The start of 2008 has brought a slew of negative economic reports. On January 4, the Department of Labor reported that the national unemployment rate in the U.S. had risen to 5.0 percent in December, up from 4.7 percent in November and 4.4 percent a year earlier. From December 2006 to December 2007, the estimated ranks of the unemployed grew from 6.8 million to 7.7 million people, and the percentage of the population employed dropped from 63.4 to 62.7 percent.
New data from the Census Bureau indicate that seasonally adjusted retail sales dipped 0.4 percent from November 2007 to December 2007, though December's sales were still up from a year earlier.
The job and sales figures suggest that economic growth is slowing. Whether the slow-down amounts to a recession is still a 50-50 proposition. Regardless, it appears that the economy is no longer growing fast enough to keep up with population growth.
The stock market is reacting negatively. For the year, the S&P index is down just over 5 percent. The index has already dropped more than 12 percent from its recent high and is near its 52-week low.
To compound the bad numbers, the Labor Department today reported that the Producer Price Index (wholesale prices) rose 6.3 percent in 2007, the largest yearly increase in a quarter of a century. The prices of crude food and feed materials rose by just over 25 percent for the year, while the prices for crude energy materials rose by just over 20 percent. President Bush spent part of his day pleading with OPEC to increase oil supplies.
The consumer (retail) price numbers will be released tomorrow, but already consumer prices for the year are up about 4 percent without the December figures. The Federal Reserve's Beige Book, describing local economic conditions will also be released tomorrow.
Although the price increases appear to be largely confined to the food and energy sector (for now). The prospect of a flat or sinking economy and escalating prices resurrects concerns about 1970s-style stagflation.