Business Report: New Jobs Numbers Lower Than Expected
Friday, September 6, 2019
Q: The latest “jobs numbers” is out. It shows about 130,000 were added in the last month. But this is lower than expected. Miro, let’s talk about the manufacturing position. What does the new data tell us?
A: It tells us that the manufacturing index dropped below 50 to 49.1. Below 50 suggests a shrinking economy. And the manufacturing sector has really struggled in the last year with the Chinese trade tariffs, and a whole host of other factors; hiring has just completely stopped in that sector. People talk a lot about manufacturing, but manufacturing is only 8% of our total employment in the United States and only 11% of our GDP. In fact, what's scary is that, since the Great Recession, the manufacturing sector has not bounced back.
Manufacturers are concerned about recession, about consumers who have been spending like drunken sailors, but at the same time when they have to spend a lot more on goods that now have a 15% tariff on it they're concerned that the orders are just not going to be there. So manufacturers are challenged and we'll see how that continues to go.
At least services had a good month last month.
Q: Next up, construction of new homes is down all across California, but especially down in San Diego. What could this mean?
A: Well you know sometimes these numbers are a little bit erratic because total construction dropped 43% for the first half of 2019. Which sounds like a lot, but most of it is multifamily housing, so apartments, condos and things like that. If builders do not file a permit in a certain quarter their units don't get counted. In the next quarter almost 600 new units will be filed so that number might change.
The real issue is houses. Housing single family homes declined 26%. The biggest reason for that in San Diego is the lack of space. There are no more big areas to develop. So developments are much smaller. Housing construction material costs are up. Labor costs are up, and it's hard to afford a new house. And that's why the state, the rent control measure that's going through the assembly right now and Gavin Newsom kind of approved last week, would kind of cap rent increases to 7%—5% cap plus inflation. That could be a way to control those prices and make it more affordable to live in San Diego.
Q: Lastly, Google and the Federal Trade Commission have reached a settlement in a case involving kids. YouTube, which is owned by Google, is accused of collecting data from videos that would be targeting kids. How big of a deal is this settlement?
A: Well it's a major issue because there's an act called the Child Online Privacy Protection Act that was passed in 2000. It's been in place for 20 years. It really protects children under 13. They have to have the consent of a parent to be marketed to. Google has been working on trying to build their behavioral business. Marketers really love to understand how consumers behave, not necessarily their attitudes. So they're willing to pay a premium. Google did this for companies like Mattel who sells toys to younger kids, and they were slapped by a fine of $170 million. It's a big fine in relation to the COPA Act.
But, in the greater scheme of things, Google has been fined well over $10 billion in the last 15 months between the European Union and the United States. Facebook, last month, was fined $5 billion. So there's a lot of pressure on Capitol Hill to look at regulating these social media platforms the same way they regulated traditional media television and radio in the past. For Google, for a company that's known for their motto "do no evil," it calls into question how they're behaving in the marketplace.
Anica Colbert contributed to this story.
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