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Storytelling In The News: #107

March job data sparks storytelling and a market rally

April 2, 2004

The ongoing saga of jobs in the US took a new turn on Friday with the release of the March statistics. In this year of the US presidential election, the monthly release of US employment statistics is now awaited with almost the same breathless anticipation by the business world as Alan Greenspan's monthly delphic pronouncements on interest rates. The attention is heightened by the political campaign, since President Bush has been claiming for several years that more jobs are just around the corner, while Democrats have been pointing out that the trend has been persistently negative for several years, making George W. Bush the first president since Herbert Hoover to have the economy lose more jobs than it created.

Last month, the February job data showed essentially no change, sparking glee among Democrats, despondency among Republicans, and puzzlement among economists as to why more jobs were not being created when the economy was growing. The economy had lost 2.1 million jobs since the recession of early 2001.

Friday's job data was higher than expected. The Labor Department said U.S. businesses expanded their payrolls by 308,000 jobs in March. This is far beyond the meager growth of recent monthly reports.

The political dimension

Joy for the White House: This was the solid employment report economists have been waiting for since the U.S. economy began to grow again at a healthy rate a year ago, and that a campaign-focused White House has been yearning for amid the past few months of anxiety about a "jobless" recovery.

Caution among Democrats: Sen. John Kerry, his Democratic opponent, who has criticized the the president on jobs after the recent months of poor reports, reacted today by saying that "after three years of punishing job losses, the one-month job creation announced today is welcome news for America's workers. I hope it continues... for too many families, living through the worst job recovery since the Great Depression has been, and continues to be, far too painful."

Cause for optimistic future stories

What to make of the news? Only the day before, on April 1, the Wall Street Journal had been preparing the world for bad news, by providing an advance explanation for what was expected to be bad news on the job front: It said: "Ahead of tomorrow's much-anticipated U.S. employment numbers, a handful of economic reports out today suggest expanding manufacturing activity may foster job growth in that sector, that layoffs aren't proliferating, but that businesses may be squeezed by price pressures that prevent them from hiring on a large scale."

But on On April 2, with the wisdom of hindsight, once it was known that the data was more positive than expected, there was positive storytelling all over:

* the Wall Street Journal was already racing ahead with positive stories as to how the year would unfold. Thus it said in its afternoon report that "today's report offers Mr. Bush handy statistical evidence to make his case that he deserves voters' trust with their economic lives. If the next few months bring similar news -- and no nasty surprises related to terrorism or Iraq -- the election could be his to lose."

* The Commonwealth Securities market bulletin was even more bullish in its future storytelling: "As a consequence of increased security of employment, confidence will remain high and consumer spending can be expected to stay strong for the rest of this year. This underpins higher profits and supports improved performance of the stock markets."

Cause for negative future stories

There was however plenty of scope for pessimists to concoct negative stories from the data.

* Thus the number of "discouraged" people who were no longer seeking work because they didn't believe a job was available actually grew to 514,000 from 484,000 in February, the government said.

* There were no moreover no new jobs in manufacturing, although the long, steady hemorrhaging of manufacturing jobs has halted, at least for now. The Labor Department said the number of factory jobs was unchanged in March.

* And the measurements for the average work week and average weekly earnings -- often indicative of future hiring trends -- both fell a bit.

* And the numbers play into another big financial story: interest rates. Thus the Fed has said the country's slack use of its industrial resources -- namely, the work force -- and the tame level of inflation are the two reasons it can and chooses to keep interest rates at historical lows. With another few monthly payroll reports like this, and should consumer prices catch up with the rising costs of raw commodities, the Fed has made it clear that rates will likely rise, which could slow the ongoing economic recovery.

The real story: nobody knows, but markets are up

Clearly one month's data doesn't constitute a trend and there is no consensus among the economists as to what story to tell about what is occurring in employment in the US economy. But if no one really knows, this doesn't stop a blizzard of storytelling as to what is going on and what might happen.

And it doesn't stop the massive financial movements as a result of the storytelling: on Friday, US markets were up strongly for the day and the week. Trading volumes were heavy. The gains were broadly spread – 25 of the 30 components of the Dow moved higher.

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