Day By Day

Saturday, August 25, 2007

The Bush Economic Miracle Continues

Don Surber notes a huge labor crunch in the West and concludes that President Bush is making the economy too good.

Record low unemployment across parts of the West has created tough working conditions for business owners, who in places are being forced to boost wages or be creative to fill their jobs.

John Francis, who owns the McDonald’s in Sidney, Mont., said he tried advertising in the local newspaper and even offered up to $10 an hour to compete with higher-paying oil field jobs. Yet the only calls were from other business owners upset they would have to raise wages, too. Of course, Francis’ current employees also wanted a pay hike.

“I don’t know what the answer is,” Francis said. “There’s just nobody around that wants to work.”

Unemployment rates have been as low as 2 percent this year in places like Montana, and nearly as low in neighboring states. Economists cite such factors as an aging work force and booming tourism economies for the tight labor market.

For places like Montana, it has been a steady climb in the nearly two decades since the timber and mining industry recession. The state approached double-digit unemployment levels in the 1980s and began the slow crawl back in the early 1990s.

“This is actually the biggest economic story of our time, and we don’t quite grasp it because it is 15 years in the making,” said economist Larry Swanson, director of the O’Connor Center for the Rocky Mountain West at the University of Montana.

Read it here.

So how do you fill those jobs? How about outsourcing and immigration? Of course raising wages and passing the costs on to consumers might help, but that has problems too.

[Q]uestions remain about how long the West can weather the problems that come with low unemployment.

“The hardest thing is to keep the economy growing at a strong rate when you have a low unemployment rate,” he said. “Take a company that wants to expand. Where is the next worker going to come from?”

Can you say "Mexico" or "Guatemala" or "Louisiana", or other such underdeveloped country?

Darn that Bush!

And regarding the credit crunch and collapse of the housing market, check out this comment by a reader:

“the credit crunch’ hasn’t even materialized as the equivalent of a market correction. A correction is characterized by a fall of 10% or more within a short period, with little discernable cause.

Dow falling from 14,000 to 13,000? 7% decline. It would appear that we are now just 4.4% down from the Dow’s high.

Housing market bust? When the sales of new homes dropped 4% in June, Krugman was dancing in the street. but then it went up in July 2.8%…

notice how the predictors of the looming housing disaster fail to mention that home sales could decline by 40% or more, and merely return to the average of any previously selected decade.

The problem is that we've had things too good for too long -- darn that Bush.