Economy: A Lion In Winter
A new batch of economic figures has analysts asking themselves a vexing question: when is this incredible economy going to run out of workers?
CBS News Correspondent Anthony Mason reports new numbers released by the Labor Department Friday show employers added 387,000 jobs to their payrolls in January, well above the 250,000 jobs many analysts were expecting. The nation's unemployment rate now stands at 4-percent, its lowest level since a 3.9-percent rate in January 1970.
Strong growth is the service industries accompanied growth in the building trades and manufacturing. Construction firms added 116,000 new jobs, their largest monthly gain in 15 years. And manufacturers, who laid off a quarter of a million workers last year, added 13,000 jobs in January.
"This economy is supercharged," said employment analyst John Challenger. "It's creating jobs at a pace nobody really expected. "
At a computer career training center in Englewood, New Jersey, owner Annette Jones say she can't turn out graduates fast enough.
"It's outrageous, the job market now," says Jones. "They're hiring children, and they don't care whether they're white, black, Jew, gentile, Protestant or Catholic. "
Unemployment, which approached 8-percent in the early 90's, has been cut in half and could fall farther.
"It certainly looks like 3.9-percent; 3.8-percent could be on the horizon,"says Challenger.
The economy entered 107 months of uninterrupted economic growth on Tuesday. That made the current boom the longest peacetime expansion in U.S. history, beating the old mark of 106 months set during the 1960s.
But what's good news for workers could be an ominous sign for Federal Reserve Board chairman Alan Greenspan, who only Thursday raised interest rates again to slow the economy before inflation accelerates.
Low unemployment can cause wage increases. When business owners add those higher wages into the costs of goods and services, prices go up.
Average hourly earnings, a key gauge of inflation pressures, rose 0.4-percent to $13.50 an hour in January, the fastest pace since September. That increase in hourly earnings was slightly higher than the moderate 0.3-percent rise some analysts had expected. In December, wages grew by 0.3-percent.
Based on todays numbers, economic observers predict Thursday's quarter-point increase in the Federal Funds rate to 5.75-percent was just the first of several rate adjustments the Fed may make this year. "These numbers are the kind that say the economy is not ready to stop or slow down," says Carpenter. "And (Greenspan is) going to have to take further corrective action."
Another interest rate hike could come as early as next month.
Financial markets had a muted reaction to the Labor Department numbers.
The Dow Jones industrial average fell 49.64 points to 10,963.80. The Nasdaq composite index rounded a week of powerful gains with a new record, riing 33.02 to 4,244.00, above its previous record of 4,235.40, set Jan. 21.