Photograph by Patrick T. Fallon/Bloomberg

Dental work performed at a free health clinic for the uninsured and underinsured at the Los Angeles Sports Arena.

The cost of health care in the U.S. is rising at the slowest pace in four decades, helping curb inflation.

The consumer-price index dropped 0.4 percent in April from the prior month, a second consecutive decrease and the biggest since December 2008, figures from the Labor Department showed today. While that was due to a decrease in gasoline — prices at the pump slumped 8.1 percent last month — there was more going on beneath the surface.

Health care, long the culprit behind sustained gains in inflation, is now showing much more modest price increases. Medical expenses were little changed in April, the first time without an increase since July 2010. Taking it out a few decimal points actually showed a 0.02 percent drop, making it the biggest decline since November 1975 – just goes to show how rare even such small declines are.

Over the past six months, medical care costs were up 0.9 percent, the smallest advance over a similar period since March 1972.

Medical commodities, the term used by economists at Labor to describe things such as prescription drugs and stethoscopes, got the ball rolling when those prices peaked late last year. They were 0.7 percent cheaper in April than in August, the biggest eight-month drop in records going back to 1967.

More recently, medical services — everything from visits to your dentist and ophthalmologist to nursing-home care and hospital stays — is following suit. The cost of hospital care, for example, fell 0.7 percent in April alone, the biggest one-month drop ever.

The reason for the turnaround will require additional reporting. The consequences for fiscal and monetary policy, though, may be easier to establish.

Should it continue, it will help bring down the federal budget deficit by curbing entitlement programs including Medicare and Medicaid.

It may also influence Federal Reserve policy makers who are trying to spur growth and prevent inflation from dipping too far. Medical care accounts for about 17 percent of the Commerce Department’s personal consumption expenditure price gauge excluding food and fuel, according to Eric Green, an economist at TD Securities in New York. That’s more than twice as much as in the consumer-price index.

The Commerce Department’s gauge is the one tracked by the central bank to determine what to do next, i.e. step on the gas pedal if it’s too low or take your foot off the accelerator if it starts to pick up.

Using today’s CPI data, economists at Morgan Stanley in New York project the Commerce Department’s figures, which will be released at the end of the month, will show the core PCE index rose 1 percent over the past 12 months, the smallest year-to-year increase since records began in 1959.

The Fed’s stated goal is to keep inflation over the longer term at around 2 percent. Do I hear QE3 anyone?

Original post is Health Care Costs Slow: Inflation Curb by Political Capital.

Photograph by Martin Soeby/Gallery Stock

It is becoming more common for wives to be paid more than their husbands.

Women who have come out on top in the job market may not find similar success in the marriage market.

As the struggle for equal pay for equal work gains ground, there may still be psychological factors undermining the link between employment and family life.

Aversion to wives earning more than husbands could be leading to fewer weddings and more divorces, according to a National Bureau of Economic Research working paper released this month by Marianne Bertrand and Emir Kamenica, University of Chicago Booth School of Business economists, and Jessica Pan at the National University of Singapore.

Compiling results from surveys taken by the U.S. Census Bureau and by the Labor Department, the researchers came to several conclusions. One was that marriage rates decline as the probability that a woman earns more than a man increases. There was also a “sharp drop” in share of household income earned by wives after women started to earn more than husbands.

“This result suggests a potential link between two important social developments over the last several decades,” namely the increase in income earned by women and the decline in marriage rates, the report said.  For adults in the 25-to-39 age group, the marriage rate dropped to 51 percent in 2010 from 81 percent in 1970.

The authors estimate that distaste for wives out-earning their husbands explains about 23 percent of that decline.

“When a randomly chosen woman becomes more likely to earn more than a randomly chosen man, marriage rates decline,” the study found.

Additionally, the more a women’s demographic background indicates she will earn more than her husband, the less likely the wife will be in the labor force, according to the report. And, if she is working, she will probably earn less than her potential would dictate.

Nevertheless, it is becoming more common for wives to be paid more than their husbands. Twenty-six percent of couples whose members are both in the 18-to-65 age range fall into that that category, according to a survey taken from 2008 to 2010.

Therein lies another negative: couples where a wife earns more are less satisfied with their marriage and are more likely to divorce, the study found, based on panel data from the National Survey of Families and Households.

Earning more doesn’t mean wives do fewer dishes, either. Women who make more than their husbands dedicate more time to non-market work than their husbands — and the gap is larger than in couples where the woman earns less.

“One explanation for the observed pattern is that, in couples where the wife earns more than the husband, the `threatening’ wife takes on a greater share of housework so as to assuage the `threatened’ husband’s unease with the situation,” the authors write.

