"The latest round of data for the U.S. economy shows pretty stable conditions over the recent past. We now have additional data for the nation's employment picture for July and August. Payroll employment shows small but steady increases, as it has done throughout the year. There is no surprise regarding the recent trend in manufacturing employment. It continues to show small, but nearly continuous reductions. This trend, by the way, is at least partly due to the continued, strong growth in productivity in the manufacturing sector. Higher productivity enables individuals in the economy to produce and buy more goods and services. Essentially, the growth in manufacturing productivity has enabled consumers to buy more of non-manufactured goods and services, resulting in job creation outside of manufacturing.
The national unemployment rate has changed only slightly this summer. Though it rose in July, it fell to 4.7 percent in August. Though there has not been much of a decline in the unemployment rate this year, it remains at a pretty low level.
The overall Consumer Price Index (CPI) increased by 0.4 percent for July, faster than the 0.2 percent increase during June. Part of the reason for this was that gasoline prices rose somewhat sharply in July after declining in June. However, the early weeks of September showed a decline in gasoline prices, which started even before the end of summer driving season. (This is verified by data from the Energy Information Agency (http://www.eia.doe.gov/) and probably by your visits to the gas station.) This is in spite of the problems British Petroleum is having with its Prudhoe Bay pipeline. The recent discovery of a large offshore oil field in the Gulf of Mexico by Chevron is not expected to affect petroleum prices for several years, though its affect may come indirectly through the futures market. Though gasoline prices have waxed and waned over the past several months, the core rate of inflation (CPI less food and energy) has remained pretty stable at around 0.3 percent per month.
Locally, the figures for July show a decline in payroll employment but a reduction in the unemployment rate. This seems somewhat peculiar. It's due, though, to a faster reduction in number of unemployed people than in employed people. In other words, there is withdrawal from the labor force. Generally, that's not a good sign; I wouldn't make too much of this, though. The changes in employment and unemployment are fairly small. Also, as I've noted before, the data for July on local employment provided by the U.S. Bureau of Labor Statistics are preliminary estimates and subject to revision. Small changes, thus, are not very meaningful. It's probably safe to conclude that the Bluegrass economy is maintaining its stability along with the national economy.
John Garen is department chair and Gatton Endowed Professor of Economics at the University of Kentucky.
"