The
Markets
With the enthusiasm of new love, American stock
markets pushed higher during Valentine’s week.
Were investors enamored of the Federal Reserve’s new
Chairwoman, Janet Yellen, who spoke on behalf of the Fed for the first time
last week? Some suggested investors appreciated her dedication – she spent
almost six hours answering questions from members of the Financial Services
Committee – and were soothed by her commitment to continuing the policies of her
predecessor. The New York Times said
stock markets rose as a result of Ms. Yellen’s testimony and were further
buoyed when the House voted to raise the government’s borrowing limit until
March 2015 without any conditions.
Perhaps investors saw the good in employment numbers
that were released recently. An analyst quoted in Barron’s said the American labor market “just might be tighter than
most of us expected.” His argument was while long-term unemployment remains
high, “…2.5 percent, higher than peaks seen in prior recessions, and much worse
than the 50-year average of 1.1 percent,” the short-term jobless rate
(measuring people who are out of work briefly) is 4.2 percent which is below
the 50-year average of 5 percent. The article shared the thoughts of another
expert, Michael Darda of MKM Partners:
“If our job market can mend even when gross domestic product
(GDP) growth averaged a lousy 2.4%, what happens if growth picks up? Last week,
Treasury data showed the federal fiscal deficit shrinking to just 3% of GDP
from more than 10% four years ago thanks to higher taxes and restrained
government spending. At this pace, our budget deficit could fall to zero next
year, and we could run a surplus by 2016.”
Tarnishing this shiny outlook is the fact 36 percent of
Americans who want a job and can’t find one have been unemployed for more than
27 weeks.
Maybe it was an unrequited desire for better weather.
Huge swathes of the United States have been gripped by snow, ice storms, and
freezing weather which Reuters.com
suggested caused many investors to discount weak economic reports in the belief
consumer spending and the company performance might have been stronger if
weather conditions had been more favorable.
How many hours do you work each week? It’s a topic that has garnered significant interest
for some time. In 1930, British economist John Maynard Keynes wrote:
“For many ages to come the old Adam will be so strong
in us that everybody will need to do some work if he is to be contented. We
shall do more things for ourselves than is usual with the rich to-day, only too
glad to have small duties and tasks and routines. But beyond this, we shall
endeavor to spread the bread thin on the butter – to make what work there is still
to be done to be as widely shared as possible. Three-hour shifts or a fifteen-hour
week may put off the problem for a great while. For three hours a day is quite
enough to satisfy the old Adam in most of us!”
If you’re a hard-driving, competitive person who logs well
over 40 hours of work each week in pursuit of higher earnings, plum promotions,
and peer respect, Keynes’ predictions may be mystifying, not to mention
unrealized.
While it’s true that Keynes’ expectations for the
future haven’t panned out (he also anticipated accumulation of wealth would
lose social importance resulting in a changed moral code), the average work
week did get shorter in many developed countries between 1990 and 2012. It’s
interesting to note, as The Economist
pointed out, more productive and better-paid workers often put in less time at
the office. The publication offered this example:
“The Greeks are some of the most hardworking in the
OECD (Organization for Economic Cooperation and Development), putting in over
2,000 hours a year on average. Germans, on the other hand, are comparative
slackers, working about 1,400 hours each year. But German productivity is about
70% higher.”
When it comes to hours worked, America is an
aberration relative to other developed nations. We’re highly productive and we
tend to work longer hours.
Weekly Focus – Think About It
“I do not want to foresee the future. I am concerned
with taking care of the present. God has given me no control over the moment
following.”
--Mahatma Gandhi, a leader of India's independence movement
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