5 Signs the Economy is Getting Better

The planets seem to be aligning for a better economy.  I know – in the past I have told people to ignore the numbers, because they are always changing and losing their meaning and only serve to stress people out.  But it’s hard to ignore new data coming out that will give people a reason to be happy as we start heading into the New Year.  Here are five signs the economy is actually moving in the right direction:

The Economy Has Added Jobs.  The October 2011 jobs report shows that companies added 80,000 new jobs and the unemployment rate has dropped to 9%.  That’s only a tenth of a percentage point drop in unemployment and the number of jobs added is nowhere near the amount needed to make a serious dent in the unemployment rate.  However, rather than be a Negative Nelly, try to look at the positive here – the economy is adding jobs.  It might be a slow and steady growth, but a slow and steady growth is better than no growth at all.  With the holiday season upon us, temporary employment will help boost the economy further and might be helpful moving forward. 

Underestimating Has Been Helpful.  Remember the flat growth we experienced in August.  Yes, we were under the assumption that no jobs were created in August, but it turns out we were wrong.  The Labor Department has revised its estimates and they did more than forget to carry the one.  It turns out 104,000 jobs were added in August.  That’s a big difference.  In addition, September’s total has also been revised to show that the economy has actually added 158,000 jobs that month.  You really need to add 250,000 jobs a month in order to make a huge impact on the economy, but these changes are the equivalent of finding money in your pocket.  It’s a welcome surprise and it begs the question, how much has October’s job growth been underestimated?  Hopefully, in November, we will see that number skip up into six figures. 

Unemployment Drop.  Weekly unemployment applications dropped 9,000 to 397,000 for the week ending on October 29, 2011.  We are inching closer to that magic number of 375,000 applications necessary to show any significant job gains.  But the number also shows that companies are laying off fewer workers and that’s a major positive.  Eventually the belief that businesses no longer need to lay off people might transform into a belief that they can hire additional staff.  You have to start somewhere. 

Factory Orders Have Increased.  According to the Commerce Department, total factory orders have increased by .3%.  It might seem like a paltry increase to some, but this is actually the third consecutive month where there has been an increase in factory orders.  In addition, demand for core capital goods, such as heavy machinery and computers, has increased by 2.5%, its largest increase since March.  What does this all mean?  It’s a sign that businesses are continuing plans to expand and modernize, which could result in more jobs down the line. 

Worker Productivity Increased; So Have Hourly Wages.  First, the Labor Department report this month indicated an increase in average hourly earnings.  That’s good, because more money results in more spending (hopefully) and keeps our economy moving and growing.  Second, the Labor Department also noted that productivity rose at an annual rate of 3.1% this past quarter.  This comes about after two straight reported declines. This resulted in labor costs dropping 2.4%.  While this seems bad, there is actually some good that comes out of it.  Higher productivity raises standards of living by allowing companies to pay workers more without raising prices and increasing inflation.  So, while a drop in labor costs means companies aren’t hiring as much, the increase in pay will eventually lead to job growth.  That’s the hope, right? 

Like I have said, those numbers can change at the drop of a hat, but to see so much in the way of encouraging signs might provide some hope to people going into the weekend.  Who said there can’t be positive news about the economy? 

--Jon Minners, Vault.com