Along with a massive snowstorm, Friday brought a blizzard of new info on the job market. From the perspective of our work at the White House, two points stand out, one about where we are and the other about where we've been.
First, while there are encouraging signs regarding jobs, they are early signs and must be viewed with care. The job market is clearly doing better than it was but the level of unemployment is miles north of where it needs to be. Unemployment fell significantly last month, which is good, but a) it's a one-month data point and not yet a new trend, and b) it fell from 10% to 9.7%, and that's still an unacceptably high rate of joblessness.
Second, today's data release has new, revised information on just how bad this recession has been in the job market. The chart below is worth a lot of words.
The chart plots the course of payroll employment over the last four recessions, including this one. In each case, we index jobs at the start of the recession to 100%, and the x-axis shows the number of months from when the recession began.
By setting it up this way, you get a lot of useful, comparative information across different downturns. For example, you see how much longer it took to regain the lost jobs in the 1990 and 2001 recession compared to the 1981 version.
But the main point is how severe this recession has been on job loss. There are two lines in the graph for the current recession because last week's data provided a revision based on more complete data. We knew it was bad, but it turned out to be even worse. We thought we were losing an unprecedented 690,000 jobs per month in the first quarter of last year. It turned out to be 750,000. In the four months between December 2008 and March 2009, we lost more jobs than during the last two recessions combined.
That's where we were. Where we are, as noted, is better but not good enough. Last month, we lost 20,000 jobs and that's not an outlier -- it's another data point in an improving trend moving towards net job gains, which we expect to be seeing in a few months. But the job market won't be in recovery until those small negatives turn into big positives.
Here's what comes out of all this: our policies, most notably the Recovery Act, have helped move us from a situation where we were losing a nightmarish 750,000 jobs per month to one in which we've pulled back from the economic abyss and are moving a lot closer to adding jobs, on net, on a regular basis. But we can't kick back and wait for that moment. There's too much pain out there, too many families struggling with a job market that's simply not providing the opportunities they need to get back on their feet.
So we have to hasten the arrival of more robust job growth with a set of initiatives targeted at the factors holding back job creation. The House passed a targeted jobs bill in December that included some of these priorities, including upgrading transportation and infrastructure, and aid to states to keep teachers, cops, and firefighters on the job. The Senate's actively working on proposals with some of those same components.
Last week the President announced an initiative to help credit flow more freely to small businesses that want to expand their operations and payrolls but can't access the capital. Both the President and Congress have been working on a new hiring tax credit targeted at the business owner who is considering adding workers but needs a nudge (and you can see employers dipping their toes in the labor pool -- temp work has increased in each of the past four months).
Another idea in the mix right now is investment in infrastructure to help offset the continuing job losses in construction, a sector that took another big hit last month. And another is help to state and local governments facing tight budget squeezes and the resultant layoffs in folks like teachers, down 10,500 last month at the local level.
GDP is growing and growing pretty solidly. The employment data show employers cutting a lot less but not yet adding a lot more. Unemployment moved in the right direction last month, and we need to build on that positive movement.
But as the figure above shows so clearly, we've got a huge hole to fill. That hole wasn't dug overnight, and it's going to take some time and some smart, targeted policies, to fill it up. Now there's a shovel-ready project worth taking on.
Originally published at WhiteHouse.gov.
Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force.
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Oh and the counter party payouts via AIG will mean our taxes will be going up and social security payouts will be coming to an end so the bankers can make their numbers this quarter (and every quarter going forward) so they can "earn" the big bonus.
The tea party guys are mostly crazy (where were they during the Bush years?) but they will get some traction in the coming years as the fatal damage to the middle class economy becomes clear as our standard of living declines even more (the middle class is at best treading water)
President Obama says he helped save the nation's economy from going over a cliff when all he did was join Bush in cooking the books and good. It will be years before we know what the hell happen.
The Republicans have succeeded in ending the the FDR reforms, and the middle class will soon be the working poor, just like the good old days.
Senior citizens die in hospitals and nursing homes (raising the cost of health-care); because their children refuse to care for them at their home in their dying days. Yet everybody is ready to sue at the drop of a hat ... because we have a right and contingency fee legal system in cahoots with judges.
The leaders in politics (both political parties and at all levels of govt.), and various sectors of business, finance, industry, education, media, health-care, etc, are only interested in their own selfish well-being; while robbing society and the country of billions of dollars in assets.
