Coming in on Unemployment Insurance claims and car sales suggest that the recovery is gaining traction. Weve had three years where weve added 6. 4 million private sector jobs over the last five months, four of the last five months over 200,000 jobs have been added, important the construction sector has been adding jobs, but theres much more work that needs to be done. Too many people are unemployed, middle class families are under stress even before the recession hit so the president remains focused on strengthening the recovery and making sure that we build on the progress that weve seen so far. Granting that there is still a relatively higher than normal unemployment especially among minorities and especially among the youth, do these numbers suggest, however, that the economy is better able today to stand on its own two feet without the help of monetary or fiscal stimulus, and is it better able today to withstand the federal budget cuts or spending cuts that are in the pipeline . Well, the economy has been healing. We have been seeing a lot of recovery take place in the housing markets. Weve worked in the homes that were built and we have been overcoming some of the head winds that we faced including cutbacks that already have been in place because of the phasing out of the recovery act. Regarding the sequester i think just about all economists who have looked at it say its bad policy. It imposes a set of indiscriminate cuts, will slow Economic Growth and job creation, the Congressional Budget Office predicts it will reduce gdp growth by 0. 6 and lower employment by 750,000 jobs, compared to where it otherwise would be, and it doesnt solve our long run problem. It does nothing to address the long run drivers of our deficit problems, which are Health Care Costs for an aging population. Reporter so does the economy need more stimulus, mormon tee more monetary help . As a general comment i dont comment on monetary help, i leave that that to the federal fiscal agency. I think what the economy would benefit most is reducing deficit in a balanced way. The president proposeds closing tax loopholes which disor the the economy, that we reform entitlements so they are there for future generations and we make smart spending cuts while we support investment in things like infrastructure today, where we still have tremendous need to improve our infrastructure, put more construction workers back to work right now and raise our competitiveness in the future so our businesses can do better going forward. Dr. Alan krueger thank you very much for joining us. Thanks for having me, tyler. The housing boom has created more than 150,000 new construction jobs just in september, but its still not enough in housing as builders struggle to higher enough qualified workers. Diana olick has the story. Reporter for the nations Home Builders, there are finally signs of life again. Construction is coming back. Unfortunately, skilled construction workers are not. They got burned during the downturn and so the appeal of running back to an industry that burned them a few years ago is not there. Reporter the nation did add 17,000 new residential specialty trade jobs in february, according to todays jobs report. Thats plumbers, electricians and roofers but thats not enough. Housing starts are up 4 from a year ago but the jobs are up just 3 . At fox hall homes in silver spring, maryland, demand is coming back, but the business has clearly changed. Yesterday we had a builder come into the site here who was looking for some subcontractors and thats kind of unusual, never happens. Reporter the situation is worst out west where builders are raising prices in order to pay for wages meanwhile the delays are growing. Nationally it is taking 15 longer to complete a home than it did a year ago, according to john byrnes real estate consulting. Why were the nations builders so caught off guard by the housing recovery . Why werent they more prepared with workers ready to go . After this Historic Housing crash, many of them just didnt believe recovery was real. We learned a lot through the recession and its important not to go out on a limb, you know, unless you really have some concrete information that its going to work out for you. Reporter better safe than sorry. Unfortunately may have Home Builders and buyers paying the price. For nightly Business Report im diana olick in silver spring, maryland. Our next guest raised his Economic Forecast and expects the economy will grow at a robust 3 this year, bill gross is the founder and chief investment Investment Officer of pimco. Thats a dramatic forecast. Whats changed . A short while ago you were expecting 1 , 1. 5 growth, now 3 . Is it todays jobs report . Something else . I think that helps, suzie. To be fair we expect 1. 