South By North Strategies, Ltd.

Around the Dial – Dec. 21

Economic policy reports, blog postings, and media stories of interest:

• The Charlotte Business Journal looks at the challenges facing Bank of America.
• Politico explores the Senate’s compromise on the health reform bill.
• The New York Times documents hiring trends for temp workers.
• The Economist wonders if voter initiatives are running wild in the US.

November Producer Prices

The seasonally-adjusted prices received by producers of finished goods rose by 1.8 percent in November, according to data recently released by the U.S. Bureau of Labor Statistics. That same month, the prices received by sellers of intermediate goods rose by 1.4 percent, and the prices received by sellers of crude goods advanced by 5.7 percent.

At each stage of the production process, price increases were attributable to rises in food and energy prices, primarily energy prices. When energy and food prices are excluded, producer prices for finished goods actually rose by 0.5 percent in November. Absent energy and food costs, producer prices rose slightly for intermediate goods and fell slightly for crude ones.

Over the past year, producer prices have risen. Unadjusted prices for finished goods have grown by 2.4 percent, and producer prices for intermediate and crude goods have risen by 1.4 percent and 5.7 percent, respectively.

The new data offer two insights into the state of the American economy. First, the findings suggest that demand for good and services remains weak, though not quite as weak as in recent months.  Second, the report indicates that inflation is not currently a threat to the larger economy.

Tracking the Recovery

In recent days, several media outlets have featured South by North Strategies’ analysis of the tentative economic recovery.

• Greensboro News & Record: “Guilford county economy starts to recover”
• Winston Salem-Journal: “Poll: Winston-Salem job outlook gloomy”

Weekend Wonk Out

A round-up of policy reports from the week ending on 12/18:

• Demos breaks down the Consumer Financial Protection Act.
• The Congressional Research Service wonders when job growth may return.
• The Center for American Progress looks at closing the federal deficit.
• The Center for Economic and Policy Research analyzes the “employer mandate.”

Bouncing Along the Bottom

CHAPEL HILL (December 18, 2009) — The November jobs report released today by the Employment Security Commission offers little proof that a labor market recovery is underway.

Last month, North Carolina employers eliminated 8,800 more positions than they added with private-sector employers responsible for almost all of the losses (-8,500 positions). Although the state’s labor market has alternated between periods of slight payroll gains and modest losses over the last four months, the fundamental reality is that North Carolina’s labor market is stuck in place.

“Job losses in North Carolina appear to have bottomed out in July, but little has changed since then,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The state’s labor market is just bouncing along the bottom of the recession.”

In November, North Carolina employers shed 8,800 more positions than they added. The public sector lost, on net, 300 positions, and the private sector cut, on net, 8,500 positions. Among private industries, leisure and hospitality services eliminated the most positions (-4,800), followed by manufacturing (-3,900) and trade, transportation and warehousing (-1,000). Education and health services posted the largest numerical gain (+1,900), followed by construction (+800). Additionally, a downward revision to the October report led to the net loss of another 3,100 positions.

“North Carolina’s job market is treading water,” adds Quinterno. “Although conditions seemingly have stabilized, private-sector hiring remains hard to find. So far in 2009, private payrolls have lost 143,400 more positions than they have added. More alarmingly, monthly net private-sector payroll growth has been positive just three times since January 2008. The private sector clearly is not in a position to ignite or sustain a labor market rally.”

Despite the recent moderation in job losses, conditions have deteriorated markedly since last year. Compared to November 2008, the state had 154,200 fewer jobs (-3.8 percent). In terms of individual industries, manufacturing (-57,600) and construction (-37,400) lost the greatest number of positions over the past year, while construction declined the most in relative terms (-16.5 percent). Government employment grew the most in absolute (+13,600 positions) and relative (+1.9 percent) terms.

“Working North Carolinians had even less to be thankful for this November than they did last year,” notes Quinterno. “Severe job losses have pushed unemployment to levels above those seen in any of the last three recessions.”

The extent of joblessness is reflected in November’s household data. Last month, the labor force grew slightly due to new entrants and the return of some discouraged workers. Nevertheless, the share of the population participating in the labor force held steady. Additionally, North Carolina saw the unemployment rate (10.8 percent) and number of unemployed individuals (487,631) remain fairly constant between October and November.

“There is a tremendous amount of idle labor in North Carolina right now,” observes Quinterno. “Little demand for that labor appears to exist, which means that North Carolina’s job market is apt to bounce along at recessionary levels well into the foreseeable future.”