Economy still cranking

From today's WSJ:

The unemployment rate fell 0.1 percentage point to 4.4% last month, matching its lowest level since May 2001. Average hourly earnings increased six cents, or 0.3%, to $17.22. That was up 4% from a year earlier, suggesting wages remain an inflation risk.

March's payroll gain exceeded Wall Street expectations of a 142,000 rise. Economists had expected a 4.6% unemployment rate and 0.3% rise in wages.

The jobs data should ease fears that a recent soft patch in data will turn into a more severe economic downturn. Gross domestic product grew 2.5% during the fourth quarter, and recent data including weak housing and business investment suggest growth could be below 2% in the first quarter.

However, with the jobless rate at six-year lows and wages on the rise, consumers should remain well supported in coming months. Consumer spending makes up about two-thirds of GDP, so even modest growth there can offset sizable drags in other sectors.


The article is mostly right, except that consumer spending will be hit soon by the end of the housing ATM. The low unemployment and high wage inflation makes a near-term rate cut very unlikely, meaning more pain for housing speculators and cash-out consumers.

This is an amazing unemployment picture, though, thanks both to the Bush tax cuts and the easy Fed. Too bad the Democrats will be crushing the economy (and tax revenues) by letting the Bush tax cuts expire.

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