5 to 2 in the first quarter, in the first half. Its in the second half when Housing Starts begin to improve even from current levels and when the sequester and fiscal drag as economists call it begins to lessen, and so its a second half that has the 3 potential but for the year, in total, you know, probably 2 as a whole. Bill, nice to see you. Youve been a little bit uncomfortable to put it charitably with respect to the feds policy. How if at all do todays jobs number in your view change what the fed will do with respect to Interest Rates and the bond purchasing or what it ought to do . I dont think it changes it much, tyler, to be fair. All markets are moving based on Central Bank Check writing. The fed is writing 1 trillion worth of checks in this particular year, if they continue their program, will todays employment report change that forecast . I dont think so. The chairman and janet yellin and others have been pretty focal in terms of the continuation of certainly the policy rate, the fed funds rate at 25 basis points and continuation of the bond buying program, the mortgage buying program. I dont think it changes it. Theyre looking at a target of 6. 5 unemployment, where 7. 7, so we have a ways to go. Bill let me ask you about stocks versus bonds. Everybodys been telling investors time to switch out the bonds and go into stocks. Do you agree with that strategy and if people do do that, what happens to bond prices . Well, i think that all asset prices arent officially elevated. Lets be fair that the fiveyear treasury at 90 basis points which means 0. 9 , certainly low in yield and high in price, to a certain extent that flows through to other assets such as stocks and high yield bonds and so on, so we have an artificiality to all asset prices. I would say that bonds are not in a bear market. Theyve certainly gone up in yield over the past few weeks and down in price, but this is really a market of bonds as opposed to a bond market, suzie and a student manager, hopefully pimco is in that category can pick bonds in mexico and brazil and perhaps even italy and spain, where yields are going down and prices up as opposed to vice versa. Bill in your always interesting letter to shareholders or investors, this month you write about irrational exuberance and say on a scale of one to ten, asset prices are about a six on the rational exuberance scale. What does that mean in terms of what investors should do with their money or what should they expect in terms of returns from their money . Thank you, thats a good question. I think what it means in terms of what they should expect is a return from bonds of perhaps 3 , 4 or return from stocks of perhaps 6 to 7 . It means a rational temperance as to irrational exuberance which was the phrase in 1996, all the way back to chairman greenspan when he asked the question. I said were at a six on a scale of one to ten in terms of exuberan exuberance. That simply means that as stock prices move higher and risk spreads are compressed in terms of bond markets that we should begin to be cautious. Dont look for an exit but temper your enthusiasm with lower expectations and then perhaps a more diversified and lower risk portfolio. Bill, we know we can always count on an exuberant conversation with you, have a great weekend. Bill gross, founder and coInvestment Officer at pimco. And the american recovery we examine where the economy is growing and where headwinds remain. In tonights final installment on this day of positive news about jobs we shift to the Bigger Picture and explore what the longterm obstacles are to americas economic primacy and prosp prosperity. In focus on this friday, american recovery and the challenges we face. Challenge number one, health care. We will spend 2. 8 trillion on it this year, thats about one out of every 6 the u. S. Economy will generate. We pay more for health care than the next ten biggest spenders combined, and we dont get better results. We have higher rates of disease and injury up to 75 and shorter life spans than any of 17 other wealthy nations. We rank 50th in the world in infant mortality, according to time magazine, cuba is number 41. We have to do something about Health Care Costs, that is the main driver of stuff but that doesnt really mean cutting benefits, that means cutting costs. Bottom line, even though health care creates jobs an expected 5. 5 million this decade, what we spend on it is a weight on our economy and future prosperity. Challenge number two, americas infrastructure, roads, bridges, water system, transit, the electric grid, all outdated, crumbling or both and its costing. According to the World Economic forum the u. S. Ranks 25th in overall infrastructure, behind barbados and oman and one spot ahead of qatar. Well lose 3. 