Another Month, Another Anemic Jobs Report
The August jobs numbers may be "better than expected," but they still aren't all that great.
The Wall Street analysts are calling this morning’s August unemployment report “better than expected,” but in reality it’s just a repeat of the same anemic cycle we’ve been stuck in all summer:
With the American economic recovery showing clear signs of slowdown, private employers added 67,000 jobs in August, the Labor Department said on Friday. The number was more than forecast.
Over all, the nation lost 54,000 jobs in August, the agency said, as state and local governments, many of them grappling with severe budget deficits, cut 1o,000 jobs last month. Another 114,000 temporary Census positions also came to an end. In all, governments cut 121,000 jobs last month.
The unemployment rate rose to 9.6 percent from 9.5 percent in July.
Economists had forecast that the overall, nonfarm payrolls would decline 105,000 in August, with private employers adding 41,000 jobs.
The numbers for July were also revised, with 54,000 jobs lost, rather than the 131,000 in the initial estimate. And the private sector added 107,000 jobs, rather than 71,000.
Also buried deep in the numbers is the news that U6, the long-term unemployment number actually fell .3% in August, reflecting yet more people who simply gave up looking for work. Also, the number of people who went from full-time to part-time employment for economic reasons increased by 344,000 in August.
The stock market seems to be reacting positively to these numbers based on pre-market trading, but there isn’t much good news politically here for the Obama Administration and Democrats. If nothing else, it pretty much confirms what’s in the mind of the public already, and there’s very little chance that the September jobs numbers will be all that better.
We may not be in a double dip recession, but it’s not much of a recovery either, and that’s bad news for the incumbent party.
It is not a recovery, the two choices are “double dip” or “stalled recovery.”
http://www.consumerindexes.com
And I think that growth index is ugly enough to call double dip now.
“The stock market seems to be reacting positively to these numbers”
Well that’s probably because they are fairly good numbers when added to some of the other positive data we’ve seen over the past week. Basically, I’m coming round to Krugman’s view that the stimulus needed to be much bigger (although I think he ignores the political impossibility of making it bigger) but that’s water over the dam. Elsewhere on OTB there’s discussion of hiring incentives but that’s pushing on a piece of string really. Until demand (eg. a car market annualizing at 13 million and not 11.5 million) fully recovers either naturally or with some further help from the administration it’s going to be a longer and slower road than we’d like. Unfortunately Doug, you’re just reading the barometer not looking at what’s making the weather.
“And I think that growth index is ugly enough to call double dip now.”
We’re no more in a double dip recession than we’re in a period of deflation.
Don’t you love Joe’s pronouncements without data?
BTW Joe, did you love that market bounce off 10K a couple days ago?
Maybe I should explain it patiently, since Joe is such an overconfident buffoon:
To dispute my call, you have to dispute the Consumer Metric Institute’s growth index as a successful leading indicator of GDP.
They are fairly confident that they provide an “18-20 week” lead, and I’m kind of going with that. It is a fuzzy confidence, a call, about the future. Not, you idiot, something that can be proved false now.
http://www.consumerindexes.com/faqs.html#FAQ015
I suspect that the market’s reaction is mostly due to earnings. The question becomes how long strong corporate earning can be sustained without stronger employment growth than we’ve seen in recent months.
For day to day (and intraday!) moves, nothing beats a rereading of Fooled by Randomness, by Taleb.
“Also buried deep in the numbers is the news that U6, the long-term unemployment number actually fell .3% in August, reflecting yet more people who simply gave up looking for work. ”
Thats not true actually. U5, which includes unemployed and discouragred was flat. Also, the labor force, after falling by about 1.2 trillion over the prior three months, rose by 500k in August – so it wasnt discouraged workers on net. What happened, which you alluded to, was a higher percent of workers are now employed part time when they prefer full time work – and that component is included in U6.
The picture is still grim, but thats what technically happened.
trillion? 😉
john personna says:
Friday, September 3, 2010 at 09:36
“Don’t you love Joe’s pronouncements without data?….Maybe I should explain it patiently, since Joe is such an overconfident buffoon:Not, you idiot, something that can be proved false now.”
Although the economy is obviously anaemic there is no hard data that says we’re currently experiencing a double dip recession and (as far as I know) there are no reputable sources making that claim. Period. And once the ranting abuse starts I stop responding. ok.
