time in 5 weeks,” AP

“Applications for unemployment benefits fell last week for the fourth time in five weeks, a sign that layoffs are declining.  The Labor Department says initial claims for jobless aid dropped by 11,000 to a seasonally adjusted 445,000.  It’s the lowest level since the week ending July 10… Weekly applications have rarely fallen below 450,000 this year, and never for longer than two weeks.  Economists say that a sustained drop below 425,000 would signal employers are stepping up hiring.  The four-week average of new claims, a less volatile measure, dropped to 455,750, the sixth straight decline. The claims report is considered a measure of the pace of layoffs and an indication of companies’ willingness to hire.”}

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