In response to the news, former General Electric chairman/CEO of Jack Welch went viral with the following tweet "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers" (Chicago is President Obama’s hometown). Defenders of the report’s integrity included Bureau of Labor Statistics economist Steve Haugen who said, “The data are not manipulated for political reasons. I've been involved in the process myself for almost three decades. There's never been any political manipulation of the data, period.” Contributing to a confusing U.S. economic picture are improvements in consumer confidence and home loan applications, but a decline in factory orders during August – the 5.2% drop is the largest in three years.
Separately, in “Is U.S. Economic Growth Over?” (September 2012), a provocative report by economist Robert Gordon of Northwestern University, he suggests that the U.S. standard of living will continue to benefit from innovation but more slowly than in the past, with headwinds including 1) the dynamics of globalization and the Internet; 2) cost inflation in higher education and poor secondary student performance; 3) environmental regulations and taxes; and 4) consumer and government debt. He also highlights that “Invention since 2000 has centered on entertainment and communication devices that are smaller, smarter, and more capable, but do not fundamentally change labor productivity or the standard of living.”
- Regarding U.S. jobs, debates will continue on this topic during the presidential campaign, but the labor participation rate remains very problematic for the economy.
- Regarding Jack Welch, his tweet is entertaining and cranky, so let’s move on.
- Regarding Gordon’s report, it makes several good points, and we should remember that productivity improvements and population growth are fundamental economic drivers. Investors should continue to seek opportunities that benefit from these dynamics, as well as other characteristics such as price/valuation dislocation.