Poor Joe, he thinks he should be treated politely for bullshit.
Dave Schuler says:
Friday, September 3, 2010 at 09:51
“I suspect that the market’s reaction is mostly due to earnings.”
Earnings principally and the strength of corporate balance sheets which are in pretty good shape plus other fundamentals like the strength of the Chinese economy, domestic manufacturing indexes and stabilization of the European debt crisis.
“The question becomes how long strong corporate earning can be sustained without stronger employment growth than we’ve seen in recent months.”
Quite a long time actually when you have plenty of spare capacity relative to demand levels. The auto industry is a good example, GM basically has sufficient capacity to handle a market of 13 million cars with corresponding benefit to it’s bottom line.
“I suspect that the market’s reaction is mostly due to earnings.”
Or alternatively, the data really was far better than expected. Based on the data in the article, there were actually 51,000 (August) + 77,000 (July) + 46,000 (June) = 174,000 more jobs in the economy than the consensus was before this announcement.
For the casual reader, this has been the pattern for my last 3 disagreements (Japanese style deflation, 10K support level, double dip) with Joe.
I make a call about the future, and Joe says it’s false because it hasn’t happened yet.
Is he dumb or dishonest?
I understand that calls are risky, and can be wrong. That’s part of the fun of making them. The thing is, you need the future to know if they are right or wrong, true or false. If I’m wrong in some future, I’m fine with that. I took my shot.
FWIW, another bounce off 10K reinforces the idea that a support level exists. The other two are in limbo. Increasing chatter about deflation says that more people are thinking the way I am maybe, but that isn’t proof, yet. An early call on a double dip is just that, supported by a leading indicator that has been right in the past, but of course can be wrong in the future.
I suspect the market is just acting as irrationally as it has for the past couple of years. The question is really what and how is small business doing. As far as I can tell their not doing anything and not doing well.
Our “recovery summer” has been yet another failure of the liberal policies put forth by the chosen one. Stimulus has been wasted on government projects that give little in terms of multipliers and improved infrastructure. We’ve kept the public employees happy at the expense of the economy and private sector jobs.
The cure is very simple. Extend the Bush Tax rates, put a freeze on any additional regulations, develop a real energy policy that increases supply and stabilizes prices, give a payroll tax holiday to business, and stop the government spending spree.
Government serves the people but in this upside world of the Democrats we now see the people serving the government. Get it right and we might pull out of this without too much damage.
What’s amazing about your “cure” Steve, is that it’s so close to the status quo. We have Bush tax rates, we don’t have scary future regulations, and “a real energy policy that increases supply and stabilizes prices” is fantasy anyway.
I guess Republican ranks will always believe there is domestic oil to fill every tank, and one more tax cut (like a kiss on a skinned knee) takes all the hurt away.
john personna, life’s too short to read comments that are rather consistently draped in insults.
To the substance, I think the Republican tax cut mantra has gotten old, but in terms of present policies, tax cuts have the benefit of wide dispersion and speed. Obama could close some of the regulatory dockets he opened and is not moving forward on.
We can’t stimulate the economy and create jobs for several reasons.
1. Banking and too much housing.
2. Jobs are gone and there are no jobs to go to.
3. You cannot create jobs if jobs are going overseas.
4. 2 billion cheap laborers will put pressure on the middle class and jobs.
5. The tax cuts was for the here and now and is spent money. The tax cuts do not have the stimulative effect that it had before.
6. We have had low interest rates for a long time, and the interest rates do not have the stimulative effect that it had before.
7. Supporting small business does not work in my town with factories closed down. You need traffic and employed people provided that traffic.
8. Putting tax cut money into the hands of the consumer does not have the effect that it once did, because half the products are made overseas.
9. What widgets can be built in America and not in China or some other country.
10. The 50 year old generation will have a tough time to retrain as companies replaced them with automation.
11. We have not invested in our country, in our people, and in the future.
12. We have seen ideology used by political parties to run the country and that is a failure. Again, you have to do what I said on number 11.
13. The politicians are controlled by interest groups and lobbyists and that leaves out the little guy.
14. Tons of mistakes through the years and the ignorance of what globalization/free trade is doing to our country.
15. There is no upward movement for the middle class, as we lost the jobs and the jobs that do exist pay lower wages and it is just one competitor against the other. There is no new industries to go to.
