Jeff Cornwall writes about the latest Kauffman Foundation survey of economic bloggers, which shows that only half of them expect the U.S. economy to produce jobs in the third quarter. The survey jives with Friday's weak Q2 GDP report and major revision to past growth estimates. See more on that story from BusinessWeek, EconomPic and CNNMoney.
James Picerno at Capital Spectator says there are positive signs of continuing recovery out there, but there are also new warning signs from aggregate business lending data compiled by the St. Louis Fed. Taken together with other indicators showing the so-called soft patch, the "worrisome cracks forming in C&I’s momentum" are worth watching.
The June Ceridian-UCLA Pulse of Commerce Index shows much of the country bouncing back nicely from two bad months, suggesting the dreaded "soft patch" may indeed be no more than that. The index's researchers say their data suggest second-quarter GDP growth will come in at 1.8 percent, the same as Q1's growth. "In other words, expect 'she loves me not' when the GDP numbers are released on July 29, 2011," they said.
The news for the four-state region that includes Tennessee isn't as good. After being the fastest-growing area in May, it was the only region to shrink last month.
There’s plenty of commentary about Friday’s dismal non-farm payroll report, but here are a couple that caught our eye. Barry Ritholtz says we shouldn’t be surprised because the past recession wasn’t a typical post-World War II one. And over at The Curious Capitalist, Stephen Gandel hits on a key issue with this recovery as a whole:
We have never really had a rebound in confidence. And you could see that in the workforce numbers. People weren't flooding back into the labor force even when we were adding more than 200,000 jobs a month. And they certainly are not going to now. Confidence is a very hard thing to turnaround. The financial crisis certainly started the drop, but when the stimulus didn't deliver as promised I think that cemented things for a while. So while a drop in gas might help, we have a more basic problem.
And to things off, here’s Calculated Risk’s popular and very sobering chart on this labor market recovery compared to others since 1945.
Fox News has the story on how Cordia Harrington and her team at Tennessee Bun Co. helped revive their fortunes coming out of the recession. Harrington called on employees for ideas and strategies and took a flyer by calling on sausage maker Odom's Tennessee Pride. The move has led to other expansion plans.
Harrington is currently hiring at least 100 new employees and the company keeps expanding. She’s now supplying bread products for local schools and looking into new products such as wheat biscuits, buns and lower sodium breads. Sales have increased more than 44%.
Every recovery, has oil worry. The issue it seems is that when gas prices rise that leaves people with less money to pay for other things. They consume less. And the economy suffers. And that happens, but the question is how much. I remember when oil hit $50 a barrel in 2005 market forecasters began worrying that rising gas prices would kill the mid-2000s recovery. But it didn't, we headed straight into the housing bubble. Hurray. What many analysts miss is that while it seems like we are always filling up the tank, gas really only makes up a small part of our budget. Americans spent just 4% of their paychecks on gas in 2009, which is the latest figures I could find quickly. That means oil has to really jump before it slows spending on all the other stuff. What's more, even when gas prices rise there are ways we can deal with it. We can drive less. We can take public transportation. We can buy smaller cars. We can start using that smaller car we bought back in 2008 again. Not all of those things are possible for everyone, but the point is there are ways to mitigate the rising cost of gas on the budget. But there is the psychological factor. Some are saying that if gas prices get to $4 a gallon, consumer confidence will plunge. And that might have been true a decade ago. But we have lived with higher gas prices for a time. Paying $100 to fill up your tank is painful, but it's not as freakout inducing as it once was. People adjust their expectations. So I don't think $4 a gallon gas means people won't travel this summer, or even less.
“We’re starting to see loan demand turn up, and that’s a very important indication that the financial system is healing and the commercial banking system is getting stronger,” said Michael Darda, chief economist and chief market strategist for MKM Partners in Stamford, Connecticut. “When that happens you usually see a step up in job creation as well.”Alphaville's take includes the duly-noted comment that M&A activity's role in demand for credit doesn't necessarily mean good things for the unemployment rate.