December 15, 2011

Maybe Obama was right last week

First, let's not be too hasty based on one month's numbers and second, let's not forget about eurozone issues. But, today's news that jobless claims hit a 3 1/2 year low has to be seen as some sort of good news for larger, longer economic growth.

That said, the story offers a caveat:

Another concern: The economy has been here before.

In February, unemployment claims fell to 375,000. Companies added about 200,000 jobs a month for three months. But then oil prices spiked and Europe's debt problem got worse. Employers added just 53,000 jobs in May.
But, nonetheless, an irregular pitter-patter of financial news for the past two months has cautiously moved more optimistic.

That's not all. Add to it not only the fact that the Federal Reserve sees decent growth in 2012 but, as noted in the same story, three of Ben Bernanke's inflation-hawk opponents on the Fed's policy-setting board will rotate off next year:
The Fed made no mention of a new communications strategy in its statement. But economists say it could be unveiled as soon as next month, after the Fed's Jan 24-25 policy meeting.

Diane Swonk, chief economist at Mesirow Financial, said the November minutes showed the Fed discussed adding an interest rate forecast to its quarterly economic projections.

Swonk said the Fed may be trying to build a stronger consensus before announcing the change. She also noted that three Federal Reserve regional bank presidents who opposed key policy changes this year will not have votes next year.

Charles Plosser of Philadelphia, Richard Fisher of Dallas and Narayana Kocherlakota of Minneapolis all dissented from the Fed's policy statements in September and August after citing concerns that the actions introduced at those meetings could fuel inflation.
Good riddance to all three. And, it will free Bernanke's hands a bit more in a variety of ways, which could help us all.

As the first story notes, we still need more hiring, especially as halfway good news tempts those who have dropped out of the job hunt to drop back in. There are the Europe worries. And oil price worries.

But, if U.S. growth can top 2.5 percent next year, some sort of recovery can keep going.

And, per Obama's "60 Minutes" comments, unemployment may just drop down to 8 percent by, say, the end of next summer.

Depending on who the Republicans nominate and how bloody the battle is, that number would look very good to the president.

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