The new jobs report comes out on Friday. Let's hope for good news - I'm not going to wish for bad news to further my personal political agenda - I'm not a supporter of "hope for short term pain to get us long term gain" either on Iraq or the economy. But, what I do want is the truth, about both those things for better or for worse, to be understood by the people in this country.
So, even as we hope for good job news (a soft labor market is of no benefit to me, either) let's prepare for the inevitable spin in which bad numbers are made good and average numbers are made great.
It's a bit premature, but let's just remind ourselves. 140K+ net new jobs or so are necessary just to keep up with the growth in the working age population. And, while a second month of good numbers will indeed be an encouraging sign, there's almost no chance that the jobs numbers will return to their pre-Bush levels by the election.
There are some discouraging trends. The rise in the adoption of adjustable rate mortgages at a time when interest rates will inevitably rise is cause for concern. Rising long term rates could destroy the housing market. The declining share of output going to labor is also of concern. (Short version - wages are flat, productivity has been going up, therefore all that extra productivity is going to profits). Whether this is just a temporary trend in a weak labor market, or whether it's a sign of structural changes in the economy (decreasing competition due to tech. changes, poor anti-trust enforcement, a rise in crony capitalism, etc...) is unclear.
