The online WSJ is back with a another wonderful round up of Economists’s reactions; (See if you can pick out which ones are in hip to the real underlying economic doings):
Employers added 110,000 jobs to U.S. nonfarm payrolls last
month, the Labor Department reported Friday, a gain that was about 50% short of
the gains that most Wall Street economists expected. At the same time, the
unemployment rate dipped to 5.2% from 5.4%. What happened? Below, a selection of
economists offer analysis of the numbers, and what they expect them to mean for
the broader economy in the weeks and months ahead:
* * *
Reported payroll growth is volatile month to month, but
the results of the March report and the increase in jobless claims since the
week of the survey indicate that business has slowed down hiring recently,
probably in response to much higher energy prices. At the same time, the decline
in the average unemployment rate in the first quarter is a reminder that recent
job growth, while less than expected, is large enough to allow the unemployment
rate to drift lower.
— Bethany Baldino, J.P. Morgan
This weaker than expected outcome, reinforced by weakness
in hours, indicates that the economy is continuing to meet is production needs
with stronger productivity. … Strong productivity growth will continue to
restrain inflation. The contradictory performance of the two key employment
surveys could deprive the Fed of the confidence it would need to alter its
current pace of adjusting policy.
— David H. Resler and Gerald
Zukowski, Nomura Securities International
In contrast to some past reports, weather-related factors
do not appear to have played a major role in March. Construction jobs rose
26,000 — right in line with the underlying trend experienced over the past year
or so. Moreover, the "not at work due to bad weather" component of the household
survey came in at 170,000 only slightly above the March average of 150,000 seen
over the prior three years.
— David Greenlaw and Ted Wieseman, Morgan
Hourly earnings are having trouble gaining traction,
suggesting that labor markets are not particularly tight. Faster job creation is
necessary to generate the faster earnings growth that is needed to sustain real
consumer spending. However, businesses still remain cautious, evidenced by a
steady workweek at a relatively short level. Total hours worked in Q1 are only
moderately above Q4’s level, indicating that labor productivity accelerated in
— Steven Wood, Insight Economics
Wage gains picked up a bit, helping push up weekly
earnings. But before we start thinking wage inflation is accelerating we need to
see a few more months of 0.3% increases before anyone, including the Fed, would
get really worried.
— Joel L. Naroff, Naroff Economic Advisers
This is disappointing but it does not change the
underlying picture of an improving labor market. … Note that the drop in the
unemployment rate appears "genuine," in the sense that the 332,000 drop in
unemployment was exceeded by the 357,000 rise in employment; in other words, the
drop in the unemployment rate was not because people dropped out of the labor
— Ian Shepherdson, High Frequency Economics
As always, interesting stuff.
April 1, 2005 12:45 p.m.
The Growth of U.S. Executive Pay
LUCIAN ARYE BEBCHUK
This paper examines both empirically and theoretically the growth of U.S. executive pay during the period 1993-2003. During this period, pay has grown much beyond the increase that could be explained by changes in firm size, performance and industry classification. Had the relationship of compensation to size, performance and industry classification remained the same in 2003 as it was in 1993, mean compensation in 2003 would have been only about half of its actual size. During the 1993-2003 period, equity-based compensation has increased considerably in both new economy and old economy firms, but this growth has not been accompanied by a substitution effect, i.e., a reduction in non-equity compensation. The aggregate compensation paid by public companies to their top-five executives during the considered period has added up to about $290 billion, and the ratio of aggregate top-five compensation to profits increased from 4.8% in 1993-1995 to 10.3% in 2001-2003. After presenting evidence about the growth of pay, we discuss alternative explanations for it. We examine how this growth could be explained under either the arm’s length bargaining model of executive compensation or the managerial power model. Among other things, we discuss the relevance of the parallel rise in market capitalizations and in the use of equity-based compensation.
France and Germany Dogged by Joblessness
By MARK LANDLER
FRANKFURT – As Germany and France released a fresh batch of dismal employment numbers on Thursday, the specter of seemingly ineradicable joblessness hung over both Europe’s economic recovery and the fortunes of its political leaders.
Unemployment in Germany rose to 12 percent in March, a post-World War II record, while in France, the rate remained 10.1 percent in February, its highest level in five years.
Economists and public officials struggled to find a silver lining in the statistical clouds, but political analysts said the trends were only negative for the German chancellor, Gerhard Schröder, and the French president, Jacques Chirac, who each face difficult ballots in May….
Born to Be a Foreigner in Her Motherland
By NORIMITSU ONISHI
CHUNG HYANG GYUN’S news conference was a sight seldom seen in Japan, the raw anger written across her face, the fury in her voice and words, the palpable feeling that these last words would somehow redeem the futility of her actions.
‘I want to tell people all over the world that they shouldn’t come to Japan to work,’ Ms. Chung said in the perfect Japanese befitting someone who has lived nowhere else but Japan. ‘Being a worker in Japan is no different from being a robot.’
After a decade-long battle, the Supreme Court ruled recently that Ms. Chung, the daughter of a Japanese woman and a South Korean man, who was born in Japan and has lived all her life here, could not take the test to become a supervisor at her public health center because she is a foreigner.
‘I have no tears to shed,’ said Ms. Chung, a 55-year-old nurse. ‘I can only laugh.’
Ms. Chung is what the Japanese call a Zainichi, a term that literally means ‘to stay in Japan,’ but that is usually shorthand for Koreans who came here during Japan’s colonial rule, and their descendants. Considered outsiders both in Japan and on the Korean peninsula, they have, over the years, adopted different ways of living in Japan.
In a Japan that has softened its attitudes toward the Zainichi, many have become citizens and taken Japanese names, melding into the larger population. Others have taken citizenship, but kept their Korean names. Others still, like Ms. Chung, have taken neither citizenship nor name. Disagreements exist, even within the same family, including Ms. Chung’s….
We ought not to think there is a given amount of work to be done, or any particular work limit for the American economy. The point of proper fiscal and monetary policy is precisely to make sure there is work enough to assure absorption of an ever growing potential labor force and wage and benefits gains as business competes for labor that are a little short of inflationary. The last 5 years of the 1990s showed us just how fine economic policy can provide for a most healthy labor market at no general inflationary expense.