Economy added 113,000 jobs in January; unemployment rate dips to 6.6 percent

2014 was supposed to be the year that the economy took off. After new data from January was released, it looks as though this may not be the case. Only 113,000 jobs were added in January, which was lower than expected. The increase in jobs helped to bring down the unemployment rate to 6.6%. Some more good news was the expansion of the labor force, as well as a rise of 5 cents in hourly wages.
There were signs that January job growth may not meet expectations. A closely watched index of manufacturing activity tumbled last month and auto sales were lower than expected.
Robert Shapiro, chairman of economic advisory firm Sonecon and a former top official at the Commerce Department, viewed the lower than expected job growth as a "pause" in the economy's growth. “We need two, three, four more months of weak numbers before we say there’s any real problem,” he said.
Stuart Hoffman, chief economist for PNC Financial Services, was even more optimistic. He believes January's results will be revised upward when next month's data is released and that hiring will soon pick up. He claimed, "“We won’t strike out three months in a row. Keep the faith, baby, keep the faith.”
Economists are keeping an eye on the Fed's short-term interest rate, which has been promised to be kept near zero until "well past" the time the unemployment rate has reached 6.5%. With the rate already at 6.6%, economists will be seeking clarity from the Fed and how it will react once the line is crossed.

http://www.washingtonpost.com/business/economy/economy-added-11300-jobs-in-january-unemployment-rate-dips-to-66-percent/2014/02/07/9724cdb8-8f8f-11e3-84e1-27626c5ef5fb_story.html

China's Economy: In three parts

http://www.economist.com/news/finance-and-economics/21594999-some-chinese-economic-indicators-are-moving-right-direction-others-are

China's economy grew by 7.7% in 2013. This article is about how some factors that show economic growth in China's economy predict continued growth and some factors predict a decline in growth in the upcoming year. China is experiencing lessened growth in its urban workforce this creates a diminishing potential for growth in the economy. Whether the economy fulfills the expected decrease in economic growth is up to the demand for goods and services.

Employment's Decline, for Men of All Ages

Within the past decades unemployment has raised many problems and is hard to find solutions for. But for men who graduated high school between 1982 and 86, their unemployment has a lot to do with bad timing. Men who graduated during this time period entered their prime working years in a period of slow growth in 1994. Only 83.3 percent of men between the ages of 25 and 29 were working. Now a decade later we are coming across the same problem. The government came out with a report that again only 83.3 percent of 25-29 year olds were working. This is do partially to the recession in 2009. Within the last 5 years employment has increased modestly but still remain low. According to the congressional budget office it is because the erosion of skills associated with long-term unemployment are preventing a growing number of people from returning to work.

http://economix.blogs.nytimes.com/2014/02/07/employments-decline-for-men-of-all-ages/?ref=economy

http://www.economist.com/news/finance-and-economics/21595937-fed-may-be-tapering-central-banks-japan-and-europe-are-still

The article discusses how although many Americans blame the recent upheaval in the financial markets on the feds decision to cut back in quantitative easing that the opposite is happening in Japan.  In fact, Japan started buying 70 billion (dollars equivalent) a month which is a much greater sum than the United States 85 billion buy back easing when considering the size of the economy.  The article addresses that there is much more to consider than simply the feds reduction quantitative easing - and how quantitative easing can be used in two different ways - for Japan it is addressing its problem of deflation.

Where rich Chinese want to live

http://money.cnn.com/gallery/news/2014/02/06/china-wealthy-move/index.html?iid=SF_E_River

Recent trends have shown that the United States of America is the favorite destination of wealthy Chinese citizens. A new program that exchanges a green card for a $500,000 investment as well as a desire for cleaner air and water, and better schools has encouraged this movement. They are also moving to Europe, Australia, Singapore, and other places around the world. However, citizens making over 10 million yuan are interested in staying in China. In the United States of America this idea is not too popular among some of the wealthier citizens. Only  time will tell whether this trend will benefit or disrupt our economy. 