Original post is Higher-Paid Women Less-Married, More-Divorced by Political Capital.

Photograph by Kristian Helgesen/Bloomberg

Maersk Line, the world’s biggest container shipping company, will stop plying through the Panama Canal to move goods from Asia to the U.S. east coast as bigger ships help the company move it profitably through Suez Canal.

To anyone worried about global disinflation, today’s Labor Department report on the cost of goods imported into the U.S. will prove sobering.

The import-price index dropped 0.5 percent in April from the prior month as fuel costs retreated 1.7 percent.

If it had stopped with the slump in energy prices, the figures could be dismissed as reflecting the usual volatility in those markets. The declines, however, were broad-based.

The cost of non-fuel imports fell 0.2 percent last month and were down 0.7 percent from April 2012. That is the biggest 12-month decrease since the year ended November 2009.

Declines over a 12-month period for non-fuel commodities aren’t common. For perspective, prices never dropped during that time-frame from 2003 through 2008. The biggest year-over-year plunge of 5.3 percent occurred in July 2009, reflecting the aftermath of the global recession.

It is difficult to pinpoint any category exhibiting pricing power. Imported food prices fell 0.5 percent in April. The cost of imported cars dropped 0.3 percent, the most since December 2011. Capital goods, including machinery, computers and electrical equipment, declined 0.2 percent, the most since October 2011.

Breaking the products down by geographic origin produced similar results. Goods from Canada cost 0.6 percent less; Mexico, down 0.9 percent; the European Union, down 0.1 percent; China, down 0.1 percent; and Japan, down 0.6 percent – the biggest drop since September 2008.

While the cost of imports don’t necessarily translate into total consumer prices, it’s hard to believe American companies will try to push through price increases given the competition from goods overseas.

With so little pricing power, it will be easier for Federal Reserve policy makers to fend off criticism that their policies risk stoking inflation.

“Inflation is not likely to be a driver for any change in policy for quite some time,” concluded Joel Naroff, president and founder of Naroff Economic Advisors Inc. in Holland, Pennsylvania.

Original post is Import Prices: Disinflation Concern by Political Capital.

Photograph by George Frey/Bloomberg

Engineers work on the graphite super structures of the science module section of the James Webb Space Telescope at Alliant Techsystems Inc.’s (ATK) Space Components Division in Magna, Utah.

An unexpected decline in applications for jobless benefits last week indicates companies remain optimistic the economy will persevere after cooling in the second quarter.

The average number of Americans filing first-time claims for unemployment benefits in the last four weeks dropped to the lowest since November 2007, a month before the start of the worst economic downturn since World War II.

Claims “continue to send a very reassuring signal about the health of the labor market,” Michael Feroli, chief U.S.
economist at JPMorgan Chase & Co., said in an e-mail to clients.

Today’s report from the Labor Department “validates the signal from last week’s payroll report that the jobs market has
remained resilient in the second quarter.”

To be sure, the labor market’s recovery has been a long slog since the end of the recession in June 2009. Fewer
dismissals precede faster job creation and today’s figures show further progress in an attempt to put more of the 11.7 million unemployed Americans back to work.

Federal Reserve Bank of Chicago President Charles Evans today said the market is “doing better” thanks to the central
bank’s record policy stimulus, adding that he wants to see employment gains continue through the middle of the year.

“The labor market has improved,” Evans said in a Bloomberg Television interview with Michael McKee. “I’d like to
have confidence that we can sustain that improvement in the labor market through the summer.”

Optimism may increase as a Bloomberg survey of economists from May 3 to May 8 showed GDP will climb at a 2.2 percent rate in the third quarter and accelerate to 2.6 percent in the final three months of 2013 after a projected 1.6 percent gain in the current quarter.

Original post is Unemployment Claims Lowest Since November 2007 by Political Capital.

Photograph by Tomohiro Ohsumi/Bloomberg

A bitcoin.

Need a job?

Try programming a gambling website that accepts the virtual currency Bitcoin, or creating computer blueprints of the objects that get printed on a 3-D printer.

While last week’s Labor Department report showed U.S. job creation has been moderate at best, hiring is on the rise for skills related to the technology world’s hottest inventions, Bloomberg News reported.

Job postings referencing Bitcoin surged 433 percent in January through March compared to a year earlier, while jobs based on 3-D printing rose 206 percent, according to Elance Inc., a service that connects employers with remote online freelancers.

Even projects that mention the Web-enabled spectacles from Google Inc. have surfaced, Mountain View, California-based Elance said. So far, Google Glass is in use by only a limited number of early adopters.

To be sure, these very nascent trends won’t even begin to make a dent on the pool of unemployed Americans. More than 11 million people — 7.5 percent of the workforce — were looking for work in April, Labor Department data showed last week.

