BLS DAILY REPORT, TUESDAY, SEPTEMBER 28, 1999
Perhaps the greatest surprise of the economic expansion that began in 1991
has been the failure of inflation to rise once the nation's unemployment
rate dipped under 6 percent. Many economists were convinced by history that
falling under that threshold would cause inflation to accelerate. ...
Economists have cited a host of reasons inflation has remained so tame,
including strong productivity growth, falling prices for imports, declining
prices for computers, and increasing competition in many markets,
particularly those subject to foreign competition. Nevertheless, this
recent history hasn't kept most Federal Reserve policymakers ... from
worrying that, if unemployment keeps falling, sooner or later employers will
begin to raise wages in an inflationary fashion in order to attract or
retain workers. ... To the Fed chairman, the issue is not just what is
happening to the pool of officially unemployed workers ... Greenspan also is
focused on a separate, somewhat smaller group that contains people who don't
have a job, aren't actively looking for work -- and therefore aren't in the
labor force -- but say they "want a job now." ... Since 1997, both groups
have shrunk. ... In congressional testimony this summer, Greenspan
reiterated his concern about this declining pool of available workers from
the viewpoint of inflation while acknowledging the social value of providing
jobs for many workers who normally would not have them. ... Some labor
experts, including analysts at BLS, are skeptical about Greenspan's way of
measuring the pool of potential workers ... because there is enormous
churning in the labor force as people enter and leave the work force, obtain
and lose jobs, turn 16, or retire or die. Taking this churning into
account, these labor experts believe there are more potential workers than
those in the two groups Greenspan is counting. ... (John M. Berry, writing
in The Washington Post, page E1).
The National Association for Business Economics forecasts 3.8 percent
economic growth this year and 2.7 percent in 2000, the association
president-elect Diane Swonk says. NABE expects inflation as measured by the
CPI to accelerate from 1.6 percent in 1998 to 2.1 percent in 1999, and 2.3
percent in 2000. The national unemployment rate is expected to average 4.3
percent this year, compared with a 4.5 percent average in 1998, and settle
in at 4.4 percent in 2000. ... The Asian crisis appears to be over, the
president-elect says. ... (Daily Labor Report, page A-4).
In the past few years, the European economy has virtually reinvented itself.
Corporations have modernized and merged. Governments have reduced budget
deficits and deregulated key industries. This year, 11 European nations
joined in creating a single currency, the euro. But Europe's economic boom
is unlike that of the United States in one crucial respect: Unemployment
remains stubbornly high. ... Sixteen million people in the EU are looking
for work and not finding it -- a problem that ultimately threatens to
undermine the continent's aspirations of being a global economic superpower.
... In the past 5 years of economic expansion, 11.5 million new jobs have
been created in the United States. In the European Union, with a population
40 percent larger, 3.6 million jobs were added, and many of those were in
just two countries -- Britain and the Netherlands. Germany and Italy have
fewer jobs today than they did in 1993, France barely more. To many
experts, the explanation is simple: It costs companies too much to create
jobs in Europe, and employment law is so protective of workers that
businesses are reluctant to hire. ... Bosses are wary of adding workers who
will be hard to shed if business turns sour. ... (Washington Post, page
A1).
British prices for consumer goods are much higher than those charged in the
rest of Europe and the United States, and Britons are complaining loudly,
says The Washington Post (page A19). ... For example, the price of a gallon
of unleaded gas in London is $5.44, while the price in the District of
Columbia is $1.30. A 6-pack of Coke is $4.90 in London, $2.50 in the
District of Columbia. ... Analysts offer a variety of explanations: Simple
market forces, an ingrained culture against competition, higher retailing
costs, and outright price gouging are some. ...
Are temporary workers a booming area's proletariat? asks The New York Times
(Sept. 26, "Money & Business" section, page 4). The article concerns
Silicon Valley, which a technician in computer-aided design says has a
subculture of temporary workers. They don't enjoy stock options or the
holidays. When they are laid off, they just bite the bullet. They don't
get much respect. ... The drive to organize temporary workers on the part
of the unions reflects growing concern about the widening gaps between
different classes of workers. In the high-tech economy of the late 1990s,
research from both ends of the labor-management spectrum shows that, while
top executives' compensation has been soaring throughout the decade, the
real wages of lower-end workers have been stagnant or dropping, even in the
pulsing heart of the technology boom. ...
Obituary from The Washington Post: Lawrence R. Klein, 91, the editor in
chief of the Monthly Labor Review magazine for more than two decades and a
proponent of lucid prose in government writing, died Sept. 23 in Tucson from
complications following a heart attack. ...
DUE OUT TOMORROW: Metropolitan Area Employment and Unemployment: August
1999
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