The prospects for 2017 growth are confusing, to say the least. For instance, will Prez-Elect Trump initiate multiple trade wars by pushing through tariffs on foreign imports to bring manufacturing jobs home to the U.S.? And will this cause the dollar’s value to continue to rise, thus harming the resulting exports, which could cancel out much of the benefits of bringing manufacturing jobs home (since manufacturing sector depends largely on exports)?
But retail sales should benefit from the post-election rise in consumer confidence, though mostly via online sales (since prices are generally lower for online goods). Econoday reports non-store sales rose 1.3 percent in December for a year-on-year rate of 13.2 percent, among the very best showings and last exceeded in November 2011. So, taking in the whole and not just ecommerce or autos, there's more off notes than on notes in the December retail sales report, per Econoday. Consumer spirits may be very high and if this benefited retail sales in December, it was mostly isolated to vehicles when looking at in-store sales.
And there's already plenty of jobs out there, exactly 5.522 million of them in November, as I said last week. This against only 5.160 million hires in the month, a wide gap over the last couple of years as employers find it difficult to fill slots.
But get this, Econoday also says if each of those 5.522 million jobs were immediately filled, the number of unemployed would fall to 1.887 million for an unemployment rate of 1.2 percent, which will never happen. There are too many working-age adults who either won’t or can no longer work due to disabilities, lack of employable skills and the like.
Widening out the definition of unemployment (i.e., to those not even looking for work) does soften the view of labor slack but even here the pool of available workers, at 13.2 million in December, is shrinking, down from 14.0 million as recently as September.
So the 2017 growth picture is still too fuzzy to see clearly. Consumer and business optimism can change to pessimism in a flash; or a Tweet.
Harlan Green © 2016
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