Outside the Beltway

Economists, traders, and politicians spend much of the first week of any given month these days looking for hints as to what the monthly jobs report that comes out on the first Friday of each month might show. One of those data points is the job survey by ADP, the automated payroll company, and the report for May doesn’t look good at all:

Companies in the U.S. added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today.

Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 175,000 advance for May.

Such gains in employment are insufficient to help the world’s largest economy accelerate after a surge in food and fuel costs earlier this year. Businesses added 207,000 jobs last month after a 268,000 gain in April and the jobless rate dipped to 8.9 percent from 9 percent, economists project a Labor Department report to show in two days.

“It is a warning shot across the bow that job growth is also weakening along with the other high frequency numbers,” Eric Green, chief market economist at TD Securities Inc. in New York, said in an e-mailed note to clients. “The weakness reflects a general slowdown and turn in sentiment that set in with the sharp rise in energy prices, disruptions from Japan, and to a lesser extent risk aversion stemming from the Greek fiasco.”

We’ve seen in the past that there sometimes isn’t a correlation between the numbers in the ADP report and the figures that the Bureau of Labor Statistics releases, mostly because ADP does not survey government jobs and doesn’t necessarily include hiring by smaller firms that don’t use ADP’s services. Nonetheless, the figure itself is so depressingly small that even a Friday jobs number that’s only modestly better might be seen as “good news.” In any case, though, it seems pretty clear that job creation is far from being at the pace it needs to be to start putting people back to work, and the political and economic ramifications of that failure are fairly easy to foresee.

Economics and Business, US Politics

Bureau of Labor Statistics, Japan, Jobs Report, Labor Department

32 responses to “Bad News In Preliminary Jobs Data”

Sean Paul Kelley

June 1, 2011 at 9:35 am

But my all means let us not do anything to stimulate the economy except cut taxes on those making more than $350,000 a year.
legion

June 1, 2011 at 9:55 am

Indeed. It’s being proven across Europe – First in Greece, then in Spain, Portugal, Ireland, and now the UK – that austerity programs will NOT get countries out of recessions. But that’s the ONLY thing on the table here in the US. Guaranteed failure. Guaranteed continuation.
Tsar Nicholas II

June 1, 2011 at 10:02 am

Hell, that’s nothing. Market pros have known for months that the economy once again is headed for the toilet. There are any number of not-well-known indicators that have been flashing negative, actually since last year. Most if not all of the recent “rallies” on Wall St. have been on speculation that the Fed will feel obliged to engage in a 3rd round of quantitative easing, to prop up the faltering economy and the administration.

Plus wait until the fiscal-budget years for states, cities and counties turn over in July. A little known fact (and unreported too, for obvious reasons) is that there will be several hundred thousand net public sector jobs jettisoned this coming fall and winter. Local governments are broke and it turns out that funneling devalued money into Democrat districts so union thugs can watch each other not fix potholes wasn’t the panacea for which the administration had hoped (go figure).

Regarding the political impacts they are of course obvious. But that doesn’t mean Obama is toast next year. If Palin runs Obama wins — regardless of how bad off the economy is next fall. Even without Palin in the race Obama has a very high likelihood of getting reelected. If Romney is the nominee literally millions of evangelical Christians will stay home and not vote, solely on the Mormon issue. That alone might be enough to reelect Obama even in the face of a horrible job market and of course a catastrophic housing market. There remains the possibility of a third-party candidacy a la Perot, in which event Obama could start chanting “death to America, death to capitalism,” and still be reelected.

If Palin doesn’t run, however, and either if Romney quickly can get through the primary and shift to the center or if Rick Perry were to run and quickly sew up the nomination, then we’re talking about a donkey of a whole other color: in that case the political bells will begin to toll for Rambobama and the media-academia-union cabal.
charles austin

June 1, 2011 at 10:12 am

By all means let’s pretend the man behind the curtain just has to turn the knobs the right way and economic growth will flow forth!
charles austin

June 1, 2011 at 10:13 am

legion, well, no. They don’t work overnight, but that doesn’t mean they don’t work. Oh, and we have ample evidence that Keynesian stimulus doesn’t work either, but it does leave us with the further need for the, ahem, austerity programs.
legion

June 1, 2011 at 11:06 am

I’m not sold on everything Keynes said, but the idea that during downturns gov’t need to spend to maintain GDP when companies won’t seems reasonably intuitive to me. But that’s just a short-term fix. The solution is to get companies to spend their cash reserves… I don’t know how to do that, but austerity programs that pull out social safety nets & force underemployed people who can’t get better-paying jobs (’cause there aren’t any) to spend more of their own money to survive, rather than consume, seems like a pretty solid plan for failure.

