Following last week's solid jobs report, The New York Times got back to its Bush-bashing recession mantra with the front-page headline: "Slowing Job Growth Seen as Ominous Sign for Economy."
This chant has been going on for quite some time. Doom and gloom from the economic pessimists has been political sport for seven years, even though the Bush boom just celebrated its sixth anniversary. The current expansion is now in its 74th month -- 17 months longer than the average 57-month business cycle since World War II.
Jobs are an "ominous sign for the economy"? The latest jobs report says America is still working, with 94,000 new corporate payrolls in November and a rolling average of 103,000 job increases for the past three months. Along with a 4.7 percent unemployment rate, there is no evidence of a recessionary collapse in jobs. Even the household job count, which picks up small businesses, surged 696,000 in November, with a 303,000 average gain over the past three months.
Jobs are paying more, too. Worker wages have risen 3.8 percent over the past year, a full percentage point ahead of inflation. In fact, growth in total compensation for the entire workforce is rising at a 3.3 percent pace after inflation. University of Michigan Professor Mark Perry, writing in his Carpe Diem blog, says this is the best performance in seven years.
But wait, there's more. U.S. productivity surged 6.3 percent in the third quarter, its best pace in four years. A big rise in output per person is good for profits, growth and low inflation. Business inflation has come down from 3.5 percent a year ago to 1.5 percent today. U.S. household net worth just scored a new record high of $58.6 trillion, with financial asset gains outpacing the drop in real estate values.
According to Prof. Perry, household wealth has increased 43 percent in just the past five years, despite $100 oil, $3 gas and the sub-prime infection. The stock market, which is probably the best leading indicator of the future economy, appears just as resilient. Despite these same challenges, it is overcoming a brief correction and looks set to rise by roughly 10 percent this year.
Yes, economic growth may indeed pause to roughly 2 percent in the next couple of quarters, the result of two years of overly tight money from the Federal Reserve and the ensuing upturn in sub-prime defaults and foreclosures. You can call it Goldilocks 2.0. But you can't call it a recession.
Even the housing market has its share of positive developments. Mortgage refinancings are up nearly 70 percent as mortgage rates on 15- and 30-year loans are down nearly 100 basis points. Such events may help cushion the plunge in home sales and will eventually stabilize prices.