The U.S. Labor Department reports that for the third week in a row, unemployment claims have hit low levels not seen since September of 1969 and that the less volatile four-week moving average has reached lows last achieved in November of 1969. What makes this milestone stunning is that the unemployment claims number is not adjusted for how many people are in the labor force, and today there are almost twice the number of people in the workforce than in 1969.
That’s right. We have twice the workforce size and the same number of people claiming unemployment, sure-fire sign that the economy is robust and based upon our nation’s economic history, the economy would be in good shape even if 50 percent more people were filing unemployment claims each week.
Yet, on the retail side of the equation, the transition from brick and mortar retail shops to cyber-shopping is having an impact. Sears is gone. Toys R ‘Us is gone. Payless is gone.
Malls are sitting with major anchor stores shuttered, hurting every smaller retailer within and it is reported that almost 6,000 stores have closed already in 2019, more than in all of 2018.
Yet, in spite of this seeming retail apocalypse, the Atlanta Federal Reserve’s highly respected GDPNow estimate which seeks to predict quarterly economic growth expects this Friday’s first quarter number to be 2.8 percent up from their beginning of the quarter expectations of almost zero percent growth.
Somewhat shockingly the main reason for the late upswing in economic growth expectations is retail in what the financial publication Barron’s describes as, “the largest monthly increase in retail sales in over a year.”
Into the mix, the tax cuts continue to have the intended effect of bringing overseas profits earned by U.S. corporations back to be invested in America, as well as encouraging investment in building new and upgrading and expanding existing domestic factories and equipment. Inflation remains under 2 percent on an annualized basis, in spite of the gasoline price spike driven largely by the ongoing political turmoil in Venezuela.
The truth is sometimes two seemingly contradictory things can be true at the same time. Brick and mortar retailers are getting creamed as consumers choose the ease of shopping along with the ability to do price comparisons using their smart phones and home computers. As the weakest anchor stores die at major shopping malls, smaller retailers which are dependent upon overall mall traffic to make a profit are squeezed in a difficult downward spiral. But the country is so awash with unfilled jobs, 7.1 million in the last (February, 2019) Job Openings and Labor Turnover Survey, that it seems clear that those losing jobs in the retail sector are being absorbed by other parts of the economy.
The key thing to remember is that a free market economy is dynamic with winners and losers chosen by the market (consumers in the case of retail.) This was true when the automobile overtook the horse and carriage as the preferred mode of transportation, creating jobs for auto workers, mechanics, road pavers, tire manufacturers and a raft of other industries, but costing the jobs for buggy whip manufacturers, blacksmiths and wooden wheel makers.
While it would be foolish to expect that the initial unemployment claims numbers will remain at impossible lows, the fact that this astonishingly low number of claims has been achieved should provide comfort to those who constantly worry about the next recession. In the least, a recession isn’t coming this quarter, as consumers know that more lucrative jobs are available and for the first time in more than a decade feel secure in their own financial situation.
Rick Manning is the President of Americans for Limited Government.