5 million jobs. Pat nattal heads up the American Society of civil engineers. Were looking at a 3,100 negative impact on your pocketbook. Natales group says that by 2020 the u. S. Could lose almost 1 trillion a year in commerce unless we invest more in our physical plant. Case in point, he says we lose about 6 billion gallons of good clean Drinking Water out of our system every day. Bottom line, the u. S. Spends 2 of gdp on infrastructure, half what it did 50 years ago. Europe spends 5 , china 9 . Thats a competitive risk. Which brings us to challenge number three, global competitiveness. Were number seven now, down two spots in the World Economic forums latest ranking. Its the fourth year in a row the u. S. Has slipped. High labor costs are hurting, damaging, too, is a complex tax code, regulation, and a political system that critics say is dysfunctional, but perhaps most troubling of all were shortchanging research and development. U. S. R d spending grew just 3 as a share of gdp from 1987 to 2008. Meanwhile, chinas rose 110 , koreas 91 . In part that lack of investment has left america with a skills gap, and that leads to challenge number four, education. We spent 810 billion a year on it for primary and secondary schooling alone, close to 8,000 per schoolaged child, far more than any other developed country, yet American Students rank 17th in science, 25th in math, out of 34 industrialized nations. Of the 1. 6 million bachelors degrees awarded in 2009, only about 6 were in engineering, half the average for rich countries. Only 15,000 degrees were in math, thats half as many as were awarded in parks, recreation, leisure and fitness studies, which is fog against parks and recreation, but which does show the education challenge we face. You know, suzie, the other side of challenges are opportunities and theres a lot of opportunities. We have a lot of things going for us, the deepest best Capital Markets in the world, we also have the most flexible labor markets in the world and an amazing gift for reinvention. And innovation, we are a country of entrepreneurs. We are leaders there. But these are the headwinds. Really nice piece, tyler. Coming up where to put your money right now, a top strategist gives his stock picks. First lets look at some of the closing numbers from markets around the globe. Market focus what a week on wall street, nine of the ten s p sectors gained today. Lets take a quick look at all of them, Consumer Discretionary leading the way up more than 1 , materials, utilities, all the way down to health care, all of them higher on this friday. And at mcdonalds, not enough customers though were biting at the fish mcbites it appears. Sales in the u. S. Fell 3. 3 last month but the sales dropoff was not as bad as analysts feared especially considering the payroll ax increase and rise in gas prices. Global sales were off just 1. 5 and as a result shares of mcdonalds were up for the day and for the week. A jury in los angeles ordered Johnson Johnson to pay more than 1 million to a plaintiff claiming injury from a defective metal hip implant that was later recalled. It is the first verdict in more than 10,000 cases brought against j js dupuis unit over the implants. J j a dow component ended the day up there at 78. 19. Zimmer holdings under its dividend 17 today, it pointed to new products in its orthopedic reconstructive devices. Shares there up slightly 75. 40 and up more than 23 over the past year. Our market monitor is bullish on the markets and not just because of those new records this week, but hes been pretty positive since last september. Lets bring in kevin kieran, market strategist. Hi, good to be here. Its really nice to see all of these milestones on the dow but you know a lot of investors are nervous about investing in this market so make a case about why the individual investor should start looking about putting stocks in their portfolios. Fundamentals have been improving and are continuing to improve and that valuations for equities overall are relatively reasonable so what were looking to do is continue along a path that we began last fall overweighting equities in portfolios and focusing on the highest quality stocks that can provide us what we think is a reasonable rate of return. Bill gross just talked about a 6 or 7 kind of return for equities and i think that investors should be looking for those kind of returns from the most consistent kind of companies out there, and i think there are names in there that can benefit from improving economy. Lets talk about some of the high quality stocks you were just mentioning. First on your list is Norfolk Southern, nsc on the nyse. Tell us why you like this stock. Well, its not getting any easier to move goods around the united states. We have after all a rising amount of exports coming out of the united states, exports have doubled over the last 15 years, same with imports. These things need to get to and from ports and places of business. Roadways are getting more congested all the time and Railway Companies such as the Norfolk Southern have the ability to provide the lowest cost transportation for those goods so its a natural in an environment where capacity is constrain constrained. We like it and think the stock can trade easily into the mid 80s. Walmart is another one of your picks and you liked wmt. Even given that consumers are feeling like penny pinchers these days . Exactly. In fact, the fact that walmart is in a market that caters to the consumers who have tight budgets, we know