Two reports worthy of your attention out this AM.
First, the preliminary benchmark revision to the payroll jobs survey showed that as of March of this year, employers added 386,000 more jobs than we thought (453K in the private sector). This is a preliminary estimate of the BLSs annual benchmark revision to the jobs data, and will likely change a bit before it becomes the official plug-in. But it is based on more complete data and will remain a sizable positive addition.
I plotted what the revised series should look like relative to the original. You wedge the difference into the previous 12 months, starting in April 2011, one-twelve at a time so you hit the level difference of 386K in March 2012. After that, you just grow the series as it has since then.
Source: BLS, my calculations
So, good to know we’ve had a bit more momentum on the jobs front, though obviously we’re still way behind where we need to be to tighten up the job market.
Various folk have pointed out that this revision makes the President’s job record net positive. That does not excite me, as I’m still basically economically gloomy given the magnitude of the remaining output gaps. Of course, I credit the President with trying to close said gaps with the American Jobs Act, proposed one-year ago and largely ignored by Congress ever since.
There’s another revision out today and this one is far less appealing. Real GDP growth for the second quarter was revised down from an annual rate of 1.7% to 1.3%. Downward revisions in consumer spending and business investment largely explain the drop, along with weaker exports.
The quarterly numbers jump around and I prefer to look year-over-year—real GDP is up 2.1% over the past year. But that’s still a slog. We remain a 70% consumer spending economy, and with high unemployment and weak wage growth, there’s just not enough income generation to break the deleveraging cycle and achieve escape velocity from the residual grasp of the great recession. We should also expect exports to continue to weaken, given slower growth in both advanced and emerging economies abroad.
Still, I suspect underlying growth is closer to 2% than 1.3% and future quarters will reflect that. I also remain hopeful that the combination of improving home prices and very low mortgage rates will lead to more refis and the commensurate stimulus that provides. And it looks like there are a few more jobs than we thought.
But simply put, we’re just not out of the economic woods. And that is, in no small part, the consequence of policy failure that pivoted to austerity and fiscal contraction way too soon.