Americans’ belief in the staying power of the economy is based on a strong job market that appears to be on steroids. With payrolls continuing to swell, folks have been willing to ignore weakness in Asia and elsewhere. They also are turning a blind eye to stepped-up layoffs, notably in the wearying manufacturing sector. If hiring has begun to fray at the edges, it will be evident Friday, with the November employment report. Chicago economist Robert Dederick is looking for it to show payrolls expanding modestly by 150,000 jobs, while the unemployment rate holds steady at 4.6 percent. “We have a bifurcated economy,” said Dederick, a consultant to Northern Trust Co. “Areas that are exposed to international pressures have been weakened, but domestic areas continue to thrive.” Fundamentally, Dederick said, “although we are in a slowing trend, there is no sign yet of an overall downturn.”
MANUFACTURING
STUMBLING SECTOR
A rebound on Wall Street has helped reignite consumer confidence, but there still is deep concern about the manufacturing sector, which has stumbled into a lull or even worse. Blame falling exports, as stagnant economies in much of the world mean foreigners continue to say no thanks to U.S.-made goods. Tuesday’s November index from the National Association of Purchasing Management could show a further drop, after sinking to 48.3 in October from 49.4 a month earlier. The October report marked the fifth month in a row that the NAPM index has remained below 50, which is considered a break-even point; anything less is considered evidence that manufacturing is contracting.
RETAIL
HOT HOLIDAY SHOPPING
All indicators are pointing to a holiday spending spree, with Thursday’s reports on November discount- and department-store sales expected to show a robust pace. For the overall shopping season between now and the end of the year, analysts are expecting a gain exceeding last year’s 5 percent advance. Also Thursday, automakers report November car and light-truck sales. Analysts are looking for volume to throttle back after a sizzling October, during which a batch of leftover ’98s helped create an outsized gain in dealer volumes.
STOCK MARKET
A SUSPECT RECOVERY
The spectacular revival of the stock market over the last seven weeks has been described as the second-fastest recovery from a bear market in a half-century. Last week, Wall Street toasted new highs. Yet doubters say investors may be chasing a mirage, because corporate profit growth is suspect. Investment manager A. Gary Shilling of Springfield, N.J., is warning in his latest letter, “It will take a series of market declines, followed by disappointing rallies, followed by more sell-offs, to convince individual investors that their bull market is over and their losses are more than temporary.” Shilling, who recently authored a book, “Deflation,” (Lakeview Publishing), says if the market again sinks into a rut, it would signal an economic downturn in mid-1999.