We have to stop the hype and self-glorification. Let us start accepting the facts and speaking the truth. Spin has gotten us no where. America continues to live high on the hog; with the expectations that the sky is the limit and America is a rich country.
What is most important to note about the current seasonally adjusted unemployment rate is that in March and April the adjustments will subtract jobs, so if the total number of jobs simply flat line from now until April, then the unemployment rate should approach 11% on a seasonally adjusted basis.
This recovery is based upon government debt. The others were based on increasing production without massive government stimuli.
There has been a precipitous drop in production since then. With production being sent overseas for lower wages using the "Global Economy" as an excuse...telling the American People that this was good for the middle class.
Until Congress gets out of bed with Corporations (quits accepting bribes), and returns much of the overseas production to the USA there will be no long term recovery.
The Democrats blame all the bad part on Republicans, (Bush in particular) and then try to take credit for anything that is good when the cycle starts to improve.
TARP, which came out of the Bush administration, probably did prevent further catastrophy. Obama's stimulus bill's effect is more open to interpretation.
It's funny; no matter how much power the Dems have, they are never responsible for problems. However, if things improve, the Dems are right there to try to take all the credit. It goes to the nature of the liberal mentality; they are never responsible for anything bad. All the problems are someone else's fault. This is immature in the extreme.
The government and the FED only have fiscal and monetary policy weapons to address the economy, and they are just about out of bullets. The private sector has run for the hills, even though in my opinion it was the private sector that created this calamity by abusing and showing the folly of a deregulatory environment of the financial sector. Bankers, investment banks, mortgage brokers, real estate brokers, borrowers--private sector all--all ran amok. It was "Deadwood capitalism.""
The good news is that the world with the exception of a few is just as screwed as we are. The world has suffered an 7.0 economic earthquake with our AAA rated sub-prime mortgages as the epicenter. The digging out will be slow--no matter what the government does. Significant job creation is way down the line.
Bernstein assumes the hackneyed "voice of technocratic reason" regarding unemployent: "We have a long way to go, but we're doing better, thanks to us." Right. We have all sorts of faith in you after learning the number crunchers in the BLS missed the job-loss estimate by about 250K, or about 10%, in the first quarter of last year. Let's run out and devise multi-billion government fixes based on our faulty understanding of what's going on. When the stimulus ends up costing another $80 billion or so in extended unemployment insurance and food stamps, we'll just have the Fed print more money. The private sector -- what's the private sector? Carpe crisis!
The only reason the unemployment number dropped is because hundreds of thousands of Americans simply fell of the grid! They didn't get a job. They just aren't being counted anymore and the 10% unemployment number is reduced by their "loss"
This is everything we need to know about how seriously the Obama administration is tackling unemployment. Statistical tricks and the blame game.
Earth to Mr. Bernstein: Those hundreds of thousands of dropped unemployed? - they're still out there!
Right now, it looks like those countries that did not spend are in better shape than those, like us, that spend foolishly and massively!
I am beginning to believe that Obama's cure for this is to prolong it, and leave us in a worse situation. There are worse things than a recession, let's hope we arent going to find out just what that is!
Sadly, Obama's big spending, anti-business, anti-capitalism approach scares the heck out of the private sector.
People are right to criticize Bush for overspending, but Obama has increased spending by a $Trillion dollars over Bush's last budget. That 33% increase in spending scares the heck out of the risk takers and job creators.
The GOP is like a pack of cavemen, but the Democrats are like that "Nowhere Man" character from the Beatles' "Yellow Submarine" -- an ineffectual, disconnected twit.
1. Get OUT of Iraq and Afghanistan
2. Tell Israel NO, Iran will NOT be attacked, Iran has broken no treaty nor law
3. INVESTIGATE 9/11 because the official story stinks to high Heaven
4. Hang every man in a suit in Goldman Sachs and the Treasury Department. A mass public execution. Then implement Glass-Steagal II.
5. Prosecute Bush43/Cheney/Rumsfeld et al for stark war crimes -- torture is illegal under ANY circumstances
Oh, and it would be nice if the US stopped rewarding corporations which offshore US jobs with tax breaks. If you sell it here, you'd better MAKE it here.
TrimTabs uses actual tax receipts data, and shows a total increase of 1.1 million of people that stopped looking for work. If that was included in the latest .gov figures, it would have looked much worse.