Economy at a Glance :: Federal Reserve Bank of Cleveland

Economy at a Glance

Executive Summary

The labor market finally showed some welcome signs of life in this month’s releases. Not only did payroll employment increased at its strongest pace since May, adding 151,000 jobs, but there were also large upward revisions to the August and September numbers. Nonetheless, the unemployment …  Executive Summary
The labor market finally showed some welcome signs of life in this month’s releases. Not only did payroll employment increased at its strongest pace since May, adding 151,000 jobs, but there were also large upward revisions to the August and September numbers. Nonetheless, the unemployment rate remained at 9.6 percent, as labor force participation edged down slightly.
Real GDP increased at a 2.0 percent annualized rate in the third quarter of the year. Private consumption continued to show some relative strength and grew at a 2.6 percent clip, strengthened by the continued robust growth in durables and faster growth in services. On the downside, private investment growth disappointed this quarter at 12.8 percent (from 26.2 percent in the second quarter), battered by residential investment’s 29.1 percent fall in the wake of the expiration of the home buyer tax credits. Production sentiment was strong in October, with the ISM’s Purchasing Managers’ Index for manufacturing increasing 2.5 percentage points on the strength of new orders and production.
Inflation, as measured by the CPI, came in at 0.1 percent from August to September and now stands at 1.1 percent for the trailing 12 months ending in September. Meanwhile, the core CPI, which excludes more volatile items like food and energy, is at a paltry 0.8 percent. The gap between CPI and PCE measures of inflation continues to hold, as the core PCE came in at 1.3 percent. Either way, the latest FOMC statement saw these inflation numbers as “somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.” This, together with the elevated unemployment rate and the lingering subdued levels of economic activity, prompted the Committee to announce the purchase of a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011.  [2010-11-08]  Executive Summary

Growth and Production   

The BEA reported that GDP in the third quarter grew at an annualized rate of 2.0 percent, up from 1.7 percent in the second quarter. Personal consumption expenditures continued to show some relative strength and grew at a 2.6 percent clip, strengthened by the continued robust growth in durables and …  Growth and Production
The BEA reported that GDP in the third quarter grew at an annualized rate of 2.0 percent, up from 1.7 percent in the second quarter. Personal consumption expenditures continued to show some relative strength and grew at a 2.6 percent clip, strengthened by the continued robust growth in durables and the faster growth in services, whose growth rate jumped to 2.5 percent in the third quarter, from 1.3 percent in the second. Private investment growth disappointed this quarter at 12.8 percent (from 26.2 percent in the second quarter), battered by residential investment’s 29.1 percent fall in the wake of the expiration of the home buyer tax credits. Production sentiment showed some spark in October, with the ISM’s Purchasing Managers’ index for manufacturing increasing 2.5 percentage points on the strength of new orders and production.  [2010-11-08]  Growth and Production
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Regional Economics   

Unemployment in the Fourth District has been slowly declining over the past six months. From March of this year through September, the unemployment rate has fallen from 10.4 percent to 9.9 percent. March 2010 was the Fourth District’s peak in unemployment over this cycle. Ohio’s …  Regional Economics
Unemployment in the Fourth District has been slowly declining over the past six months. From March of this year through September, the unemployment rate has fallen from 10.4 percent to 9.9 percent. March 2010 was the Fourth District’s peak in unemployment over this cycle. Ohio’s unemployment rate fell from 11 percent to 10 percent, representing the largest decline of the four states in the Fourth District (Kentucky, Ohio, Pennsylvania, and West Virginia), while Pennsylvania’s unemployment rate held steady at 9 percent over the six-month period. Following national trends, net employment expansion has been relatively anemic in the Fourth District states. Pennsylvania performed the best among the Fourth District states, with an overall employment growth rate of 0.7 percent (compared to a national rate of 0.3 percent over the last half a year). On the other hand, Ohio showed below-average employment growth.
While the housing sector led the U.S. economy and the Fourth District into the recession, it has certainly not led us out of it. Housing starts and permits remain at severely depressed levels, and there exists a substantial overhang of houses on the market due to the foreclosure crisis. In this month’s coverage of regional trends, Stephan Whitaker looks at Fourth District housing markets and whether there is any signs of improvement.  [2010-11-05]  Regional Economics
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Labor Markets, Unemployment, and Wages   

October’s employment report is a tale of two surveys. The household survey showed little improvement in labor market conditions between October and September. The unemployment rate remained at 9.6 percent, the employment-to-population ratio fell slightly to 58.3 percent (hovering near decadal …  Labor Markets, Unemployment, and Wages
October’s employment report is a tale of two surveys. The household survey showed little improvement in labor market conditions between October and September. The unemployment rate remained at 9.6 percent, the employment-to-population ratio fell slightly to 58.3 percent (hovering near decadal lows), and the labor force participation rate declined by 0.2 percent to 64.5 percent. On the other hand, the establishment survey showed some clear improvement. Overall payroll employment rose by 151,000 jobs, with the private sector adding 159,000 jobs. In addition, private sector employment was revised up in both September and August. This makes four months in a row of private sector employment gains of 100,000 or more workers. Hours also expanded by 0.1 hours to 34.3 hours per workweek and average hourly wages increased by 5 cents. Still, this growth in private sector jobs, hours, and wages represents a relatively weak employment picture at this point in the recovery cycle.
A key concern with the slow pace of improvement in the labor market is the possibility that a disproportionate share of unemployment this cycle is due to structural unemployment, as opposed to cyclical unemployment. The re-employment patterns of displaced workers (workers who lost their job when the company closed or their position was no longer needed) might tell us something about structural unemployment. This month we provide some evidence from the Survey of Displaced Workers on the unemployment and re-employment rates of workers displaced over the last decade, including the last recession.  [2010-11-05]  Labor Markets, Unemployment, and Wages
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