Jobs Day Round Up

February 1st, 2013 at 10:06 pm

Played chin music all day on the jobs report and stumbled on a number of good and no-so-good points made by various peeps throughout the day.

–With the revisions to last year’s payroll numbers, job growth in the last few months of 2012 was pretty strong, at least by recent standards—about 200k in Nov and 250k in Dec.  Re that, Dean Baker made a point worth remembering: apparently, uncertainty around the fiscal cliff wasn’t exactly dampening hiring.

I’ve got the rule that comes in very handy: I largely discount the warnings of those who can’t possibly know what they’re talking about.  If people tell me firms are not hiring because they’re worried about a fiscal “cliff” that a) isn’t at all a cliff and b) is a phenomenon for which history provides no guidance, I smile pleasantly and get back to my Sudoku.

–Just taped a spot with Ezra Klein on movements in various economic indicators and once again, I loved his setup.  The logic went like this:

–GDP was flat in the 4th quarter in large part due to a contraction in government spending.
–Jobs are trucking along, but at too slow a rate and the unemployment rate remains uncomfortably high.
–The stock market is on a bit of a tear, even though we just raised taxes a bit.

As I’ve stressed, real GDP growth isn’t as grim as this week’s report suggested, but the gods of data releases saw fit to provide us with a warning as to the impact of government austerity on growth at a time like this, when the private sector isn’t yet firing on all cylinders.

The figure below from GS Researchers shows the extent of fiscal drag that is or could be in the mix for 2013 in terms of its impact on GDP growth.  The tax part is mostly from the loss of the payroll tax break, and the sequester is mostly the $85 billion of automatic spending cuts that will take effect in March if Congress doesn’t defuse them.  And some of those bars are awfully big negatives.

So, the points are a) cut government spending now and you’ll cut growth, b) cut growth and you’ll reduce our already too weak pace of job creation.  The stock market point above…that’s just a dig at the Larry Kudlow’s of the world who incessantly go on about how tax increases will kill the market, the economy, and our freedom.


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2 comments in reply to "Jobs Day Round Up"

  1. purple says:

    Exports showed weakness, and there’s little to suggest that pre-crisis structural imbalances have abated. This despite a weaker U.S. dollar in Asia. Which suggests we will be back in a new crisis sooner rather than later.

    The jobs situation is bleak, millions have dropped out and aren’t coming back. The failure of political imagination is staggering, as I sit surrounded by moonscaped roads and water pipes that spit out rust particles.

  2. save_the_rustbelt says:

    Out here in the “real world” :)) unemployment and especially underemployment are brutal, with only tiny signs of any improvement.

    Blue collar? Not good. Over 50? Problems. Geographically challenged? Move if you can afford it. Small business? Hang on for dear life.

    Nothing new, the problems gained momentum with NAFTA and have been rolling over people every since. Even in a really dark period (1979-1982) small business had more confidence than today.

    Small bit of optimism, I am giving less advice on closing businesses and more on holding steady, even occasionally on expansion (talked to folks in about 15 states last year).

    Pessimism? Slow cash flow and major confusion about Obamacare.

    And….government spending will not fix these long-term structural problems (yes, I know, dogma says there are no structural problems…..right).