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And now for the big game for economists

By Mark Hamrick ·
Monday, February 3, 2014
Posted: 6 am ET

With the Super Bowl now behind us, it is time to zoom ahead to a popular sporting event for the financial community: handicapping the monthly employment report.

While stock and bond traders will push the markets around as part of the typically short-term reaction to this news, the thing to keep in mind is that jobs are critically important to the everyday lives of Americans and to the stability of the broader economy. It can be easy to forget that real people are affected if the economy is on a scoring run -- or losing streak.

Key reports due this week include:

- January manufacturing, from the Institute for Supply Management, due Monday at 10 a.m. (all times Eastern).

- Auto sales for January, expected from the automakers throughout the day on Monday.

- Services sector for January, from the Institute for Supply Management, due Wednesday at 10 a.m.

- January employment, from the Labor Department, due Friday at 8:30 a.m.

Remember the last report?

The previous jobs report, covering December, showed fewer-than-expected 74,000 jobs were added.  A portion of that weakness was blamed on nasty winter weather in much of the country. The unemployment rate fell to 6.7 percent, but largely for a not-so-welcome reason: a large number of people gave up on their job search.

During all of 2013, slightly more than 180,000 jobs a month were added by employers, on average.

So, for January…

Economists are penciling in estimates, on average, for 185,000 jobs added in January. Looks suspiciously like the average over the past year, right? That's called playing it safe, in terms of coming up with an estimate. And, little change is expected in the unemployment rate for the month.

Economist John Canally thinks there's a possibility of a positive surprise in the upcoming report, though not any indication that employers were hiring aggressively. But Canally, with LPL Financial, says the week when employers were surveyed in January was during a bit of a warm spell in the Northeast. That could give the deceptive appearance of a boost in hiring. Nevertheless, he thinks the job market is fairly steady overall.

What happens if the report suggests weakness once again? Then, people will start to question whether something more dire is happening with the economy, coming after recent declines in the stock market. "If we get a number below 170K, the markets may start to question the sustainability of the stronger growth we have seen over the past six months, especially now with the Fed moving forward with further tapering," says Scott Anderson, chief economist with Bank of the West.

How about a raise?

In the years during and after the Great Recession, Americans have largely gone without pay increases. Further evidence of this miserly experience was seen in the government's December snapshot of personal incomes and spending, which showed that incomes were flat. Similarly, the previous employment report from the Labor Department told us that average hourly earnings rose just 1.8 percent over the past year. That's hardly burning the proverbial hole in Americans' pockets. "Consumers are spending beyond their means right now and may need to rebuild savings before they can hit the stores again," says economist Anderson.

Hooray for Hollywood

For this week in business history, we go way, way, way back to Feb. 5, 1919. That's when some of the motion picture industry's leading figures -- director D. W. Griffith and actors Charlie Chaplin, Douglas Fairbanks and Mary Pickford -- founded the United Artists film studio. They had the hope of breaking the stranglehold held by the big studios. United Artists still survives, but as a unit of MGM.

Follow me on Twitter: @Hamrickisms.

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A battle plan for today's job market

Though we may see more evidence this week of an improving jobs picture, finding work still requires a strategy.


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