In the meantime, the supply of online workers with the kind of background Silicon Valley companies have been clamoring for is growing, Elance data show. Those with an expertise in science, technology, engineering and math surged 153 percent from a year earlier. That compared with 52 percent growth of contractors on the company’s platform in the same period.

Original post is Help Wanted: Bitcoin, 3-D Printing, Google Glass by Political Capital.

Photograph by John Moore/Getty Images

Commuter passengers move through Penn Station on April 16, 2013 in New York City.

At the risk of raining on Wall Street’s parade today after the Labor Department’s April employment report, there are some caveats in the data.

Of the jobs added last month, many were in industries that typically don’t pay a lot. The average number of hours worked during a week decreased. More people said they were working part-time for economic reasons. And lastly, there was a
narrowing in the breadth of industries adding to headcount.

Granted, the labor market report showed resilience – 165,000 net new jobs were created in April, while revisions added 114,000 to payroll counts in the previous two months. Also, more people entered the labor force and were successful
finding work, allowing the jobless rate to fall to a fresh four-year low of 7.5 percent.

“The sources of strength weren’t the most high-quality jobs but they were jobs nonetheless,” Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York, said in a note to clients.

Restaurants and retailers accounted for 67,200, about 40 percent, of the bigger-than-projected gain in total job growth last month. Employment at food services businesses increased 1.1 percent in the last three months, the most since the end of 2011. The median wage for workers in food services was $9.10 an hour as of May 2012, the latest available data from the Bureau of Labor Statistics show. For all occupations it was $16.71.

Payrolls in the retail industry, from department stores such as Macy’s to home-improvement outlets like Home Depot and auto dealerships selling Ford F-150s, climbed 29,300 in April. The gain was the biggest in five months. The median hourly wage for retail sales workers was $9.56.

The report also showed that employees worked 34 hours, 24 minutes a week in April on average, down 12 minutes from the prior month and the fewest since January. The decrease may restrain incomes and underscores the softer tone of recent data that indicate a lull in the economy this quarter. What’s more, an additional 278,000 people said they were working part-time for economic reasons.

Finally, there’s the Labor Department’s so-called diffusion index of private employment, which measures the breadth of industries adding or reducing payrolls. The gauge of 266 private industries declined for a fourth month to 53.9, the lowest level since August. The index for the higher-paying manufacturing industry slumped to 44.4, showing more factories were reducing headcounts than taking on more workers.

Original post is April Jobs Report: Caveats by Political Capital.

Photograph by Patrick Fallon/Bloomberg

An employee demonstrates how to prepare a room for guests at a hotel in Los Angeles, California.

The more time government statisticians have to crunch the numbers, the stronger the job market looks — that is assuming you’re not looking to earn in the six figures.

On March 8, the Labor Department said employers added 236,000 workers to payrolls the month before. As of today, the gain for February is 332,000, almost 100,000 more than first estimated. Excluding the mid-2010 surge in hiring of temporary workers to conduct the Census, the February employment jump is now the biggest since November 2005.

Changes to the job count for March are heading in the same direction. The 88,000 increase for the month announced on April 5 — which raised concern that federal government budget reductions, or sequestration, were cutting the legs out from under the labor market and sent shivers through financial markets — today was revised to 138,000. These figures will be updated again with the May employment report released on June 7.

On net, revisions added a combined 114,000 to the March and February jobs tally today. Should they continue in the same direction, the 165,000 increase in payrolls for April reported this morning could easily top 200,000 when all is said and done.

“The upward revisions are probably the single-biggest piece of news,” said Gary Burtless, a labor economist at the Washington-based Brookings Institution. “In terms of payroll employment, the winter was very strong.”

The Labor Department surveys about 145,000 employers representing approximately 557,000 single worksites to calculate the payroll count. Not all respond on a timely basis, prompting revisions over subsequent months as more information becomes available.

Which industries were among those too busy interviewing potential candidates to respond to Labor’s queries then and there? Hotels and restaurants took the top spot, adding an 60,000 additional workers than the government estimated for February and March initially.

Others were less busy firing than previously thought. Retailers cut 4,000 employees from behind their counters in March instead of the 24,000 first estimated.

There is some downside to the positive readings, though. Julia Coronado, chief economist for North America at BNP Paribas in New York, said the revisions are concentrated in areas that benefit from tourism and exports.

“The good news is that we are growing off of global strength as U.S. households deleverage their balance sheets,” Coronado wrote in a research note. The bad news, she said, is that these jobs tend to be of “generally lower quality.”

Original post is Job Market Better-Looking in Rear-View Mirror by Political Capital.

