The Clinton Herald, Clinton, Iowa

Opinion

November 19, 2013

Will improved economy be part of our Christmas celebration?

With the advent of the holiday season come the perennial questions: Who has been naughty or nice; will Santa bring what I asked for; will this be enough punch? Add to the list for this holiday season, will the Federal Reserve Open Market Committee taper or not? There is no store to secure this season’s hot financial item and there is no lack of chatter on both sides of the question.

The taper I refer to is the scaling back, eventually ending, of the monthly purchase by the Fed of $85 billion of securities. The FOMC has hinted at this for several months, putting it on hold at their September meeting in anticipation of the shutdown. Prior to October’s nonfarm payroll report, the consensus was that tapering had moved to the back burner, meaning 2014, due to a weak job market. The FOMC has stated their decision was data dependent, waiting for signs of a self-sustaining economic recovery and sustainable job creation trend in the employment markets.

With analysts eyes all aglow, but what should appear? A much stronger than expected October employment report. The headline number was a net increase of 204,000 jobs, roughly twice the estimate. Private payrolls increased by 212,000. Both August and September figures were upwardly revised by a combined 70,000. The trailing three month average of 190,000 is well above the average gain of 165,000 from March to July.

Despite this positive surprise, there was a lump of coal involved. The Bureau of Labor Statistics compiles the establishment survey based on filings by employers. It did not include the 800,000 furloughed government workers as unemployed as Congress provided them with back pay. The household survey, based on phone interviews during the week ending Oct. 12, did include 448,000 government workers that listed themselves as unemployed or on temporary layoff. The household survey lost 735,000 jobs in October. The unemployment rate moved up to 7.3 percent but without the government shutdown might have moved down to 7.0 percent. The labor-force participation rate declined to a 35 year low of 62.8 percent as many of the federal workers did not report themselves as seeking employment during the shutdown, resulting in a decline of 720,000 in the labor force last month. This rate will likely tick up in the coming months. The information made for a very noisy report.

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Poll

With the Clinton County Justice Coordinating Commission and the Clinton County Board of Supervisors discussing proposals to construct a new jail, do you think the time has come for Clinton County to construct such a facility?

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