by Michael Roberts
The US economy added just 88,000 new jobs in March, a reading sharply
lower than expected. However, the unemployment rate ticked down to 7.6
per cent, because the share of Americans in the labour force dropped to
its lowest level since 1979. On the other hand, jobs figures for
January and February were revised up. March was the poorest monthly
jobs figure in nine months. In the private sector, manufacturing lost
3,000 jobs and retail lost 24,000. Again, on the other hand, little
noticed, the U6 unemployment rate (that includes those not registered
but looking for work) fell from 14.3% to 13.8%.
The stock markets greeted the news by selling off and many analysts
preached doom and gloom. But these are same experts that jump with
delight when there are good figures. Can we see through the noise at
the underlying state of the US economy and elsewhere? Well, as readers
of this blog know, I rely on a few ‘high-frequency’ indicators to guide
me. I start with my ‘combined’ US manufacturing and services sectors
purchasing managers’ index (PMI). After the March data came in last
week, it looks like this
On this indicator, the US economy continues to trundle along in a
crawl. If we look at the less reliable but even more frequent ECRI
weekly indicator, it’s much the same story – if anything, it’s a little
bit stronger in the few months.
What about the world economy as a whole as of March 2013? Well, using the PMIs from around the
globe, it looks like this.
It seems that most parts of the world capitalist economy are
expanding, if at a crawl. Only the Eurozone is in a significant
Yet this may be the best picture for some time ahead. The US
government again faces a close down in the summer unless Congress agrees
to raise the debt limit and reaches agreement on budget measures. As
it is, the Obama administration is preparing spending cuts in its 2014
budget starting in October, including cutting the real value of average
pensions by changing the inflation indexation (see my post, http://thenextrecession.wordpress.com/2012/12/27/the-fiscal-cliff-okuns-law-and-the-long-depression/).
And the private sector remains in the doldrums with investment growth
poor, even though profits are at record highs (see my post, http://thenextrecession.wordpress.com/2013/03/30/its-still-a-bear-market/).
Sales growth is low by historic standards (see pink in graph below) and
there is a limit on how much labour’s share of national income can be
squeezed further. At that point, profitability could start to fall.
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