Gross domestic product was up by +3.1% for the fourth quarter of 2004, and up +4.4% for the year. I’m sure this will be revised up as they move from this advance report to preliminary and then final in the next two months. Business investment in equipment and software was up +13.4% for the year.

Workers are being robbed of their wage increases by the growing costs of benefits. The Employment Cost Index was up +3.7% for the year, but benefits costs were up +6.9%, and wages were up a meager +2.4%. Workers do not see benefits costs because they see the same or less health coverage, vacation time, or other benefits, and often perceive small wage increases as their employers “holding out” on them. In addition, the rising level of wages upon which Social Security taxes are paid (now $90,000) is yet another “hidden tax” because the employer “matching” also increases costs and depresses wages. In the mid-to-late 1990s, the relationship was the other way around. Benefits are real costs of employment, but they are rarely viewed that way by employees. Many feel that their employers are just “making up stories” to pay them less. Good employers make it a regular practice to reveal to their employees the total value of their pay and their benefits. For low-wage workers, benefits costs (many of which are fixed, such as a monthly per worker fee for health plans) can be a disproportionately high percentage of their pay, making this especially tragic in their ability to save and increase family wealth.

Initial Jobless claims were down by -9,000, and the four-week average dropped to 331,500, which is considered be be indicative of an improving hiring picture (more about that later). There are now 41,355 fewer initial claims compared to the same week of last year.