When economists discuss the job market, we hear glowing accounts that workers have little to fear and that employers are hanging out “help wanted” signs all over the land. Unemployment? Forget it. Wages are growing, according to the experts, at the fastest rate in five years.
Yet the current jobless rate of 4.8 percent remains a full percentage point above the level of 2000, when it hit a generational low of 3.8 percent. And some analysts fret that a widely predicted boomerang by the housing market will start to hit workers later this year. Add to those concerns: rising interest rates.
Against that backdrop, economist Robert Dederick is looking for Friday’s March employment report to show payrolls growing by a moderate 275,000 positions, as joblessness holds steady.
“There was one fly in the ointment, as fewer construction workers were added last month,” said Dederick, of RGD Economics. “The main reason is that the weather earlier in the winter was warmer than usual; so there were fewer layoffs.”
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Overall, he says that while alarms are being heard about housing, “the economy continues to push ahead at a comfortable pace, and wage gains remain non-inflationary. For workers, the job market still is beckoning.”
Other news to watch:
– Analysts scanning Monday’s reports of February car and light truck sales will be watching for any hopeful signs that Detroit is escaping a death spiral. With layoffs by the thousands affecting auto workers at Ford Motor Co. and General Motors Corp., the hope is that new models can reinvigorate sales. It’s an uphill battle, though, as the domestics battle overseas giants who pay, on average, $2,000 less per vehicle in labor costs, thanks to non-union factories.
– For now, investors are taking a casual approach toward another problem that is on the back burner, says Bannockburn-based mutual fund manager Henry Van der Eb. That is a failure by Congress to extend the 15 percent tax rate on capital gains and dividends beyond 2008. The issue is likely to be discussed this week, he said.
“If nothing is done, at some point we would see an exodus from high-risk stocks as well as from dividend-paying issues such as utilities,” said Van der Eb, of the Gabelli Mathers Fund.
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