Based on all the recent weather problems, we haven't been able to meet much since the course started. So, for tomorrow's class, make sure you bring the notes on Supply and Demand. Also, review this topic in your principles textbook, as we will be using this throughout the entire semester. You need to be very strong on this topic.
Friday, the employment report for January was released. It was perhaps the most bizarre report I can remember in quite some time. The "headline number" (+36,000) was far below expectations and appeared to be disappointing, yet in spite of this, the unemployment rate dropped all the way to 9 percent! Here is a link to this report on Econoday. You should also read about this in a more typical news story (this link is for MarketWatch). Essentially, weather played some indeterminate effect in the January jobs report. That report is the payroll employment report, which counts the number of jobs available (i.e., non-farm payroll). But, as last Friday showed all to vividly, there is another survey, the Household Survey, from which the unemployment rate is derived. The number of persons working, resident employment (weather doesn't affect the number in this survey), didn't show such weakness, rising by 117,000.
From what little we have had the opportunity to discuss in class up to this point, a weak employment report should (other things being equal) bring about lower interest rates. Yet that didn't occur, as persons looked below the "headline number" and found signs of strength (and weather-related reasons to look beyond this). Here is a story about the changes in interest rates that occurred. Try to follow this as much as possible at this point.
So, the overriding pattern in major "numbers" at this point in the semester continues to be the need to look beyond "headline numbers" and look at a release in a broader and more meaningful context. Fortunately, with all the snow days, you have lots of time to do this!
