As previously mentioned, the Bureau of Labor Statistics released its monthly employment outlook this morning. The basic numbers are a 0.1% drop in unemployment from 5.1% to 5.0% and a gain of 56,000 to nonfarm employment. These are excellent numbers considering the relatively recent hurricanes in the Gulf Coast region, and their effects on the region's economy. For example, the affected states saw a sharp rise in unemployment in September while the nation's numbers saw only a slight rise.
This month's numbers show two things in particular: 1) the nation is still growing steadily in all regions, and 2) workers are earning more to keep up with inflation. Starting with the growth, the cleanup process will provide many displaced craftsmen and manufacturing workers with temporary work in the Gulf region. Apart from that area, the rest of the country is moving along at breakneck pace. Productivity was up 4% in September and wages rose another eight cents last month. The recently released GDP numbers show a 3.8% growth for the third quarter which is just higher than the average for the previous 15 years.
Indeed, inflation is a concern for everyone in this country. Energy and gas prices are through the roof causing a 41% increase in transportation prices and a 122% increase in energy prices over the last 12 month cycle (ending 9/05). Nevertheless, these extraordinarily large numbers have only resulted in a 4.7% increase in the Consumer Price Index (CPI) over the same period. However, once September's hurricane-bloated numbers are taken out of consideration, the CPI increase falls to around 3.6%. This is merely 0.4% higher than the increase in wages over the last year.
While the two aforementioned categorical price increases will continue to be the difference between good and bad times ahead, this is certainly no time to panic. Recall a time in the 1970's when inflation averaged above 6% and reached as high as 11%. Real wages were certainly nowhere near the -0.4% that we're seeing today, and uncertainty in the global economy had many consumers rushing to fill up vats and storage tanks with gasoline. Don't be fooled by the MSM which likes to warn of impending doom in the form of $6/gallon prices at the pumps. Oil is in no shortage, there is still plenty to go around for at LEAST thirty years. This is more than enough time to complete research and perfect new forms of fuel.
So breathe a sigh of relief, for this country has made it through a rough few months relatively unscathed. The final two months of the year will be no walk in the park, but faith in the economy will make it much easier than fear.