The cadence of this week's business activity, including reports on the economy, will be on the disjointed side. Independence Day is Thursday, and the holiday is followed a day later by the monthly employment report. That could bring its own brand of fireworks.
The jobs report has a great deal of interest both on Main Street and Wall Street alike.
Key events this compacted week:
- Institute for Supply Management report on June manufacturing, Monday at 10 a.m. (all times Eastern).
- Automakers report on June car and truck sales, Tuesday throughout the day.
- Independence Day holiday, U.S. markets closed, Thursday.
- U.S. Labor Department reports on June employment, Friday at 8:30 a.m.
Much data, little new
Jobs creation has been moderate with the unemployment rate at 7.6 percent in May. Analysts look for more of the same in this report, with the June jobless rate falling slightly to 7.5 percent.
Says PNC Financial Services Group economist Gus Faucher, "The economy continues to add jobs generally enough to bring down the unemployment rate, but it isn't a really strong labor market."
He looks for slow improvement with unemployment eventually dropping to the Federal Reserve's threshold of 6.5 percent "either in late 2014 or early in 2015." Faucher's outlook is for "modest growth" through the end of the year and then some acceleration in 2014 "as the drag from the federal government lifts somewhat."
Sad truth: 'Spotty job growth'
Jeff Joerres, chairman and CEO of employment services giant ManpowerGroup, says job creation is failing to fully reflect the level of growth in the broader economy. Joerres says, "We're at the point now where we are still seeing spotty job growth, geographically and within the industry as opposed to the entire boat being risen up by this (gross domestic product) number."
What about a raise?
If you feel like your earnings haven't gone up much in recent years, you have plenty of company. Joerres, who is also chairman of the Federal Reserve Bank of Chicago, notes that wage growth has been frustratingly low, if not largely absent. He says, "We are not seeing a lot of wage growth, or, if you will, wage inflation." Joerres calls that "a conundrum at this point, because you would normally see that -- talent shortages, decreasing unemployment numbers, translate into more hours and higher wages and we're not seeing either of those right now."
Because the Fed has tied improvement in the job market to both scaling back asset purchases and raising short-term rates, the jobs reports have taken on added importance. Indeed, since the Fed's most recent statement and Chairman Ben Bernanke's news conference June 19, there's been added volatility in the financial markets, with both interest rates and stock prices caught in the middle.
Ben bashers versus boosters
Bernanke's term ends in January. Bob McTeer, former president of the Federal Reserve Bank of Dallas, believes Bernanke will be remembered as something of a hero. "I think history will be kinder to him than his contemporaries have been," McTeer says. The rallying stock market may have quieted that, says McTeer. "The criticism of him has diminished as the markets have become more dependent on Fed policy for a good stock market. For a long time they were just criticizing everything he did."
McTeer says of Bernanke bashers: "It sort of launched them into a situation where they are now scared to death he will quit doing it. It's kind of odd," says McTeer, a distinguished fellow with the National Center for Policy Analysis in Dallas.
Car sales up like July temperatures
Auto sales continue to be a largely positive story for the U.S. economy. Car-shopping site Edmunds.com says the total number of new cars and trucks sold in the U.S. in June should come in at a seasonally adjusted annual rate of 15.5 million light vehicles. That should make for the best June since 2007.
This week in business history: US Secret Service
Most people associate the Secret Service with the important mission of guarding the president, but that's not how it started. On July 5, 1865, the Secret Service was created in response to the flood of counterfeit currency. In 1901, Congress informally requested Secret Service presidential protection following the assassination of President William McKinley. Even today, it looks "to safeguard the nation's financial infrastructure and payment systems to preserve the integrity of the economy."
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Focus on the Fed and the job market
A former Federal Reserve official says Ben Bernanke saved us from a depression. Also, ManpowerGroup CEO Jeff Joeress tells us job growth is still "spotty."
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