Around this Labor Day, the fact remains that the job market itself has been no picnic in recent years. That appears to be changing now amid signs of surging economic growth in the U.S. Businesses are adding jobs, and the unemployment rate has been hovering around the lowest levels in about six years.
All of that means increased pressure on the Federal Reserve to begin raising interest rates. After the holiday, we'll get an update this week on unemployment, along with a preview of this month's Fed meeting.
Here's what we have on tap:
- The Institute for Supply Management releases its August manufacturing index, Tuesday at 10 a.m. (All times Eastern.)
- The Commerce Department reports on July factory orders, Wednesday at 10 a.m.
- The Federal Reserve releases the Beige Book economic survey, Wednesday at 2 p.m.
- Automakers release August sales figures, Wednesday.
- The Labor Department reports on second-quarter productivity, Thursday at 8:30 a.m.
- The Institute for Supply Management releases its August service sector index, Thursday at 10 a.m.
- The Labor Department reports on August employment, Friday at 8:30 a.m.
Settling into steady jobs reports
Ahead of the August jobs report, the story in recent months has been one of stability. Employers added 209,000 jobs in July, matching the average for the number of jobs added over the previous 12 months. Analysts are looking for something similar this week. "Hiring intentions are stable and firings are still low," says Neil Dutta, head of U.S. economics at Renaissance Macro Securities.
Other recent, more upbeat economic indicators include rising consumer confidence. Second-quarter gross domestic product was revised upward to 4.2 percent, helped by stronger business investment.
Prep for Fed's mid-month meeting
Release of the Beige Book regional economic roundup sets the stage for the Fed's Sept. 16-17 meeting. The central bank is expected to acknowledge steady improvement in the job market and inflation that's edging closer to the Fed's target.
During her recent speech on the state of the job market at Jackson Hole, Wyoming, Fed Chair Janet Yellen spoke about indicators suggesting that "the labor market has yet to fully recover." That's seen as the underpinning of her belief that the Federal Open Market Committee needs to be cautious in deciding when to raise short-term interest rates.
From too few jobs to too few workers?
For a number of months now, there have been reports from across the country that employers are having difficulty finding qualified workers for job openings. "We're starting to see some indications of labor shortages popping up, usually in very skilled areas (sectors)," says John Challenger, CEO of workplace consulting firm Challenger, Gray & Christmas.
Unlike the Fed's Yellen, Challenger doesn't see much slack in the job market. "I'm dubious of that kind of concern because it seems to mean that the only time you can be happy about the labor market is when you're at full employment," says Challenger. Fed policymakers believe full employment is somewhere between 5.2 and 5.5 percent.
Cheaper gas in the tank
For Americans and businesses needing to fill gasoline tanks, there's been good news at the pump in recent weeks. Gasoline prices peaked toward the end of June and have declined steadily since.
The national average for gasoline has recently been running under $3.45 a gallon, down from both month-ago and year-ago levels. Although most Americans have seen little improvement in wages, there's been relief on the price of motor fuel.
CBO: Short-term versus the long-term
The nonpartisan Congressional Budget Office's latest projections point to positive possibilities for the economy over the next few years. It looks for growth to expand at an annual rate of nearly 3.5 percent through 2016 and expects slack in the job market to "largely disappear by the end of 2017."
The long-term outlook is clouded by the massive amount of federal debt held by the public: CBO says that debt will rise to 77 percent of GDP in 2024. The dangers include "eventually increasing the risk of a fiscal crisis (in which investors would demand high interest rates to buy the government's debt)."
This week in business history: Power kick
Talk about generating a buzz. On Sept. 4, 1882, some 132 years ago, famed inventor Thomas Edison flipped the switch on his Pearl Street electrical generating station in New York.
© Underwood & Underwood/Underwood & Underwood/Corbis
The result was power for something new: Electrical lighting for the surrounding area. Current was running only a few short years after he invented a commercially-practical electric light bulb. As a result, dozens of customers in lower Manhattan were using 110 volts of direct current to power their lights.
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