Call it the head-scratcher. January's employment report, showing anemic job growth, surprised and dismayed almost everyone, including Austan Goolsbee, chairman of the White House Council of Economic Advisers:
"This was a very unusual jobs number. And I think the important thing is to look at what we see as the overall trend."
Just 36,000 new jobs were created last month, far short of the 145,000 that analysts had predicted. Goolsbee blamed the ferocious winter weather that enveloped much of the country; he says that may have kept companies from hiring. The unemployment rate, however, dropped 0.4 percent. More on that in a moment.
Today caps a volatile five days for the world's oil markets. Gasoline prices ended the week up 2.4 cents from last week, not a huge jump, but pump-watchers say the price of oil is likely to climb, as political instability in Egypt wears on. The average gallon of gasoline today cost $3.12. Analysts say the price would be higher but for winter weather and large inventories.
Wall Street Numbers
In trading today, the Dow added 28 points, closing at 12,091. Over the week the index rose more than 250 points.
The Nasdaq increased 15 points, settling at 2,769. And the S&P 500 ended at 1,311, a gain of 4 points.
Gov. Cuomo's Budget & Bernie Madoff
This week, Governor Cuomo unveiled his first state budget, saying it will change the way budgeting is done in Albany. And JP Morgan and the Mets each separately suffered knocks to their reputations as lawsuits alleged they benefited from Bernie Madoff's ponzi scheme.
We'll review the week's business and economic news now with Greg David, Director of the Business & Economics Reporting Program at the CUNY Graduate School of Journalism.
First, jobs. Not a lot of new jobs, but unemployment fell, from 9.4 to 9 percent. What does that tell us?
Well the unemployment number isn't good anyway. The reason it fell is people left the workforce. And remember these are done with seperate surveys. The unemployment number is devised by calling up 60,000 people. The jobs number is derived by calling 300,000 businesses. You know, the narrative of this recovery is the jobless recovery. Well, if we get any more months like this, it will be the jobless recovery. I just hope the Obama officials are right. That it's the weather. Otherwise, we're not going to have a good spring. Let's hope that the weather gets better in February and the numbers get better too.
On to some pretty sensational news today. The trustee trying to recoup money for Bernie Madoff's bilked investors says Mets owners, Fred Wilpon and Saul Katz, took in about $300 million in "fictitious profits" and used the money to run the team. Last week, before the case was unsealed, it was believed the Wilpon family — Fred and his son Jeff — had made tens of millions, not hundreds of millions of dollars. How does this allegation change things?
Well, not only in the court papers, but all week we've been reading stories about how interconnected the Madoffs and the Wilpons have been. The reason we went from $43 million to $300 million is every Wilpon enterprise was investing money with Bernie Madoff. I read this week that they borrowed money to invest money. Money they owed the players got put with Madoff. And they took a lot of money out. And what the trustee alleges is that as sophisticated people, they had to have known that this wasn't real. That they couldn't be getting it. And there were a lot of other examples. So one of their accounts got moved to Merrill Lynch. Merrill Lynch told them they wouldn't do business with Madoff. They were working with this hedge fund manager who told them he wouldn't participate with Madoff because he didn't believe it. Over and over again, the Wilpons were told Madoff wasn't legit. And they went ahead anyway. That's the bottom line. I don't know how they sit there and say we didn't do anything wrong.
That's not the only Madoff news this week. The bankruptcy trustee also made public a suit against JP Morgan Chase, alleging the bank had suspicions about Bernie Madoff for years but kept doing business with him. Sound familiar? One email from a Chase employee referred to a “cloud over the head of Madoff; his returns are speculated to be part of a Ponzi scheme.” The money at stake here is bigger - 6.4 billion dollars. Are the risks for JP Morgan different from the risks to the Wilpons?
Well, it's a little different. Look, there were many people within JP Morgan who said it was a Ponzi scheme and said it wasn't legit. Over time, JP Morgan Chase took its own money and its client's money out of Madoff. They were the processing bank. They were Bernie's bank that they ran everything through and they wouldn't give up on that business. They say they've done nothing wrong too. Well, I think both people are in for big settlements. I read that stuff all week and I said to myself, "I can't believe it."
Governor Cuomo's budget? A game changer for Albany?
Yes. Here's why. You know, it used to be, 'what closed the budget deficit.' He says government in New York is too big and we have to shrink it. He's changed the conversation.