us economic forecast
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U.S. Economy: These Jobs Numbers Point to Slower Growth in Q2
Anyone hoping the U S. economy in 2013 would gain strength from job growth needs to check out Wednesday's ADP National Employment Report.
According to ADP, the U.S. economy added 158,000 private-sector jobs in March, well below projections of 200,000 - 215,000. That's the smallest gain since October when companies hired just 148,000.
March's lackluster showing was mainly due to lower job creation in construction. The industry enjoyed robust hiring in the months following late October's Hurricane Sandy. In its wake, the superstorm left behind upwards of $50 billion in damages.
A tepid recovery in the housing market in Q1 also helped the sector in January, with recent monthly gains in construction averaging 35,000.
In March, however, no new construction jobs were added.
"If that's the case, underlying job growth is not changed appreciably," Moody's Analytics chief economist Mark Zandi told Reuters. He estimates overall employment growth is running near 175,000 a month.
March's jobs report included a revised 237,000 gain for February from the previously reported 198,000. But January's numbers were revised down to 177,000 from 215,000.
So what does this mean for Friday's U.S. jobs report?
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Why There's No Real Inflation (Yet)
According to Milton Friedman, "inflation is always and everywhere a monetary phenomenon."
If that is true, then you have to wonder where the heck all of the inflation is.
Every central bank in the Western world is holding interest rates down, and almost all of them are printing money like it's going out of style.
Five years ago, nearly every economist in the world would have told you this would cause inflation to skyrocket, and the big deficits governments were running would make matters even worse.
Taken together, monetary and fiscal policies are far more extreme than they have ever been.
Yet, inflation has remained rather tame. In Friedman's world that just wouldn't be possible.
But today inflation is only running at around 2%--well below where it should be according to his monetarist theories.
What does it all mean?....
It means even Nobel Prize-winning economists can get it wrong-at least in the short run.
Here's why Friedman has been wrong on inflation so far. It starts with his basic theory.
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2013 U.S. Economic Forecast: Even Without the Fiscal Cliff, A Recession Still Looms
Everyone is worried about the damage the "fiscal cliff" might do to the U.S. economy in 2013, but the reality is that's only one of the potential problems in our 2013 U.S. Economic Forecast.
At present there appears to be four problems-- aside from the fiscal cliff-- that could throw the U.S. economy into recession in 2013.
These are international problems that include:
- Brewing trouble in Japan: Japan faces an election next month. More importantly, its government debt is currently 230% of GDP, with that ratio rising by about 10% a year. The current government has increased sales tax in 2014, which may cause a recession and will likely push its debt to GDP ratio even higher.
The problem is no country has ever survived a debt/GDP ratio above about 250% without defaulting. Britain did succeed with this in 1815 and 1945, but on the second occasion it relied on exchange controls, inflation, and dozy domestic investors, while on the first occasion it had a government under Lord Liverpool far more capable than anything we have seen in the last 185 years.
The point is, if Japan gets a weak coalition after its election, the market may panic and cause a Japanese government default.
To continue reading, please click here... - Brewing trouble in Japan: Japan faces an election next month. More importantly, its government debt is currently 230% of GDP, with that ratio rising by about 10% a year. The current government has increased sales tax in 2014, which may cause a recession and will likely push its debt to GDP ratio even higher.