The U.S. Labor Market Cools, and It's Not Just the Weather

http://www.businessweek.com/articles/2014-02-07/the-labor-market-is-cooling-off-and-its-not-just-the-weather#r=nav-f-story

The economy added just 113,000 jobs in January. The average prediction by economists surveyed by Bloomberg was for a gain of 180,000. The weak report is better than the 74,000 jobs created last month, which was the worst month of job creation in three years, but it shows December’s weakness was more than just an aberration. The hope was that historically bad weather in December led to a bizarrely low number that would soon get revised up. After two straight months of big misses on the jobs front, though, it’s not just the cold weather that’s slowing down hiring. Part of the drag is that the government keeps shedding workers. While the private sector added 142,000 jobs last month, government payrolls shrank by 29,000. Those cuts were pretty evenly distributed between the federal government, which lost 12,000 jobs, and local government, which cut 11,000 jobs, 8,700 of which were to local education staff. Despite that, the labor force did grow by 499,000 people, raising the participation rate ever so slightly to 63 percent, from 62.8 percent in December. According to the household survey, total employment grew by 616,000, pushing down the unemployment rate for the right reason for a change, as a smaller share of people in the labor force were not unemployed. Still, it’s not exactly what the Federal Reserve wanted to see when it said in 2012 that it would keep short-term interest rates near zero as long as unemployment remained above 6.5 percent.

Debt ceiling must be raised by Feb. 27

The treasury is at the legal limit for borrowing, in order to run the country and if congress doesn't make a deal there could be another government shut down. Lew is using "accounting tricks" in order to extend the deadline but if this is not taken care of soon the then, of course according to the media, the whole market will meltdown and everyone is going to freak out and the world will come close to the end. The government is hoping they do not come close to a default and everything can stay happy and safe. Both sides both do not want another government shut down, but a deal will most likely have to be made. There does not necessarily need to be an increase, but most likely there will be a suspension of the debt ceiling like what has happen in the past.

http://money.cnn.com/2014/02/07/news/economy/debt-ceiling-reached/index.html?iid=SF_E_Lead

Dear Congress: Help the Long Term Jobless

Senate Republicans almost blocked the three month renewal of unemployment benefits for those who are long term unemployed. This program provides 47 weeks of benefits after state-paid benefits ran out. If this legislation did not pass more than 1.7 million Americans would have lost these benefits.  Economist stress the importance the extension of these benefits have on the economy. Even though the unemployment rate has fallen to 6.6% (the lowest in 5 years) this number is still really high and should not be seen as this great accomplishment. Also there is the concern that the number of jobs added to the market are lower than what were to be expected. Only 113,000 instead of the expected 189,000. People who are long term unemployed make up 35.8% of all people unemployed. The concern is whether or not these individuals will be able to work again. Without the extension of these benefits the probability of them finding work would deplete immensely.


http://finance.yahoo.com/blogs/daily-ticker/plight-of-the-long-term-unemployed-160841066.html

Emerging Economies Hike Rates to Defend Currencies

The article that I found was published to the ABC news website and was written on January 29^th. Countries are becoming increasingly open to the idea of raising interest rates as a way to protect their domestic currencies. Recently, the central bank in India increased rates by a quarter of a percent up to eight percent. This doesn’t seem like much but it can have a substantial effect on the local economy as well as international investors. According to the author, this move was justified because it will keep a cap on inflation pressures. A lower value for currency is susceptible to stroke inflation because it increases the relative price of imports. Raising interest rates can have a positive effect by strengthening the value of local currency because investors are looking for higher returns. Turkey and South Africa quickly followed India’s example and jacked up their rates to ensure the well-being of the lira and rand. Unfortunately, according to Neil Mackinnon, "The history of using interest rates to defend a currency usually ends in tears." We will have to see whether or not more countries follow India’s method.

http://abcnews.go.com/International/wireStory/emerging-economies-hike-rates-defend-currencies-22280693

The Worldwide wobble

According to an article published to The Economist, 2014 is going to be a tough year for the global economy. The performance in 2013 was very impressive, however people are skeptical that it can be repeated. One of the reasons why the first two months of 2014 have been so average is because investors are trying to cash out on the high stock prices that the market ended with in 2013. They are taking the money and running because most experts don’t believe that it will last. Written on February 8, the article explains that “American share prices, in particular, were beginning to look too high: the S&P finished 2013 at a multiple of 25 times ten-year earnings, well above the historical average of 16”. However we aren’t doomed just yet. One point that the author wants to make clear is that economists and experts alike have a pretty poor track record when it comes to predicting sudden shifts in the global economy. Another reason why investors are scared of 2014 is because of China’s slowing growth. Factory activity is at a six month low. It doesn’t take a specialist to understand that when the world’s most productive manufacturer is slowing then there will probably be a negative consequence that can be seen in the global economy. There is a large amount of uncertainty for the future but at this point, all we can do is be optimistic.

http://www.economist.com/news/leaders/21595900-world-economy-will-have-bumpy-2014-recovery-not-yet-risk-worldwide