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'Better-Than-Expected' Doesn't Mean 'Good'

 
     
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    After a week with some surprises -- “upside” surprises, as economic apologists describe them -- the stage is set for more numbers that might exceed expectations as the new week unfolds.

    It’s rather easy to create the mood: just paint a dour picture -- perhaps dourer than evidence would support -- then announce and let investors react when economic data are better than expected.

    Writing an inaugural vocabulary column in the New York Times, Ben Schott described the phenomenon as “pessimism porn,” which Schott said refers to “titillatingly bleak media reports on the state of the economic collapse.”

    We’ll get our fill of such “porn” this upcoming week with forecasts of Friday’s employment situation report for March when even cautious economists are anticipating the numbers to be worse than they were for February when the unemployment rate jumped to 8.1% from 7.6% one month earlier and job losses for the month topped 600,000 for the third straight month. The worse the forecasts, the greater the chance for a better-than-expected outcome.

    The economy though is more than just numbers of job losses or an unemployment rate: it encompasses the impact of those data points, in the near-term and the long-term. Indeed, in the week just ended, Spectrem Group, a Chicago-based consulting firm reported 34% of U.S. employers have reduced or eliminate matching contributions to retirement plans.

    The survey was released the same day the U.S. Chamber of Commerce reported businesses of all sizes have seen the cost of providing certain benefits to employees rise dramatically. The Chamber study said in 2007, the cost of providing health insurance rose 15%, averaging $4,559 per employee, up from $3,961 in 2006. The cost of retirement and savings benefits increased 14%, from $2,356 per employee to $2,694 per employee.

    The Chamber study also showed employers of all sizes began scaling back on employee benefits in 2007. The average dollar amount that employees received in benefits decreased from $21,527 in 2006 to $18,496 in 2007.

    All the cuts will have an impact not only on current family expenses, but retirement planning as well, exacerbating the tight labor market as new, less experienced entrants to the labor force compete with higher-salaried, more experienced workers. Data from the Bureau of Labor Statistics shows a steady increase in the number of older Americans still working. Since the recession began in December 2007, the number of workers 55 and over has increased by more than 3%, about 830,000 -- faster than the population.

    It is just that number that makes the Spectrem findings a concern as Americans struggle with retirement spending, and indeed the findings suggested the situation might deteriorate. Over the next 12 months, 29% of plan sponsors intend to reduce or eliminate matching contributions, the Spectrem survey said.

    Even if Friday’s employment report is “better-than-expected” it will still represent absolutely bad news, with the Chamber and Spectrem reports putting flesh behind the numbers.

    Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.

    MONDAY March 30 FOX BUSINESS SHOPPING CART (Feb)
        January actual:
        No February consensus
         
        HELP WANTED ONLINE ADVERTISING INDEX (Mar)
        February actual: 3,348,000; DOWN 6,600
        No March consensus
         
        Federal Reserve Governor Elizabeth A. Duke speaks on "A Framework for Bank Lending"
         
    TUESDAY March 31 CASE SHILLER HOME PRICE INDEX (Jan)
        10 City Index
        December actual: 162.2 DOWN 2.3% m-m; DOWN 19.2% y-y
        No January consensus
        20 City Index
        December actual: 150.7 DOWN 2.5% m-m; DOWN 18.5% y-y
        January consensus: 147.2 
         
        CHICAGO PURCHASING MANAGERS INDEX (Mar)
        February actual: 34.2 UP 0.9
        No March consensus: 34.4
         
        CONSUMER CONFIDENCE INDEX (Mar)
        February actual: 25.0 DOWN 12.4
        March consensus: 28.0
         
        Philadelphia Fed President Charles Plosser speaks on financial regulatory reform
         
    WEDNESDAY April 01 MBA APPLICATION INDEX (Week ended: March 27)
        Total Index
        Week Ended March 20: 1,159.4 UP 32.2%
        Four-week moving average: 769.2 UP 2.8%
        Purchase Index:
        Week Ended March 20: 267.8 UP 4.2%
        Four-week moving average: 250.2 UP 0.3%
        Refi Index:
        Week Ended March 20:  6,363.2 UP 41.5%
        Four-week moving average: 3,799.7 UP 3.9%
        No March 27 consensus 
         
        CHALLENGER LAYOFFS (Mar)
        February actual: 186,350, DOWN 55,399 from Jan; UP 114,259 from Feb '08
        No March consensus
         
        ADP EMPLOYMENT REPORT  (Mar)
        February actual: DOWN 697,000
        March consensus: DOWN 645,000
         
        ISM NON-MANUFACTURING INDEX (Mar)
        February actual: 35.8 UP 0.2
        March consensus: 36.0
         
        CONSTRUCTION SPENDING (Feb)
        January actual: DOWN 3.3%
        February consensus: DOWN 1.5%
         
        PENDING HOME SALES (Feb)
        January actual: 80.4 down 6.7
        February consensus: 82.0
         
        MOTOR VEHICLE SALES (Mar)
        February actual: 9.1 million DOWN 0.4 million
        March consensus: 9.2 million
         
    THURSDAY April 02 UNEMPLOYMENT INSURANCE CLAIMS (Wk Ended Mar 28)
        March 21 Actual: 652,000 UP 8,000
        March 28 Consensus: 640,000
        Four-week moving average: 649,000 DOWN 1,000
        No March 28 consensus
         
        FACTORY ORDERS (Feb)
        Total
        January actual: DOWN 1.9%
        February consensus: DOWN 1.1%
        Ex-Auto
        January actual: DOWN 0.9%
        February consensus: 
         
    FRIDAY April 03 EMPLOYMENT SITUATION REPORT (Mar)
        Payroll Jobs (M-M Change)
        February actual: DOWN 651,000
        March consensus: DOWN 640,000
        Unemployment Rate
        February actual: 8.1%
        March consensus: 8.5%
        Average Hourly Earnings
        February consensus: $18.47, UP 3¢, 0.2%
        March consensus: $18.51, UP 4¢, 0.2%
        Average Weekly Hours
        February actual: 33.3 UNCHANGED
        March consensus: 33.3 UNCHANGED
         
        ISM NON-MANUFACTURING INDEX (Mar)
        February actual: 41.6 DOWN 1.3
        March consensus: 41.5
         
        Federal Reserve Chairman Ben Bernanke speaks at Richmond Fed's Credit Markets symposium
         
        Federal Reserve Vice Chairman Donald L. Kohn speak on Policies to Bring Us Out of the Financial Crisis and Recession

     

     

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