that employment is increasing. We saw those numbers today. But when you look at underlying wage growth its positive but very meager, so we want to look for Companies Like walmart that cater to that. I think they were a little slow in executing coming out of the recession. Many of the other Dollar Stores took away market share but i think theyre executing better now and have tremendous clout in the Global Market to provide customers who are value oriented with a needed product and service. Microsoft is is another one of your picks, msft, its been having issues with its surface tablets, smartphones and operating systems, why do you like it . Nothing ventured, nothing gained. Microsoft is looking for a new product for a while. If you subtract the debt they have about 7 of cash on the Balance Sheet youre looking at a Company Trading seven times earnings stripping out the cash so ultimately if something positive does happen in terms of tablets or perhaps mobile, this is a company that has a lot of upside and a good dividend to boot. A lot of good information. We have to leave it there. Thanks a lot, kevin. Do you have any disclosures to make . Steeple makes a markstiefel a market in the securities. On monday the treasury will update investors on the sale of its stake in general motors. Tuesday a monthly check on how Small Business owners see things, will hiring pick up and no more big gulp in new york city as the ban on big sugary drinks kicks in, other cities will be watching. On friday a Senate Investigative committee will hear from jpmorgan execs on what they knew and when about the risks in the london wale trade, thats all ahead next week on nightly Business Report. Daylight savings time on sunday and the official start of spring is 12 days away, that means baseball is right around the corner but Major League Games are expensive and in a tepid economy its sometimes tough to fill seats. At spring training Brian Shactman found out what some teams are doing to make baseball a little earlier. Reporter baseball season, it means springtime and it also means time for fans to save some money if they want to go to a game. Yankee stadium i dont see much of a value. Reporter to treat four people to a yankee game last year costs an average of 324 according to Team Marketing report. The League Average over 200. But not every ball park costs that much, especially in this post recession economy. Clevelands slashed concession prices and has the cheapest beer in baseball 4. There seems to be a renewed focus on the fan. You need a good product on the field. If the experience is not good in the stands fans will not pay to come back. If its so uncouaffordable to to a ball game theyre going somewhere else. Reporter his first move when he bought the team for 180 million in 2003 was to cut beer prices almost in half. For ten years ive never moved that price. Reporter then he went after the underaged crowd. When we came in, i said im going to start marking 5 and 6 and 7yearolds and they thought they were nuts. There are 17, 18, 19yearold kids buying tickets. Reporter so moreno its good business. For nightly Business Report Brian Shactman, phoenix, arizona. No matter what you find system money to go to the baseball game. I cant wait for the yankees to start. They have a lot on the dl. Cleveland cut the prices of beer and hotdogs and all kinds of things to fill some seats. They used to sell out all the time. Im from cleveland so thats another one. I always have a hard time. Go indians. We have to leave it there. Thats nightly Business Report for tonight. We remind you this is the time of the year your Public Television station seeks your support. Thank you. Thank you for welcoming me to cnbc, great to be here. On behalf of your Public Television station thank you for your support. Have a great weekend, everybody. Well see you next week. Two Santa Cruz Police officers killed on duty are laid to rest after a memorial that drew thousands from across california. A new record on wall street as the dow jones hits an alltime high. What could that really mean for bay area workers and Silicon Valley businesses . New state of the art tunnels are making a dangerous oceanside highway safer. But some drivers could miss the heavenly vistas of devils slide. And urban planner stuart cohen has some ideas for avoiding the nightmare ride to work known as the megacommute. Coming up next. Good evening. Welcome to this week in northern california. Im joshua johnson. Lets dive into our roundtable discussion. Joining us tonight on the news panel are paul rogers, science and environment reporter for the San Jose Mercury news. Tom vacar, consumer editor for ktvu news. And martha mendoza, reporter for the Associated Press based in santa cruz. Welcome, everyone. Yesterday, thousands of Law Enforcement officers came together in honor of Santa Cruz Police Sergeant Loran butch baker and detective elizabeth butler, shot dead last week by a suspect they were questioning bo
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