[PEN-L:9387] FW: BLS Daily Report

[Richardson_D <Richardson_D@xxxxxxx>]

> BLS DAILY REPORT, MONDAY, APRIL  7, 1997
>
> RELEASED TODAY:  "News Advisory -- BLS to Issue Experimental CPI
> Indexes on April 10" points out that BLS will begin regular
> publication of an experimental CPI that uses a geometric mean instead
> of an arithmetic mean formula to calculate price changers at the basic
> level of detail.  These experimental data have been produced as part
> of the BLS research effort to examine ways to make the CPI a more
> accurate measure of price change.  A briefing will be held on
> Thursday, April 10, to assist reporters and other users in
> understanding the new experimental index, called the CPI-U-XG.  The
> data being released on April 10 will show monthly price changes from
> December of 1990 through February of 1997 in the all-items CPI-U-XG,
> the seven broad components of food, housing, apparel, transportation,
> medical care, entertainment, and other goods and services, and the
> special indexes for food, energy, and all items less food and energy.
> BLS will make printed materials available at 9:00 a.m. EDT on
> Thursday, April 10.  John S. Greenlees, Assistant Commissioner for
> Consumer Prices and Price Indexes, and staff will make a brief
> presentation at 9:30, followed by a question-and-answer period.  All
> materials and information will be embargoed until 11:00 a.m. EDT ....
>
> __Nonfarm payroll employment increased in March by a moderate 175,000
> seasonally adjusted, while unemployment dipped to 5.2 percent.  At the
> same time, the highest year-over-year increase in average hourly
> earnings since June 1990 is recorded.  Also, the March employment
> report shows the largest proportion of the U.S. population employed
> since BLS began keeping track in 1948.  The employment-population
> ratio rose to 63.8 percent ...."The pace of earnings growth has
> continued to drift upward for several years now," said BLS
> Commissioner Abraham at a press briefing ....(Daily Labor Report,
> pages D-1, E-1).
> __The strong U.S. economy kept churning out jobs and lifting wages
> last month, pushing the nation's unemployment rate down to 5.2
> percent.  While workers obviously are benefiting from all the added
> jobs and higher wages, the report only heightened concerns among some
> investors, analysts, and government policymakers that the pace of
> economic growth may be spurring inflation ....Abraham told reporters
> that the length of the average factory workweek rose two-tenths of an
> hour last month, to a "quite high" 42.1 hours.  Overtime hours
> increased a similar amount, to 4.9 hours, the "highest level since we
> began measuring it in 1956," she said ....(John M. Berry and Sharon
> Webb, Washington Post, April 5, page A1).....A sidebar article by
> Steven Pearlstein says that for three years they've been calling it
> the Goldilocks economy -- not too hot, not too cold, just right.  But
> now there are almost daily signs that the economy has begun to
> overheat, bringing with it a real danger of inflation, falling stock
> prices, higher interest rates, and -- eventually -- a slowdown in job
> and income growth.  The latest evidence was delivered by the Labor
> Department, which reported that the unemployment rate had declined
> despite a big jump in the number of Americans joining -- or rejoining
> -- the labor market ....
> __The unemployment rate edged down to 5.2 percent last month --
> matching its lower level in eight years -- as the reinvigorated
> economy continued to produce a bountiful labor market for legions of
> Americans.  While the government reported that employers added a
> slightly less-than-expected 175,000 workers to their payrolls in
> March, every other economic indicator pointed to strong growth that
> may well prompt the Fed to raise interest rates again ....(Robert D.
> Hershey, Jr., New York Times, April 5, page A1).
> __More and more Americans are willing to work, and that's one
> explanation of why the economy has been able to grow so much with
> barely a hint of inflation ....The growth in the labor force reverses
> a perplexing trend from earlier in the current expansion, when
> millions of potential workers remained on the sidelines despite the
> economy's growth.  Now six years old with no signs of slowing, the
> expansion finally appears to be offering incentives to once-excluded
> segments of the population ....The March report provided some signs
> that the strong labor market may now be fueling inflation, but the
> signals weren't that alarming to economists.  The average hourly wage
> rose by 0.4 percent in March, the same pace of increase as in
> February.  Compared with a year earlier, wages in March were up 4
> percent, the largest jump since 1990.  But many economists believe
> this report doesn't provide as accurate a picture of employment costs
> as other governmental statistics, which do not show such clear-cut
> increases.  In another sign of labor market tightness, factory
> overtime rose by l2 minutes to 4.9 hours per week, the highest level
> since the department started tracking the figure 41 years ago
> ....(Wall Street Journal, page A2).
>
> The Wall Street Journal's consensus forecast for the Producer Prices
> Index is for "no change" in the March figure (page A4).
>
> Federal Reserve Board Vice Chairman Alice Rivlin said it would be a
> "mistake" to make price stability the sole goal of the nation's
> central bank, asserting that maximizing growth and employment are
> equally important policy goals.  But Rivlin, in remarks delivered to
> the Eastern Economic Association, also defended the Fed's recent
> quarter-point increase in short-term interest rates as a
> forward-looking move made necessary by an economy that may be on the
> verge of overheating.  She hailed the benefits of the economy's
> current tight labor markets, stating that this is exactly the type of
> climate needed to make welfare reform a success.  Rivlin also urged
> economists to launch "a full court press" for better and more useful
> economic data, not to be content with "the same old statistics that we
> continue to collect" ....Giving the Fed a zero-inflation target as its
> policy goal, in particular, would be a mistake because current
> inflation data are awash in measurement problems, so it would be
> difficult to determine if and when that target is achieved, and
> because the costs of achieving zero inflation could be substantial,
> she said ....(Daily Labor Report, page A-14).
>
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