Happy employment Friday, all. No time to waste. Get started on your daily reads so you'll be all set when the fun and games start at 8:30 a.m.
Everything you need to know about the employment report
The Wall Street Journal's Real Time Economics blog tells us four things we need to know before the 8:30 a.m. release. Pay close attention: 1. Better isn't good enough. The consensus forecast for an increase of 180,000 is close to the 12-month average of 194,000. (It makes you wonder how economists forecast and why we bother to poll them.) 2. More jobs don't mean more higher-paying jobs. 3. More jobs = more spending = stronger growth. Maybe you knew this already. 4. The bigger the number, the louder the taper talk.
The Pope should stick to faith and morals
Judge Andrew Napolitano takes issue with Pope Francis' critique of capitalism, laid out in his recent encyclical. "Thank God, so to speak, that his teaching authority is limited to faith and morals, because in matters of economics, he is wide of the mark," Napolitano writes. I plead ignorance on the relationship between religion and economics, so I'll gladly defer to Napolitano: "The Pope seems to prefer common ownership of the means of production, which is Marxist, or private ownership and government control, which is fascist, or government ownership and government control, which is socialist. All of those failed systems lead to ashes, not wealth. Pope Francis must know this. He must also know that when Europe was in turmoil in 1931, his predecessor Pius XI wrote in one of his encyclicals: '(N)o one can be at the same time a sincere Catholic and a true Socialist.'"
Dreaming that drone delivery becomes reality
Financial Times columnist Tim Harford looks forward to a time when regulatory hurdles to Jeff Bezos's fantasy of package delivery via drone have been surmounted. Then what? Think what it could do for just-in-time delivery! Retailers and restaurateurs could "book a slot on the drone mother ship" on short notice and for a low fee. Suburbanites and exurbanites will be freed from driving to the local supermarket. Who says the U.S. has hit a technology wall? Alas, Amazon won't be able to cater to all our wants. "Amazon will not be delivering cocaine via drones -- but somebody certainly will," Harford says.
Differentiating between cause and effect
The president has been talking about income inequality in the U.S. and proposing government solutions to address it. Maybe he's confusing cause and effect. "Nothing better illustrates the causes of income inequality in America today than the vast differences in educational attainment between high-income households and low-income households," according to the Tax Foundation's Scott Hodge and Andrew Lundeen. Nearly 70 percent of Americans at the bottom of the income scale have a high-school degree or less. Only 10 percent have a college degree or more. At the same time, almost 80 percent of high income earners have a college degree or higher; less than 10 percent have only a high-school diploma. The chart pretty much says it all. The government should focus on fixing the education system, which it runs. Then it can watch as the income gap narrows.
Business investment is MIA
The U.S. economy grew at a 3.6 percent annualized rate in the third quarter, with inventory accumulation accounting for almost half the growth -- and all of the upward revision from the 2.8 percent estimate a month ago. Inventories are a two-way street. If businesses are voluntarily stock-piling goods, it's a sign they expect stronger demand in the future. The alternative is that demand collapsed, leaving companies with unwanted inventory. Final demand was weak: consumer spending rose an anemic 1.4 percent last quarter, and business investment in equipment and software was unchanged after tiny increases in the first and second quarters. Economists lowered their fourth-quarter GDP forecasts based on the inventory build. Maybe 2014 will be the year that catapults the U.S. economy to a higher growth path.
(Caroline Baum is a Bloomberg View columnist. Follow her on Twitter.)