"Kee" Points with Jim Kee, Ph.D.

It looks like Greece will receive a second bailout of $170 billion in exchange for bondholders taking a $130 billion haircut. That effectively wipes out $130 billion of Greek debt and is a continuation of steps in the right direction.

In the U.S., private sector job creation last month was about 234,000, which is good. The average over the past three months has been about 245,000, and that's what is most important (not any one month). 200,000 per month is considered to be the minimum for bringing down the unemployment rate, but many analysts feel that number is closer to 100,000. The reason is a declining labor force participation rate, which is the number of people employed and unemployed (looking) as a proportion of the total working age population (i.e. ages between 16 and 64). This rate peaked around 2000 at 67%, and is currently just below 64% (it rose slightly last month). While it is common to attribute the decline to general discouragement at findingjobs, the truth is that demographics (more workers 55 and older) explain a lot of it. My opinion is that it just overshot during the peak of the tech boom. Anyway, a declining participation rate explains why the unemployment rate can fall even when net new job creation is weak.

Finally, in China, the big news was the official announcement that China was lowering its overall GDP growth target from 8% to 7.5%. I see this as a non-event. This news has been telegraphed by China for several years, including its intention to go from an export-oriented economy to more of a consumer-oriented economy. I read this statement as "China's government intent on avoiding a hard landing." I'll probably talk more on the pitfalls of comparing communist and capitalist country GDP later...it is a fascinating topic from the cold war days that is still somewhat relevant now.

Please click the link below to see Jim Kee's recent interview on FOX Business News March 5, 2012.


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