Economic outlook, dreary with bursts of occasional sun

Jay Bookman:

The economic outlook continues to be dreary, with occasional patches of blue sky and sunshine breaking out to offer hope that better days might be coming.

In Georgia, for the moment, things continues to look pretty grim, as the AJC’s Mike Morris reports:

The Georgia Department of Labor reported that the state’s seasonally adjusted unemployment rate in January was 10.4 percent, topping the previous record high of 10.3 percent a month earlier.

The January jobless rate was up 2 percentage points from 8.4 percent a year ago.

“Georgia’s unemployment crisis is deepening,” Labor Commissioner Michael Thurmond said in a statement released early Wednesday.

On Tuesday, state Senate Majority Leader Chip Rogers predicted “massive layoffs” in state government to balance Georgia’s budget. Combined with looming layoffs at school districts, MARTA and other agencies, that’s not going to help much.

In addition, the New York Times has a sobering look at the debt problem in Great Britain, which is perilously close to that of Greece.

“If you really want a fiscal problem, look at the U.K.,” said Mark Schofield, a fixed-income strategist at Citigroup. “In Europe, the average deficit is about 6 percent of G.D.P. and in the U.K. it’s 12 percent. It is only just beginning.”

… on a broader scale, which includes the borrowing of households and companies, the overall level of debt in Britain is the second-largest in the world, after Japan’s, at 380 percent of the country’s gross domestic product, according to a recent report by the consulting company McKinsey.

For comparison’s sake, the fiscal 2010 deficit of the US government is estimated to be 10.6 percent of GDP, declining to 8.3 percent in fiscal ‘11.

So, you ready for the brighter news yet? I thought you might be.

Bloomberg reports that the recovery finally seems to have hit the service industry, with the Institute for Supply Management’s index of non-manufacturing businesses expanding faster last month than at any time since October 2007, and faster than any of the experts predicted:

“The group’s measure of employment rose to the highest level since April 2008, signaling the economy may be on the cusp of creating the job growth necessary to encourage spending.

“The strength in the nation’s manufacturing sector is now spreading to the services economy,” Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said before the report. “With services activity picking up and manufacturing continuing to show strong gains, the economic outlook looks to be self-sustaining. We are probably just months away from seeing broad-based increases in hiring.”

Two other signals confirmed the encouraging ISM numbers, as the Wall Street Journal reports (subs. required):

Private-sector jobs in the U.S. fell 20,000 in February, according to a national employment report published Wednesday by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers…. The ADP loss is below the 50,000 drop projected by economists in a Dow Jones Newswires survey. … The February employment decline was the smallest since employment began falling in February 2008.

And…

In other Wednesday job reports, outplacement firm Challenger, Gray & Christmas said U.S. companies in February announced plans to reduce payrolls by 42,090 workers. It was 77% lower than the 186,350 job cuts announced in February 2009 and the smallest number since 2006, said Challenger.

As good news goes, that ain’t great. But it does suggest improvement ahead.

 

Posted via email from Jim Nichols for GA State House