Dr Jeff Cornwall

The Congressional Joint Economic Committee has released state by state job statistics for July.
Here are the highlights of this report:
* “Over the past year (since July 2003), the unemployment rate has fallen in 49 states and all 4 regions of the United States. 35 states have unemployment rates at or below the national unemployment rate of 5.5 percent.
* Non-farm payroll employment has increased in 46 states over the past year.
* Non-farm payroll employment increased in 28 states in July. The states with the largest payroll job gains during July were Maryland (+11,800), Massachusetts (+11,600), Washington (+8,600), North Carolina (+8,200), and Wisconsin (+7,000).”
Find the complete report here.

The Congressional Joint Economic Committee released a summary report on current economic conditions.
“The economic expansion continues to be vibrant, but growth in employment and gross domestic product (GDP) moderated this summer. Much of the moderation in GDP growth was from slower consumer spending after rapid spending earlier this year. The recent economic soft patch is attributed by the Federal Reserve (Fed) ‘importantly to the substantial rise in energy prices.’ Many, including the Fed, believe that the economy is poised to resume sustained robust growth in jobs and output. Consistent with that belief, recent indicators show rising consumer confidence, vigorous activity in manufacturing and service industries, still-vibrant housing markets, strong business investment, and continued low inflation.”
Read the full report here.

The Office of Advocacy of the SBA has issued a summary of a conference they sponsored on “Entrepreneurship in the 21st Century”. There is a fairly short summary that is an interesting read. More detail about the specific presentations at this conference can be found here.
Conference participants (academics and public policy folks) examine the current conditions and obstacles faced by entrepreneurs, and present a fairly accurate picture, although by no means groundbreaking.
Sadly, they take a very academic turn at the end by simply calling for more research to determine public policy options to support entrepreneurship. Much research has already been conducted around the world. This research has consistently concluded that education and breaking down governmental obstacles are the two most important policy initiatives that can help. I fear that this is an attempt to federalize entrepreneurship rather than create the free markets and educated entrepreneurs that can make it continue to flourish. Some would like to advocate for funding more governmental programs rather than advocate for entrepreneurs.

As expected, the Fed increased interest rates today. They are still at historically low levels and helping to make financing accessible for small business. Here is an analysis from Sean M. Davis, Policy Analyst, Congressional Joint Economic Committee:
“There were four noteworthy features of today’s monetary policy statement:
1. The Fed still believes that the stance of monetary policy is accommodative, which means that interest rates remain very low to assist economic growth.
2. The Fed noted that since its last meeting, incoming data indicate that output growth has moderated in recent months and the pace of labor market improvements has slowed. The recent economic soft patch is attributed by the Fed “importantly to the substantial rise in energy prices.”
3. The economy, according to the Fed, is “poised to resume a stronger pace of expansion going forward.”
4. The Fed also noted that inflation has risen this year and that “a portion” of the rise reflects “transitory factors.”
Analysis:
* In June, the Fed started to remove policy accommodation by increasing its target for overnight interest rates to 1.25% from the 1.0% level that had been in place for almost a year. Today’s action puts the target overnight interest rate at 1.5%.
* As in the past few policy statements, the Fed announced that policy accommodation (i.e. low interest rates to accommodate economic growth) can be removed “at a pace that is likely to be measured.”
* Financial market participants still feel that the Fed will increase short-term interest rates in the future, but perhaps not as quickly as was previously thought given recent signs of slower economic activity. The Fed may adopt a wait-and-see approach at its next meeting, waiting to raise interest rates further if incoming data have not confirmed that the recent soft patch in the economy was indeed temporary.
* The Fed’s monetary policy committee meets three more times this year: September 21, November 10, and December 14.”
Here is the full statement from the Federal Reserve.

July employment data has been released. And while the payroll survey of employment announced today did not increase by as much as Wall Street’s forecast (32,000 vs. 240,000), unemployment actually was lower than expected (down from 5.6 to 5.5 percent). Why? That often ignored household survey on employment, which measures total employment including entrepreneurial activity, increased by 629,000 in July! The entrepreneurial economy at work!