A simple tax on corporate cash reserves would be a good why to jump start hiring as well as a good way to fund extended unemployment benefits.
“I suspect the market is just acting as irrationally as it has for the past couple of years.”
Au contraire, the market is behaving fairly rationally. It’s up about 65% from the bottom because the financial system and parts of our manufacturing base have been dragged back from the brink, the economy is clearly recovering although not as fast as we’d like, corporate profitability has improved massively and corporate finances are strong, Europe has also avoided a economic meltdown, consumer spending is up, inflation is under control, job growth is happening, and the economies of China and others are performing strongly. Are there some negatives out there, sure, but the positives far outeigh them and this is reflected in financial markets not just here but overseas.
jp –
I think you are discounting, when you say “we already have Bush tax rates,” the anticipation of an increase. I know that that’s what I am thinking, and many of the business owners I speak with.
“I know that that’s what I am thinking,”
You earn more than 200k individually or 250k as a couple then?
john personna,
As a casual reader, I must say that my impression in this thread is that you are the one who is somewhat off-base. Your initial assertion was worded in a way that is somewhat ambiguous. When I first read it, I assumed that you meant that we are now in a double-dip. Thats how I would use the idea of “calling it” – “it” is something that is coming, and the moment we can confidently assert that it has arrived, then we “call it”. In that context, Joe’s rejoinder made perfect sense, and seemed to be correct.
But I see now that what you really meant is that you are “calling it” in the sense of making a prediction about what it going to happen in the future. Fine – it would have been better if you made that more explicity in the beginning.
That said, I still don’t quite understand your incredibly rude and obnoxious attitude throughout this thread. Joe’s initial response to you is still not wrong, even if he misunderstood exactly what you meant to say (as others surely did). We are not in a double dip now, which is all that he said.
One of the things that I appreciate about this site is that it is relatively rare to have the bitter ad hominem pissing contests that are so ubiquitous in Blogistan – and it is quite remarkable that this site, which attracts readers and commenters from an unusually wide spectrum, is so civil. Lets keep it that way.
Drew is correct. Everyone has expected those tax rates to disappear so an extension would be a plus. It’s not just the rich that pay, those lower down know the rich would handle the money better than the federal government and likely expand and invest knowing rates would remain stable.
The problem with our energy policy is we don’t have a realistic one at present. Gulf drilling ban? What idiocy. Why aren’t we actively exploiting out gas reserves instead of having the EPA put the kibosh on drilling and fracturing? Piceane oil? They don’t even acknowledge the potential there. What we are doing is subsidizing solar, wind and whatever else is green even though they can’t replace coal and petroleum. Spinning our wheels instead of doing what works. I don’t expect domestic oil to fill every tank but I should expect a policy that doesn’t make things worse.
Since the Dems are essentially beholding to unions and the environmental movement business has expected new rules, regulations, and interpretations that will damage the ability to compete in the world market and at home against imports. The track history is there for the Left to make it harder to make a buck and therefore employ anyone.
I expect some of our regular crew to try and punch holes in these ideas but we know what is being done now is not working and is not inspiring confidence.
@Plunk
“those lower down know the rich would handle the money better than the federal government”
And just what over the last 3-4 years would lead you to say that? Oh, and Bernie Madoff and Allan Stanford send their regards.
“It’s not just the rich that pay, those lower down know the rich would handle the money better than the federal government and likely expand and invest knowing rates would remain stable.”
Perhaps we should increase the share of income taken by the top 1% of the country from around 22% to 40% then our problems will be solved since they will make such a good job of investing it. The problem with this analysis is that investment in bonds or raw material futures aren’t likely to do much to grow the economy. When 70% of your GDP is dependant on consumer spending we need people to lay out money on cars, fancy meals and new kitchens. There is very little to invest in that brings a good return at present since our domestic economy is already over invested (ie. has too much capacity).
Tano, the Consumer Metric Institute’s data is real-time. The BEA’s GDP is cumulative data, trailing the real time. What they’ll report in future months is what is happening now.
So it is a future call about GDP reporting, based on current activity. When somene says “GDP doesn’t show” they are talking about past conditions, bubbled through the reporting system.
