Today brought two more bits of good economic news.
National job growth continued with a gain of 212,000 private sector jobs and a drop in the unemployment rate nationally to 8.5% overall and 8.0% for workers over 20 years of age. This comes on top of 4 weeks of lower first-time unemployment claims.
Many of the job gains in December were the result of higher than expected seasonal hiring in retail stores and the delivery sector—FedEx, UPS and similar companies. We won’t know for a month or two how much of this increased hiring is permanent. But there were also gains in manufacturing, health care, technology and restaurants.
On a much smaller scale Ford today announced the creation of a small research center in Palo Alto. The story is reported elsewhere on Town Square.
"Silicon Valley represents a deep and dynamic technology neighborhood according to the Ford executive who will oversee the Palo Alto office…By locating in Silicon Valley, he added, "our new lab will allow us to scout new technologies and partners in their own environment."
What do these stories imply? The national recovery remains slow but unemployment rates are falling though there are still far too many workers who have been unemployed for a year or longer.
Most of the recent growth has been the result of stronger than expected consumer spending. If consumers are spending money they have and not, once again, going into debt, this is a positive sign for the economy. It also provides support for the federal programs like the payroll tax cut that have supported household income growth during the recession and recovery.
The contrast with Europe is pretty clear. The European austerity programs have slowed economic growth and the region remains in financial turmoil. In contrast the limited refusal to impose austerity in the midst of our nation’s early recovery has at least kept the economy moving forward. In addition U.S. long-term interest rates remain at low levels and, even so, our debt is attractive to world-wide investors.
The Ford announcement today is another is a series of positive signs for Silicon Valley. Job growth here was 3.3% over the past year, second highest in the nation for large metro areas. And the growth is concentrated in high-wage technology sectors with good growth prospects.
Downtown Palo Alto is alive with construction and high demand for commercial space as small start ups find the environment attractive.
The lesson I think for Palo Alto and the Valley is to understand where our strengths lie and make our communities attractive for the talented entrepreneurs, workers and their families who are attracted to locate near the great labor force and creative energy that is coming alive again in the Valley.