Popular Economics Weekly
Here are more signs that economic growth will increase in 2017. There’s a large increase in revolving credit, one of the largest of the cycle, reports the Federal Reserve, a sign that retail sales are booming (with retails sales report due out Friday). And the National Federation of Independent Business reported its small business optimism index soared 7.4 points in December to 105.8, the highest reading since December 2004.
Revolving credit jumped $11.0 billion in data for November to indicate that consumers are increasingly running up their credit-card debt. Non-revolving credit, up $13.5 billion, is also positive, here reflecting demand for vehicle financing and student loans (which are tracked in this report). Total credit rose $24.5 billion in the month, well above the consensus of economists. Retail sales for December, to be posted Friday as we said, will offer more definitive data on the strength of holiday spending.
The outsized increase in small business optimism far exceeds expectations and follows a robust 3.5-point rise in November. NFIB said business owners who expect better economic conditions accounted for about half of the overall increase, with a net 50 percent of respondents expecting that the economy will improve, a 38 point leap up from November.
And even more importantly for small businesses, plans to increase capital spending jumped 5 points to 29. An increase in capital expenditures usually means increased productivity, a plus for increased economic growth. Earnings trends were also up 6 points, but remained in negative territory at minus 14, which is why more capex spending is so necessary to boost small business profits.
And lastly, the Labor Department just released its JOLTS report, the Job Openings and Labor Turnover Survey, which showed Jobs openings increased in November to 5.522 million from 5.451 million in October. Quits rose to 3.1 million (a sign more workers are finding better jobs), and new hires rose to 5.2 million.
This tells us the actual size of the U.S. jobs market that ‘churns’ so many millions of jobs every month, and which gives US the best picture of employment. The above graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.
Over the month, hires and separations were also little changed at 5.2 million and 5.0 million. It is the difference between hires and separations that determines the actual number of new jobs created, says the Labor Department’s Bureau of Labor Stats (BLS).
The number of job openings (yellow) are up 6 percent year-over-year. This is big and says and says our economy continues to expand, but there aren’t enough skilled workers to fill those jobs. Quits are up 7 percent year-over-year. These are voluntary separations, as we said, and are the reason incomes are now rising faster than inflation.
What should we take away from this? No wonder it is so difficult to forecast future job trends. But with 300,000 more Job Openings than actual Hires, U.S. businesses must find more ways to train and promote their own workforce.
Harlan Green © 2016
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