Everyone's all wound up about tomorrow's employment report... as am I.
One could sagely stroke the chin and very correctly pronounce that given the statistical confidence intervals around these data -- their margins of error -- the monthly reports are given far too much weight. The closely watched net job growth figure, for example, has a margin of error of plus or minus 100k. The numbers also are subject to significant revisions in coming months.
Or one could hang up the wonkiness and face that we're entering the heart of the election season where each jobs report will be a very big deal.
Best to try to do both -- respect the limits of the data, try to figure out what the numbers are trying to tell us (which typically means taking averages over a few months), but don't ignore their elevated political salience right now.
The consensus expectation is for about 150,000 jobs overall, 160k in the private sector, meaning folks reasonably expect the state and local sector to keep shedding jobs (state/local cutbacks sucked three-tenths of a point off of real GDP growth last quarter). The unemployment rate is expected to stay where it is at 8.1%.
I'm a bit more pessimistic and wouldn't be surprised to see a payroll number south of 150k -- more like 130k. A lot of this depends on technical aspects of the jobs data, like the fact that unseasonably warm weather boosted earlier months this year at the expense of later months. If the "seasonals" settled down in May, which "may" be the case, we're more likely to hit a higher jobs number.
Either way, the main economic point to keep in mind is that all of this is pretty consistent with an economy that's slogging along at its trend growth, rate about 2% per year. That's not a bad thing and, in fact, it's worlds beyond the horrors of the Great Recession, when GDP was tanking at 9% per year and we were losing 750,000 jobs a month.
But it's not great either. After being down so far, you need some bounce-back months where you're well above trend for a while. And that is not something we've reliably experienced.
Now, to the politics. Simply put, my experience suggests -- and this is art, not science -- that any jobs number of 150k or above with unemployment staying put, at worst (i.e., not rising), will be considered quite favorable for the administration. Anything below 125k will likely not.
But just think about this for a minute. Given the margin of error, a 170k print on net job growth, for example, could actually be 70k jobs... or 270k!* If the unemployment rate ticks up to 8.2%, that's statistically indistinguishable from no change at all.
And think also about the policy implications behind this. Suppose it's a strong month. What, exactly, did the administration or Congress do last month that was such a great boost to jobs (Jay Carney did mention my work yesterday, so perhaps that's it)? And vice versa, of course.
For policy evaluation, you want to think about the nexus of jobs and policy in the longer term, which in this case asks, "what did the administration do to offset the massive contraction in labor demand, aka the Great Recession?" The answers to that are the Recovery Act, financial and auto rescues, unemployment insurance extensions, payroll tax cuts, and all the rest of that stuff. Those measures demonstrably pulled the recovery, tepid as it is, forward, saved and created millions of jobs, and hastened the turnaround in net jobs growth that began in February of 2010, and which has yielded about four million jobs so far.
You might also want to note that Republicans have generally tried to block all of the above, and since 2010, have successfully blocked efforts like the American Jobs Act to do more to help offset the residual drag from the downturn. In that regard, their fingerprints are the most prominent ones on the current slog.
So, tune in tomorrow and I'll be sure to be going all kinds of crazy regarding the May jobs numbers. I can't help it, and neither can anyone else around here. But the truth is you learn a lot less from such reports than the reaction to them would suggest.
* Technically speaking, there's a 90% chance that the true jobs number is between 70k and 270k.
This post originally appeared at Jared Bernstein's On The Economy blog.
Follow Jared Bernstein on Twitter: www.twitter.com/@econjared
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Axelrod knows that this election is a referendum on Obama's first term.
With the economic devastation of Bush's Recession and even worse economic devastation of Obama's Recovery, in spite of the biggest stimulus in history, Axelrod knows that he needs to spin and spin to justify why even today, three and a half years after Obama was sworn in, the US unemployment rate is still higher than the day Bush left office.
So Bernstein was told to spin the bad employment numbers that will come out today.
Hence the standard Axelrod rubbish blaming the minority party for Obama's failures, as if Obama had not wasted more taxpayer money on "stimulus" than any other leader in the history of the world.
Remember, the US has a growing population so it needs to create about 2.5 million jobs a year just to maintain the same unemployment level.
Obama can't seem to create more than about 1.8 million new jobs a year, so not only do all those who have lost their jobs during Obama's "Recovery" not have any hope of finding work, but all the new workers who just graqduated aren't going to find anything either.
