First the jobs data. A minor change in last month was cause for celebrating in Washington. Of course is was a small blip. But the real story may be told next month, when the new jobs data comes out, because things still aren't good.
Initial claims for state jobless benefits increased 31,000 to 473,000, the Labor Department said on Thursday. Financial markets had expected them to fall slightly to 430,000.Then there is the little item of inflation. The Producer Price Index went up 1.4 percent in January. (That is a yearly rate of more than 16 percent!) Of course the government will say that includes the volatile food and energy sectors. And while if you are living in an era of steady energy prices, you can safely ignore the short-term fluctuations, if you are living in an era of increasing (or decreasing) energy costs, you ignore them at your peril. I don't know about you, but energy and food are two of the things I buy every month. To say I can ignore the price of gas and how it has changed in the past 10 years is, quite simply, insane.
Then there is the bit you probably won't see in the US media. The GDP numbers. Well you will see them, because they look incredibly good. But you won't see too many in the US media try to peel the onion. GDP grew at a 5.7 percent annual rate in the 4th quarter of 2009. That is almost too fast, so why no job creation?
"Initial claims have been flat over the last three months. That means the improvement in the labor market is much slower than suggested by the headline GDP figure," said Harm Bandholz an economist at Unicredit Research in New York.So, is the economy coming out of recession? I don't think anyone in Washington knows.
"That shows GDP growth is artificially inflated by government stimulus and the inventory cycle rather than driven by final demand, which usually goes hand in hand with an improvement in the labor market."