By Jim Murphy
A DOW JONES NEWSWIRES COLUMN
NEW YORK (Dow Jones)--I'm back again, well-rested and ready to go. I spent most of my vacation sleeping. I don't know what Ruthie did because I was sleeping.
I always thought that writing two columns a day wasn't really a stressful job and that there were thousands of other jobs, including performing open-heart surgery, that were far more stressful. However, if writing columns isn't stressful, then why did I spend most of my vacation sleeping?
When I'm writing two columns a day, I hardly ever sleep more than four hours at a time. So writing columns must be very stressful. I must suffer from tons of stress as I continuously put together in my mind the hysterical remarks that will appear in my column. "Where are they?" a reader writes to ask.
How fortuitous. As it happens, "stress" is the word of the week. On Thursday, the government will release the results of its "stress tests" on 19 of the largest banks in the U.S. No one should be alarmed, however. All the banks are going to pass, we have been assured by sources.
Probably the two banks most in danger of failing were Citigroup and Bank of America, although, to be fair, Bank of America might have been able to bail itself out. It rather begs the question to assert that Citigroup passed a stress test when, if it were not for billions of dollars of federal bailout money, the sign on Citi headquarters would have been torn down and replaced by a more modest sign reading, "Pete's Pawn Shop - We Buy Old Gold."
Citi's being said to have passed a stress test is like saying I passed the final exam in high-school calculus after having been given 75% of the answers.
In between countless noddings off last week, I was able to piece together the answer to a question that has been stalking me during the 12 years I have been writing Mark to Market: "Why is it that they call the monthly unemployment report a lagging indicator?"
For years, I kept tossing this question around in my small brain, wondering how the jobs report can be a lagging indicator when, if I were to be fired, my misery would begin from that moment forward and would embrace to a greater or lesser degree my family and all the merchants with whom I did business. The misery would only begin to end for myself and my circle when I got a new job.
My long personal nightmare is over. On vacation, I realized that employment is a lagging indicator because hiring doesn't begin to improve before the hirer can plainly see that the economy is improving so that more people will have to be hired or fewer people will have to be laid off. Hiring can't be turned on like a spigot, but it sure can be turned off like a spigot.
Here comes another U.S. jobs report. On Friday morning, the Bureau of Labor Statistics (BLS) reports on nonfarm jobs and the unemployment rate for April.
If the Dow Jones forecast for nonfarm jobs is on target, the reduction from March is not what I mean when I speak of a lagging indicator. Since the losses in nonfarm jobs gapped higher by a monthly average of 685,000 for the first quarter, a reduction of 35,000 for April is almost meaningless. Here at Dow Jones Newswires, the median forecast of the economists we surveyed estimates total nonfarm job losses at 628,000 in April, down from 663,000 in March.
We also forecast that the unemployment rate jumped to 8.9% in April from 8.5% in March. If the forecast of a contraction in nonfarm jobs and an expected spike in the unemployment rate seems somewhat odd, keep in mind that the numbers come from two different surveys. To determine the nonfarm-jobs number, the BLS polls companies, or as they call them, "establishments." To determine the unemployment rate, the BLS surveys households.
If you believe the two headline numbers ought to move in the same direction, you may be one of those people who just learned that the unemployment report is a lagging indicator.
Telling It Like It Is
When I came fully awake from my long slumber on Saturday morning, the first thing I did was tune into President Barack Obama's weekly radio address to the people.
The president spoke of a malady he called H1N1. I thought for a moment that he was giving me the chemical formula for monohydronitrogena, which in liquid form has been found to be an effective cuticle remover.
It was only when the president went on to use "flu" and "virus" as synonyms for H1N1 that I realized he was talking about what Ruthie and I called swine flu before I fell asleep on Monday.
Why did the president change the name of swine flu to H1N1? I don't know. I will simply point out that there is no H1N1 Lobby.
Think of all the slogans and items on the menu that would be tainted if swine flu were called swine flu. For examples: "Swine, the other white meat." "Would you like mashed potatoes or fries with your swine chops?" "So I went to the Chinese take-out for a pint of Swine Fried Rice." "Give me a bag of swine rinds."
I have a suggestion for the president and other top U.S. rebranders: Call it Goat Flu. The goats have no lobby. Or how about Urban Pigeon Flu?
You will notice that in citing previous flu outbreaks, neither the president nor health officials have any hesitancy to cite something they call "avian flu." That's because the avians have no lobby either.
Through it all, the World Health Organization has been tremendously helpful in calming the fears of Earthpeople everywhere.
H1N1 is a pandemic that might become an epidemic, WHO said, or is it the other way around, an epidemic that might become a pandemic, WHO said. I don't know, that's what I'm asking you.
H1N1 very much reminds me of Y2K.
Two From Tier Two
Two U.S. economic indicators are on tap this morning, both of them at 10 a.m. EDT, but they are decidedly Tier Two. It's not that either of them is unimportant; it's just that they have been eclipsed by other indicators that are far more important, including, for one example, the results of the pseudo stress tests that will be released on Thursday.
Construction spending has been mired in a malaise, which is unsurprising given the state of the economy.
Here at Dow Jones, a survey of economists produced a median forecast of a 1.3% decline in construction spending in March. This would be a deterioration from the 0.9% drop reported for February.
We're looking for an increase of 1% in pending home sales for March, but that would be less than half the 2.1% increase in February.
Always keep in mind that much of the improvement in pending home sales and, for that matter, actual home sales, reflects sales of foreclosed homes at greatly reduced prices.
Ben And Then Some
Unless the president has something to say to everyone, the top official on this week's speaking calendar will be Federal Reserve Chairman Ben Bernanke.
At 10 a.m. EDT on Tuesday, the Fed chief goes before the Joint Economic Committee of Congress to speak on the economic outlook.
It would be of great interest if Bernanke were to expand upon tantalizing hints of a "modest improvement" in some economic yardsticks mentioned in Wednesday's postmeeting statement of the Federal Open Market Committee.
Two Federal Reserve district bank presidents take to the stump today, both of them at 12:30 p.m. EDT.
Thomas Hoenig, president of the Kansas City Fed, is in New York City to speak on "The Financial Crisis" as part of the Demos Effective Regulation for the 21st Century Project.
Richmond Federal Reserve head Jeffrey Lacker will speak in Charlottesville, Va.
(Jim Murphy, resident iconoclast at Dow Jones Newswires and veteran observer of global business trends, can be reached at 201-938-2145 or by email at Jim.Murphy@DowJones.com)
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(END) Dow Jones Newswires
May 04, 2009 08:00 ET (12:00 GMT) | 