But I will take you all seriously, and consider that not everyone is following those numbers, or reading the “about” text there.
Given that I’d explained my forward looking calls to Joe before, I figured he had to be jerking me around. In the future I will try to be more patient.
I understand the argument, Drew, that expectations of future taxes could be holding down the economy. How would you ever prove that? I really think my consumer contraction at the above mentioned site is a little more solid.
My feeling is that for there to be hiring, there has to be buying.
“I expect some of our regular crew to try and punch holes in these ideas ”
No punching required, they already have more ventilation than Swiss cheese.
I love the notion of all the hurting people in the country fervently wishing that the government would transfer more of their tax dollars to the super-rich so that they would invest it wisely and make our lives better by buying bigger mansions. As opposed to, say, the government using that money to rebuild our crumbling infrastructure, hire cops, teachers and firefighters, regulate polluters, and all the other esential fuctions that only a government is equipped to perform.
“super-rich so that they would invest it wisely and make our lives better by buying bigger mansions.”
I wouldn’t mind if they did take it and build mega mansions but they won’t or not in sufficient volume. I’m sure building Versailles was immensely stimulative, the same with all those magnificent country palaces across England. This is one of the major flaws in the entire supply side concept. How are you going to sustain an economy where 70% of GDP is consumer spending when real incomes for 90% of the country have been flat or declining for thirty years (apart from a brief period when Clinton was president). The problem was papered over firstly by the addition of women to workforce (over 60% of married women are now working while it was in the low 20’s in the 60’s) and latterly by borrowing. Well now we’re borrowed out. Transferring yet more income to the top 1-3% of the country is not the solution.
As an example, the BEA’s most recent GDP release came on August 27th, just a few days ago, but covered activity for the second quarter (through June). Even more interesting, they are still moving their number quite a bit:
A move from 2.4 down to 1.6 was big, and we might say “especially for data months old” but, their system is very old-school. It has to be to maintain compatability with old data streams (say the 1940s) when they had no computers and etc.
So, when someone says what does GDP show? Remember that it is looking at the past, and subject to revision even then.
Joe says: “There is very little to invest in that brings a good return at present since our domestic economy is already over invested (ie. has too much capacity).”
Ain’t that the truth. The stores are full of junk. And we are out of work.
bj –
Yes, and for years, and by a wide margin.
jp –
I understand, but please don’t stand behind “prove it.” That’s a high school debating tactic in an arena where “proof” is almost unatainable.
By the virtue of my work I speak with these folks (and LOT’S) of them all the time. This what they tell me. You can reject it because on a blog the argument means nothing. But back to the real world, it means everything. And I can’t imagine that my sample set is skewed.
BTW – I’m not suggesting that “consumer contraction” (ie wealth effect) is not relevant. It is. But small to moderate sized business owners are simply frozen in time, as are many consumers.
Heh, they practice “prove it” in high school, because it teaches structured thinking. It also teaches introspection, and self-doubt. All useful qualities.
Otherwise, you know, you might take some small pool of people grousing about taxes as … the world.
bj –
The share of income earned by the top 1 or 5% and tax policy are seperate arguments. You can’t change the reasons for income disparity with tax policy. Further, killing the golden goose is simply venal and irrational.
Why don’t you sit down at your kitchen table with your favorite drink – coffee, tea, milk, Bordeaux, Jimmy Beam, whatever – and do something constructive like pencil out what you would do to enable half the population to earn more, rather than come here whining like an old women and advocating plots to steal the other halfs money.
“Heh, they practice “prove it” in high school, because it teaches structured thinking. It also teaches introspection, and self-doubt. All useful qualities.”
You know me: never in doubt. 😉
Look, this argument goes nowhere. There simply is no way to academically “prove” the point. But when you have been – like me – in the business of small business for 20 years, you have a pretty good handle on sentiment. My network is huge. Call it “anecdotal” if you like, but at your peril.
Drew: I still have contact with some medium size businesses in the mid west making widgets of one sort and another and based on my experience the only uncertainty out there is about order books. Issues of regulation, taxes, and healthcare changes aren’t on the radar except in the generic sense that the upper middle class manager/owners of such businesses alway moan about taxes etc. The fact is unless you’re making approaching a million bucks the proposed reversions in the top couple of bands aren’t material in absolute or percentage terms. For those in the 200 to 500k bands it’s a 3-4% increase your tax bill and if you’re an owner you at least have some opportunity for creativity. Most of these people are simply much more focussed incoming orders, inventories, o/h’s etc.
