BLS DAILY REPORT, MONDAY, MAY 5, 1997 __The unemployment rate fell to 4.9 percent in April, its lowest level since 1973, BLS reports. Although BLS' survey of 50,000 households showed that the unemployment rate declined 0.3 percentage point in April, the economy created a modest 142,000 new jobs, according to the agency's separate payroll survey ....The drop in the unemployment rate was as much a result of a 221,000 decline in the civilian labor force as job growth, although the household survey showed a gain of 209,000 jobs in April. BLS Commissioner Katharine Abraham said seasonal factors did not appear to muddy the household survey numbers in April. But, monthly labor force fluctuations in this series are not uncommon ....(Daily Labor Report, pages D-1,E-8). __Jobless rate hits a 24-year low). The remarkable U.S. economic expansion entered its seventh year last month in a state that seemed to many experts and ordinary Americans almost too good to be true: an economy that had been growing at its highest rate in a decade, wages outpacing low inflation, and a jobless rate continuing to fall ....(Washington Post, May 3, page A1). __The nation's unemployment rate dropped a starting 0.3 percent in April to 4.9 percent, a level not seen since 1973, as factories recorded a new peak in overtime hours. Stock market surges, unfazed by unemployment of 4.9 percent ....(New York Times, May 3, page A1). __An early look at the second quarter's employment picture indicates the economy will relax a bit after a stunning spurt in the first quarter. Of course, it's hard to ignore the fact that the unemployment rate dropped to 4.9 percent of the work force in April -- from 5.2 percent in March. But other labor market measures suggest some slowing in the pace of growth ....(Wall Street Journal, page A2). __The White House and lawmakers from both parties claimed victory May 2 in stitching together a loosely detailed deal to eliminate the deficit by 2002 while also cutting taxes ....Both parties were given a major gift late May 1 when the CBO admitted that it underestimated the growth of the economy and the flood of treasury receipts ....The negotiators finessed a disagreement over the government's measure of inflation by not legislating a change. Instead, they agreed to assume future adjustments by BLS amounting to 0.15 percent after 1999. Another 0.15 percent would be possible, but would require legislation ....(Daily Labor Report, page A-12). __Last-minute disputes swept away by $225 billion revenue windfall ....The budget blueprint includes ... Congress will save about $12 billion by assuming that BLS will shave 0.15 percent off the CPI. Because of the revenue windfall, Republicans could drop a plan to seek through legislative mandate an additional 0.15 percent reduction ....(Washington Post, May 3, page A1). __As part of the balanced-budget deal, Clinton and the Congress agreed that they could assume technicians will alter CPI to reduce increase by 0.15 percentage points annually ....(Wall Street Journal, pages A3,A20). __The budget plan assumes BLS will continue to trim the annual inflation adjustments used as the basis for cost-of-living increases in Social Security and other benefits. The plan is essentially a painless way for lawmakers to pencil in some budget savings. They can place the blame on bureau experts if retirees or anyone else complain ....(USA Today, page 5A). __Congress and the Clinton Administration backed down yesterday, declining to impose on the nation an outsized reduction in the CPI as part of their budget agreement. Instead, they decided simply to accept a future change expected to be made in the index by the statisticians and economists who calculate it ...."That [a 0.15 percentage point reduction in the index starting in 1999] is their estimate, not ours," said Brent Moulton, the BLS official heading CPI research. "The only estimate we have given is zero to 0.25, and we don't have any more precise estimate at this point" ....(Louis Uchitelle, New York Times, May 3, page 12). New labor market dynamics make it possible that the unemployment rate could fall even further than the April level of 4.9 percent without triggering a rise in inflation, suggests University of Massachusetts economist Barry Bluestone at a conference. Bluestone points to growth in the number of hours worked by the average participant in the U.S. workforce as an explanation for lower unemployment without significant inflation pressures. "Workers are putting more and more hours into the labor market to maintain their standard of living," he said. "Employers are getting more labor supply without having to coax workers into the labor market with higher wages." Such a formulation -- in which "demand creates its own supply" -- turns the traditional law of supply and demand on its head, he remarked ....(Daily Labor Report, page A-10). The index of leading economic indicators rose 0.1 percent on a seasonally adjusted basis in March, according to data released by the Conference Board. The biggest negative factors in the index were declines in factory orders of consumer goods and materials and in orders of nondefense capital goods ....(Daily Labor Report, page D-17) Thousands of workers lost jobs at major companies across the United States last year, as executives at many of those companies enjoyed heftier compensation packages, according to a study released last week. The gap between the pay of chief executives and employees widened as the average U.S. worker received a 3 percent raise in wages in 1996, the nonprofit, liberal Institute for Policy Studies said in its fourth annual survey of executive compensation. The study ... examined 30 domestic companies that reported layoffs ranging from 2,800 to 48,640 workers ....According to the study, CEOs at the 30 companies that reported layoffs saw total direct compensation -- consisting of salary, bonus, and long-term compensation such as stock options -- rise 67.3 percent, well above the average increase of 54 percent for executives of the top 365 U.S. companies. Most of the increased earnings came in the form of gains from stock options ....(Washington Post, May 4, page H2). The Wall Street Journal's feature "Tracking the Economy" (page A4) reports that the Technical Data Consensus Forecast predicts that nonfarm productivity will rise 2.5 percent for the 1st quarter of 1997, when it comes out Wednesday. The previous actual rise was 1.1 percent. __The U.S. economy's report card is not all "A's", says The Wall Street Journal (page A2), illustrating its story with a chart that compares various economic data in 1973 and today. Productivity and the distribution of wealth don't make the grade despite affluence .... __Unemployment below 5 percent with low inflation. The stock market and corporate profits setting records as the economic expansion enters its seventh year. Median household income finally rising again with poverty rates falling. The dollar on the rebound. And now a balanced federal budget within grasp. The thriving economy keeps on surprising ....(Washington Post, May 3, page H1). If Los Angeles and New York broke off and sank into the seas, the U.S. economy would get at least one benefit, says The Wall Street Journal's "The Outlook" column (page A1). The average unemployment rate would abruptly fall to about 4.7 percent of the work force from the 4.9 percent posted Friday. Labor markets in most areas of the country are extremely tight with employers sometimes desperate to find qualified workers after six years of economic growth. But the two coastal commercial capitals are glaring exceptions. Both cities have been slow to recover from deep recessions, and have unemployment rates that raise the national average. In fact, both have had so many more workers than jobs that their residents have left for areas where labor is in short supply, apparently helping hold down national wage inflation .... But, the safety valve could soon be shut off as the two cities' economies gain speed .... Pressure to keep premiums low has driven up co-payments for patients in health maintenance organizations, a new study reports. Increasing co-payments for everything from drugs to hospital stays decreases premiums, partly because the higher prices discourage people from using their health care, said Jon Gabel, director of the Center for Survey Research at KPMG Peat Marwick, whose study is published in the May/June issue of Health Affairs ....(Washington Post, May 4, page A15).
