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Employment Situation

The granddaddy of monthly economic reports is the federal reading on the employment situation. To call this a single report is deceptive. It actually has a bunch of moving parts that, on their own or as a group, can move stock and bond markets.

It's easy to think of the report in four parts. The first is non-farm payrolls, which tracks the month-over-month change in the number of jobs in the U.S. that don't involve milking cows or picking lettuce. Then comes the unemployment rate, which is the percentage of unemployed people as it relates to the total workforce.

The third component is the average hourly earnings change, which tracks how much more or less money U.S. workers are making. Finally, there's the average work week, which counts the number of hours non-farmers work.

Like most data reports, the unemployment one has its flaws. For one thing, it tracks non-farm payrolls, which means that a lot of folks who work off the land -- or, more to the point, are not currently working off the land -- are excluded. Also, if you¿re a consultant or small-business owner (a big part of the current economy), you¿re not counted. On the flip side, you can be double-counted if you hold down two jobs. That's one of the reasons why it's common to see non-farm payrolls drop (suggesting higher unemployment) but the unemployment rate shrinking (suggesting higher employment).

The impact of the Employment Situation report often depends on the mood of the markets. Take the wage component. If stock and bond traders are worried about inflation, an unexpected rise in hourly earnings suggests wage inflation and, ergo, can scare people. But, that same spike could be welcome if traders are more worried about a slowdown in consumer spending. Higher earnings mean more spending power.

Look for the employment report on the first Friday of every month at 8:30 a.m. EST.

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In Case You Missed It... Roll Call Mullen Says Pentagon Needs Funds Quickly

 
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WASHINGTON, May 5, 2008 /PRNewswire-USNewswire via COMTEX News Network/ ----Chairman of the Joint Chiefs of Staffs Admiral Michael Mullen: "We need [the supplemental appropriations bill] very badly before the Memorial Day recess. We stop paying soldiers on the 15th of June and we have precious little flexibility with respect to that. Clearly that creates incredible constraints and difficulties for us."

The following was issued today by the office of House Republican Whip Roy Blunt:

May 5, 2008

By George Cahlink,

CongressNow Staff

Adm. Michael Mullen, the nation's top military officer, has a warning for Congressional leaders wrestling with the time frame for passing a massive war spending bill: The Pentagon is dangerously close to running out of money.

"We need [the supplemental appropriations bill] very badly before the Memorial Day recess. We stop paying soldiers on the 15th of June and we have precious little flexibility with respect to that," Mullen, the chairman of the Joint Chiefs of Staff, said in an interview at his Pentagon office last week. "Clearly that creates incredible constraints and difficulties for us."

Without the extra funding, Mullen said, the Defense Department would be forced to delay contract awards and withhold other spending to pay for the Iraq and Afghanistan wars. "It makes it extremely difficult to execute the day-to-day business of the Pentagon without knowing the money is coming," he said.

It's hardly new for the Pentagon to issue a dire warning about being strapped for cash. Defense officials in recent years have repeatedly warned of massive layoffs if supplemental spending bills were not passed.

In all cases, lawmakers approved the bills before drastic cutbacks were necessary. Nonetheless, the warnings can be a powerful political weapon in an election year and are a concern as Congressional leaders plot a path forward on the spending bill.

Lawmakers are currently reviewing a $108 billion proposal that would cover the war costs for the remainder of fiscal 2008. While Democrats have suggested for weeks that the bill would be passed before the break, top leaders last week were uncertain as to when the bill would hit the House and Senate floors.

Senate Majority Leader Harry Reid (D-Nev.) told reporters, "I think we'll do our best to finish this before the Memorial Day break, but if we don't, it's no big deal. There's money there." House Majority Leader Steny Hoyer (D-Md.) said late last week that he was not sure the House would be ready to consider the measure this week.

Mullen said the Pentagon could not afford to have any money cut from its request. "The $108 billion is a good number," he said. "We have been pretty vigorous and rigorous about scrubbing that and I am comfortable with it."

While Democrats seem to lack support to force troop withdrawals in the bill, bipartisan support is building in both chambers for a provision to force Iraqis to share more of the reconstruction costs. For example, the Senate Armed Services Committee backed a bipartisan measure in the Defense authorization bill last week prohibiting the Pentagon from paying for Iraq infrastructure projects that cost more than $2 million. A similar provision could make its way into the supplemental.

Mullen said Iraq should pay "as much as it can" of the reconstruction costs, noting Iraq has a roughly $60 billion annual surplus. Still, he said, Congress should be cautious in shifting responsibility because Iraq lacks the capacity to manage all reconstruction projects.

"Certainly it makes sense to me that... the Iraq government bear more of the financial burden of what's going on in Iraq," he added.

On Afghanistan, Mullen -- who last month told Congress that he was "deeply concerned" about deteriorating security conditions there -- predicted an even more violent year this year than last for troops on the ground as they battle insurgent forces. But he has stopped short of asking lawmakers for more troops for Afghanistan.

"Iraqis the No. 1 priority right now, and should forces become available down the road out of Iraq, then they would very likely [move] into Afghanistan," Mullen said. He suggested as many as 12,000 more troops from the United States and other countries eventually would be needed in Afghanistan, once a contingent of 3,500 Marines leaves the country later this year.

"There will be a need for more forces down the road, but they are not going to be available unless we come down from current levels we are in in Iraq," Mullen said, adding that the forces could include two combat brigades and 3,000 trainers for Afghan forces. He stressed that the military had yet to formally request those forces.

Some Democratic lawmakers have suggested the spending bill contain a provision calling for the military to make Afghanistan its top priority. Mullen declined to weigh in, saying Iraq remains at the top of his agenda until the president and other national leaders say otherwise.

Mullen also said he's bullish on the future prospects for Afghanistan. "It's going to take a long time. I do not expect an overnight success in Afghanistan. ...In the long run, I am optimistic about a positive outcome," he said.

Some lawmakers have also questioned whether the military has been "broken" by the demands of the Iraq and Afghanistan wars. Mullen disputed that claim, but he said military leaders must be vigilant to ensure troop readiness does not suffer under the strain of steady deployments.

Despite partisan bickering, Mullen also made it clear that Congress on the whole has given the military what it needs for Iraq and Afghanistan.

"I appreciate over the years that the Congress has been a terrific supporter of funding the troops for the needs that they have. There have been many supplementals, and obviously there is always a heated discussion around them. That said, in the end, Congress has provided the money for which I am really grateful," he said.

Jennifer Bendery and Ashley Roque contributed to this report.

SOURCE House Republican Whip Roy Blunt

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