Yeah Bernie Madoff and Sanford screwed some people (greedy people seeking unrealistic returns). Next year it will be a new crook and new set of victims. But what about the trillions of dollars this government is screwing out of the next few generations? I’d still take my chances with business rather than a government with no morals or conscience.
It’s always the “super rich” that some complain about. Those are the people who invest prudently and expect a real return. You know, reward success. On the other hand is the government that consistently punishes success and rewards those politically connected. The idea the government has any moral entitlement to people’s earnings is part of our sickness.
No one has shot holes in anything yet but only claimed it’s already been done. You know, consensus. When you got nothing I guess that’s the tactic.
Finally, tax dollars are not transferred to wealthy except in the case of crony capitalism where the government is the truly guilty party. Keeping your own money is not taking it form someone else. If people are going to complain about transfer of money through taxes then they better start complaining about the poor rather than the rich.
Drew says:
Friday, September 3, 2010 at 14:47
bj –
‘The share of income earned by the top 1 or 5% and tax policy are seperate arguments”
Largely but not entirely in that recent tax policy has exacerbated an existing trend. And I’d venture to suggest that if you think the modest band adjustments proposed are going to slay many geese then it’s not me being irrational. And it’s a martini, and I’ll be having one in about two hours.
” You can’t change the reasons for income disparity with tax policy. ”
But you can change income disparity, I’m not advocating it, but its entirely doable and has been been widely done.
“Why don’t you sit down at your kitchen table with your favorite drink – coffee, tea, milk, Bordeaux, Jimmy Beam, whatever – and do something constructive like pencil out what you would do to enable half the population to earn more, rather than come here whining like an old women and advocating plots to steal the other halfs money.”
And it’s not the other half, it’s the other 1-3% that would be “stolen.”. And I could pose the same challenge to you. How do you sustain an economy where 70% of GDP is based on consumer spending while reducing the real incomes of 90% of your consumers. I don’t pretend that there aren’t loads of other structural issues out there but this is huge problem.
Joe, you think 70% of GDP is based on consumer spending, while also maintaining that the consumer spending data stream has no meaning?
what does GDP show? Remember that it is looking at the past, and subject to revision even then.
Maybe this is a minor point, but I did look a bit at your consumerindexes site, and I was a bit puzzled about why they (and you here) seem to think that going back to revise the GDP numbers from a quarter or two ago is somehow a bad thing. I mean, sure, we would all love to have perfectly accurate data immediately – and consumerindexes seems to promise that by stating proudly that their data will never be adjusted once published – but why should anyone take that seriously? What gives them the ability to have data which is immediately accurate, with no need to ever revise?
Tano, this is the problem of mapping two data streams with different time bases.
The GDP, as I understand it, comes from many data sources reporting. Some might produce estimates first, and data second. Or they might get late data. It is a bureaucratic data set. I don’t mean that in the pejorative sense, but in the way data flows from one desk to the next, up the department, to the supervisor, etc. Many people touch it. It is natural in that kind of system that the number would change as data shows up.
The Consumer Metrics Institute has taken a different approach, and one that appeals to us users of the real time internest. They have systems monitoring real-time sales, electronically. The data gets from source to destination in a day, as I understand it. If they encountered errors, and the data had to be fixed, I could see them having to go back. Perhaps they are proud because their single-data data is good, without holes?
I think you have a good question, “what if they are wrong” but it seems they’ve been right recently, in the last year or so, which gave me that confidence for a fuzzy call.
The other question, especially as time goes on, and patterns of buying change, is how well the data sources they had access to, and the data sources they chose, will continue to map to GDP. Perhaps if we all started buying refrigerators with our iPhones they’d need a new feed.
“while also maintaining that the consumer spending data stream has no meaning?”
uhhhmmm don’t remember saying that. But then I’m an idiotic buffoon so it’s quite possible I’ve forgotten.
We Joe, while we are trying to be nice, after having my links you wrote:
The “reputable sources” and “period” seemed to say you were rejecting my sources.