Thanks, Jared. One day, Proggies everywhere will learn that giving people slogans is not governing.
The sad truth is that Europe, Japan and the U.S. have such an onerous amount of debt outstanding that the hope of continued solvency rests completely on the perpetual condition of interest rates that are kept ridiculously low. It isn't so much a mystery as to why the Fed, ECB and BOJ are working overtime to keep interest rates from rising. If rates were allowed to rise to a level that could bring in the support of the free market, the vastly increased borrowing costs would cause the economy to falter and deficits to skyrocket. This would eventually lead to an explicit default on the debt.
Start buying silver and gold to protect yourself.
Good luck peddling that to the public.
Unemployment peaked at 10%, vs 10.8% under Reagan in 1982. Unemployment is now down to 8.1%, vs about 7.4% at this time in Reagan's first term. Reagan was reelected in a landslide. This is not even the "greatest" recession of my lifetime. The '70s and early '80s were far worse times, 10+% inflation, gas lines and rationing, followed by 10.8% unemployment. The economy has been stable since then, we got spoiled.
I realize we as Democrats didn't try as hard as we could to work with Bush on positive things he was trying to accomplish because we were so focused on the many negatives. However, we never saw Democrats preventing budgets from being passed or holding the government hostage like petulant children because they refuse to compromise to move the nation forward.
I remember in the 80's I thought that Reagan and Tip O'Neill were constantly at odds. I wondered how they could get ANYTHING done. Now, I'd positively jump for joy if Boehner and McConnell were even half the patriots and men that Reagan and O'Neill were.
I used to loathe Reagan, now....I wish there were actually some Republicans who were REALLY like him--strong in their beliefs, but even stronger in their desire to see America succeed.
I'm sure you'll have excuses for not doing any of this..
The macro view is that the next election is purely a case of the Masters of the Universe demanding to install their chosen puppet president to do their bidding - to effectively turn the United States into the worlds' largest private equity project. The Masters of the Universe know they'll become fabulously, offensively wealthy if Romney gets elected, and they'll only be really, really wealthy if Obama is elected. You don't even need data to make that observation - you only need eyes, ears and a small amount of common sense.
Wall Street financials total "market cap" is half what it was before the crash, while the non-financials have all recovered. Apple can buy BofA with cash now, it's stock is worth 15% what it was. Bankers are taking a loss on Greek bonds, and will on Spain, Ireland, ...
We are seeing the end of rule by global capitalism, the rise of the socialist nations where growth and the economy are managed by the government. Bankers and the IMF are falling. Don't forget, all the nations of South America talked about in Shock Doctrine are now less capitalist, disaster capitalism has failed everywhere. And it will here too, although the US will be the last bastion.
Capitalism is not the following:
1. Government central banks manipulating the interest rates and forcing savers into risk assets. Not letting the supply of money cost correspond to the demand of money.
2. Corporations lobbying for special interests and laws to get benefits and government providing barriers to entry (for smaller companies) provided by governments. i.e. Corporatism.
3. Complete manipulation of major markets like government funding and excessive regulation of education & healthcare. (you may like this, but it is not capitalism.)
4. Huge regulation of money assets, stocks, mortgages, FDIC, banking regulations that push money into big banks at the expense of the little guy.
NO we do not live in a capitalist country. Yes there are some markets that act without much interference like consumer electronics (on the margin) but the majority of our markets are very regulated and our money is regulated, so no capitalism here. Not even the slightest
What European voters are demanding, in other words, is a more moderate, American-style course. Eamon Gilmore, Ireland’s deputy prime minister said “You can’t have economic growth unless you also have stability, but neither can you have stability without growth.”
France’s Francois Hollande favors a balanced policy that would use public spending primarily to induce more private sector growth. Matt Browne views it as “pragmatic” and his proposals as embodying “a realistic European agenda.”
On the other hand, the Mourdock Republicans — and they now very much include Mitt Romney, the party’s presumptive nominee, in their ranks — would have the United States embrace an even more radical program of government cutbacks at the very moment when Europe’s voters are telling us that this simply doesn’t work.
Obama’s economic policies are an excellent example of a practical American exceptionalism.
Europeans are moving toward the center-left not because they are doctrinaire but precisely because they are sick of the rigid approaches the advocates of austerity have imposed upon them. Why would we now want to imitate Europe’s failures?” - E.J. Dionne