Photograph by Spencer Platt/Getty Images

A worker is viewed through protective sheeting on the Brooklyn Bridge on April 30, 2013 in New York City.

The Labor Department said today that the economy added 165,000 jobs in April. With this kind of moderate-but-not-stellar growth in payrolls, is the Federal Reserve on track to meet its own forecast for its first interest-rate increase?

A simple calculation using the Atlanta Fed’s Jobs Calculator tool says yes.

We would need an average 160,310 jobs per month to reach 6.5 percent unemployment by June 2015.

A quick refresher: The Federal Open Market Committee repeated this week that it will keep interest rates “exceptionally low” as long as the unemployment rate is above 6.5 percent and inflation is projected to be no more than 2.5 percent.

When the FOMC first unveiled this guidance in December, it said the change was consistent with an expectation of keeping zero-rates through at least mid-2015.

The calculation above comes with a big caveat. It assumes  that labor force participation will stay at April’s 63.3 percent, which matches its lowest level since May 1979. Some of the decline in joblessness in the past few years can be attributed to people dropping out of the workforce.

If an improving economy emboldens more people to resume their job search, it will take much faster job creation to get
to 6.5 percent unemployment.

How much faster? If labor force participation grows to 64.2 percent — the rate in April 2011 — the economy would need an average 236,394 jobs per month. And if participation returns to a pre-recession level of 66 percent? We would need a super-charged monthly pace of 388,562.

Original post is Zero-Interest Fed: How Long? by Political Capital.

Photograph by Mario Tama/Getty Images

People yell during a protest for better wages for fast food workers in Harlem on April 4, 2013 in New York City.

Supporters of a minimum wage increase may have a surprising ally — small business owners.

More than two-thirds of them support increasing the federal minimum wage, according to a poll released yesterday by Small Business Majority, a non-profit advocacy group based in Sausalito, California. In fact, 85 percent of business owners say they already pay all of their workers more than the current minimum of $7.25 an hour, the poll found.

“The biggest concern for small business owners is that there be sufficient money in the economy for people to buy their goods and services,” said John Arensmeyer, chief executive officer of the Small Business Majority. “The more money the middle class has to spend, the better the economy does.”

Nineteen states and the District of Columbia already require employers to pay more than the $7.25 an hour mandated by federal law, according to the U.S. Labor Department.

President Barack Obama in February asked Congress for legislation to boost the minimum wage. Last month, Rep. George Miller of California and Sen. Tom Harkin of Iowa, both Democrats, followed up with legislation to raise the wage floor to $10.10 an hour. The bill faces long odds in Congress, with opposition mostly from Republicans including House Speaker John Boehner of Ohio.

Arensmeyer, himself a one-time Silicon Valley entrepreneur, says there’s no such partisan divide among business owners. Among those polled, 46 percent identified themselves as Republican or independent-leaning Republican.

“There doesn’t appear to be this fantastically partisan set of views,” he said. “Among small business owners, increasing the minimum wage doesn’t show up on their list of top concerns.”

Greenberg Quinlan Rosner Research conducted the poll in early March, surveying 500 business owners who employed 50 or fewer workers. The survey has a margin of error of  plus or minus 4.4 percent.

Original post is Minimum Wage Boost: Surprising Ally by Political Capital.

Photograph by Lachlan Currie

Wages are up, but inflation is up even more.

Workers in the good old USA earned $773 a week in the first quarter before taxes and other deductions, 0.5 percent more than in the same three months of 2012.

Unfortunately, the cost of living for the almost 103 million full-time workers rose three times as much — climbing 1.7 percent over the same period, according to data today from the Labor Department’s Bureau of Labor Statistics.

The BLS surveys about 15,000 households and the figures reflect median wages and salaries that are usually earned and are unadjusted for seasonal changes that include weather, holidays and school openings and closings.

American men, from 45 years old to 54 years old, have benefited the most from the steady growth in the labor market over the past year. At $1,015 a week, they earned the most. By comparison, women in that same age group made $758. For all working-age men, the median increased 2.2 percent from the first quarter of 2012, more than twice the gain for women. Women earned 81.2 percent as much as their male counterparts in the first quarter.

Within the occupational groups, median earnings climbed 2.6 percent to $1,136 a week in the first quarter from the same three months last year for persons employed full time in management and professional jobs. While those employees took home the most, workers in service jobs earned the least — $501 a week.

Meantime, the wage bill for employers climbed 2.3 percent over the past year to $80.4 billion a week, reflecting median weekly wages of $773 as 1.78 million more Americans found full-time work.

Original post is Wages Up 0.5% — Cost of Living 1.7% by Political Capital.