Anyone who has a sense of how the economy works knows that markets don’t have borders.
That is to say, when you study Clark County’s labor market, you also need to pay attention to what’s influencing it on a much broader scale: everything from global oil prices to Europe’s woes.
Oil prices influence gas prices, and most of us fill up to get anywhere. And Europe’s problems can very easily become our problems because of the interconnectedness of the global financial system and international trade.
These are forces we have very little — if any — control over, even though we know that what we do locally counts.
And that’s why I like the fact that Scott Bailey, regional labor economist with his nose to the grindstone of local trends, doesn’t just focus on the Clark County job and unemployment figures. He also addresses the U.S. and global economies.
In his latest report, which covers the county’s labor market in January, Bailey offers speculation, via another source, on what’s happening in the global market for oil (the bloodstream of the global economy). It’s good food for thought. Here it is:
“Gas prices have been heading higher. No way they could suddenly drop down to, say, $2.40 a gallon, right?
“Chris Cook, former compliance and market supervision director of the International Petroleum Exchange, disagrees. His controversial hypothesis is that the global petroleum market has been unduly influenced by financial speculators, completely divorcing it from the basics of supply and demand.
“Meanwhile, two large oil consumers — the U.S. and Europe — have sharply cut back on their oil consumption. Mr. Cook believes that we will soon be at a ‘Wiley Coyote’ moment (when Wiley, with a sad face, looks down and sees nothing but air and the bottom of the canyon far below), when speculative money is withdrawn from the market and slowing demand leads to a sharp decline in prices, similar to what happened in the speculative bubble in oil prices back in 2008.
“Regardless of whether Mr. Cook’s prediction is correct, the article shines a light on the ‘financialization’ of the economy and (how) speculation has affected oil prices. Buy some popcorn, take a seat in the cheap seats in the balcony, and we shall see in the coming months if Mr. Cook is correct.”
Hot, not hot or warm?
I wrote about Bailey’s most recent report on Clark County’s labor market a couple of weeks ago, but I feel like one part of it deserves a bit more attention than I was able to give in my story.
It’s his take on, as he puts it, “what’s hot and what’s not” about the county’s job market. Here’s his analysis: “… alas, it’s more a case of what is lukewarm. Manufacturing, wholesale trade, and professional services have all been trending upward at 3 to 4 percent growth for two years. The good news is, these industries all pay above average. Information services and government have both trended downward. Other industries are either flat (for example, retail trade), erratic with no trend (for example, transportation services), or increasing somewhat slowly (like health care, which is growing at 2 percent).”
Bailey’s next report is due Tuesday. It will cover February’s numbers.
One more thing I like about Bailey’s reports: the song lyrics he puts up at the top of each one as a kind of tone setter for the data.
Bailey, who, like many economists, rocks a healthy beard, chose Stephen Foster’s “Hard Times” for his January report:
“Many days you have lingered
Around my cabin door
Oh hard times
Come again no more.”
Amen.
Aaron Corvin is a business reporter at The Columbian. Read the stories behind today’s local business news at http://www.columbian.com/weblogs/strictly-business.