(A similar post was lost to the filter, but no problem)
Borrowing from wikipedia, here is the GDP equation:
GDP = private consumption + gross investment + government spending + (exports − imports)
I think we can see who totals for things like government spending or imports/exports could take months to prepare, and move across many desks.
john personna says:
Friday, September 3, 2010 at 16:09
“We Joe, while we are trying to be nice, after having my links you wrote:”
I’m not being “nice” just pointing out that you’re misrepresenting what I said. Again.
“I think you are discounting, when you say “we already have Bush tax rates,” the anticipation of an increase. I know that that’s what I am thinking, and many of the business owners I speak with. ”
1) The Bush cuts were designed to go away. I suspect the brighter business owners knew that.
2) They did not do much to help the economy from 2001-2008. Why would they do much now?
I am sort of agnostic on the whole issue. I think that if you are ok with adding more debt to the economy, you can support extending the cuts. If you want to adress the debt, you do not extend them. If you want the middle course, you get rid of them for some high earner group.
Steve
Ah Joe, I quoted you and then said my interpretation of two word-sets. I was even clear in saying how it seemed, to me. How is that misinterpretation?
“How is that misinterpretation?”
“while also maintaining that the consumer spending data stream has no meaning?”
uuuuhhhmmm I don’t remember saying that. Of course I am an idiotic buffoon so I probably don’t understand the meaning of the word misinterpretation either.
P.S. There is hope for america, read Gerry W’s most cogent remarks above.
Unlike me who obviously has an anger issue with you dolts on the right, Gerry makes his points
with logic and without rancor. Again, I believe he is spot on with the jist of his list.
bj –
Enjoy your martini. But you completely miss the point. The warehouse costs $500K to build, you need a wh manager, someone to answer the phone, drivers, salesmen etc etc.
When you say to a business owner: “take a million dollar risk, and if you win, we get 50%, plus who knows what in this environment, if you lose, tough shit………..they give you the finger. Wake up.
In Japan and other countries the government backs small business loans by banks 100%.
Why don’t we do that here?
I mean, the Gubmint will guarantee a student loan, why not loans to small and medium size businesses since that is where 90% of the jobs are created.
From Money Mag, May 2010,
Even as the Fortune 500 racked up astounding profit growth of 335% last year, a whopping 761,422 Fortune 500 jobs were lost to layoffs, spinoffs, and attrition.
I just spent several days talking to senior executives for a Fortune 500 company. They were talking about how to increase market share and reach new customers. Not a peep about Obama being a socialist, an anti-business White House or the end of Bush tax cuts making the whole thing futile. Likewise nothing about throttling back on capital spending.
Re. our deflation discussions, I wouldn’t pretend Zero Hedge is the most moderate outlet, but now and then interesting ideas pop out:
http://www.zerohedge.com/article/guest-post-inflationary-policy-wmd-babyboomers
It was interesting listening to the Fox News bimbos trying to lay down some spin today when the economist they had on the show was telling them that the economy is improving and we are not in a double dip.
“When you say to a business owner: “take a million dollar risk, and if you win, we get 50%, plus who knows what in this environment, if you lose, tough shit………..they give you the finger. Wake up.”
Drew: whose taking 50%? I think you need to wake up to your math problem.
anjin-san says:
Friday, September 3, 2010 at 23:18
“I just spent several days talking to senior executives for a Fortune 500 company. They were talking about how to increase market share and reach new customers. ”
You’re basically right. This is my experience also. Drew, who may well have a network of contacts in the small business world, is grass hoppering. He makes some assertion, gets called on it, and then instead of responding grass hoppers off to some other vague assertion with no standard of proof (something he criticises others for doing). I’m certainly not anti business (I’ve been in business most of my life) but I’ve never found bumper sticker oversimplifications persuasive. Effective rates of taxation in this country are the lowest in the western world. The huge cuts Bush made had little or no positive effect, they certainly never paid for themselves as it was claimed they would, and they have contributed to the deficit problems we have. We’re now on the horns of a dilemma when it comes to taking spending power out of the economy. Paradoxically Republicans claim allowing the two top bands to revert will (by taking money out of the economy) have a disastrous impact on the overall level of demand and in the next breath are proposing huge govt spending cuts that would similarly remove demand. Summers, Geithner and Greenspan have all said reversion of the two top bands is the best course and they’re probably right.