Like I said – I don’t know what _will_ fix the problem, but I can’t see any combination of circumstances where austerity improves things…
Axel Edgren

June 1, 2011 at 11:29 am

Oh, and we have ample evidence that Keynesian stimulus doesn’t work either

Such as? Obama’s stimulus was predicted by the most prominent Keynesian today to be insufficient and poorly aimed, according to macroeconomic calculations. This was due to the input of republicans.

Austerity doesn’t work. Stimulus doesn’t work. The US has the lowest tax rates for decades and still there is no trickle down. Seeing as we’re all screwed no matter what we do, why not at least stick with the guys who are not homophobes and womb-enslavers?
Axel Edgren

June 1, 2011 at 11:35 am

legion, you need to understand that making the poor and welfare-dependent suffer will make them stop enjoying being poor, and like Pavlovian dogs they will conjure jobs out of thin air by pulling their bootstraps hard enough.

Likewise, fellating the rich and capital-owning will stimulate them to ejaculate new technologies and jobs all over us. Even though they haven’t invested so far, we just need to lower their taxes a little more and they will suddenly find millions of positive-NPV investments!

Never mind the fact that small business owners would mostly not be affected by tax cuts for those with incomes over 250K. Never mind the fact that the main reason people don’t dare to start businesses or be flexible when choosing jobs is healthcare costs. Never mind the fact that privatizing healthcare doesn’t bring down costs.

Making the poor suffer just for the sake of it and obeying the rich is the only moral thing to do. And if we do the moral thing, the ghost of Reagan will bless us anew.
Jay Tea

June 1, 2011 at 11:40 am

…unexpectedly.

J.
Axel Edgren

June 1, 2011 at 11:51 am

Could any right-winger explain how Obama causes jobs to be scarce by not being neo-liberal/right-wing enough? Remember that the bible or Ayn Rand are not macroeconomic or microeconomic texts.
Jay Tea

June 1, 2011 at 12:18 pm

Well, Axel, there’s the whole uncertainty angle — nobody knows what the “cost of doing business” will be, but they do know that if Obama gets his wishes, it will be “more.” So they don’t know how much new employees will cost them.

Then there’s the surge in government jobs. Private industry has to compete with the government for employees.

Then there’s the Obama tendency of demonizing businesses. Why should Big Oil invest in new employees, when they’re going to get pounded in taxes, fines, penalties, and any profits they make be taken away?

That’s from the Book Of Common Sense, Axel. I understand if that’s not something you’re overly familiar with.

J.
Moosebreath

June 1, 2011 at 12:28 pm

Jay Tea,

Wow — 0 for 3 in one post.

Please check recent monthly jobs reports, broken down into private and public sectors. Since the beginning of 2010, we’ve had an uninterrupted string of private sector growth, and public sector job losses (census jobs excluded).

As for demonizing business, please point to any actual evidence, not what you hear on Rush’s show. To the contrary, Obama has coddled business by weakening every proposal made, especially on the financial industry who has been responsible for the Great Recession.

Finally, it always amazes me that people can say Obama is creating uncertainty (but the Republicans are not) and lightning does not come down from the skies and smite them for their stupidity. It takes two to tango, but you only want to blame one.
mantis

June 1, 2011 at 12:39 pm

Why should Big Oil invest in new employees, when they’re going to get pounded in taxes, fines, penalties, and any profits they make be taken away?

Jay thinks Obama takes all the oil profits away. Jay doesn’t not live in reality. This will be unsurprising to most of you. He will lecture you on common sense while demonstrating he has none himself. Like most any wingnut.
Axel Edgren

June 1, 2011 at 12:45 pm

Removing oil subsidies is anti-corporate hatred. The Galtian overlords are tender and easily spooked indeed.

And like I said, if there is one thing that creates uncertainty for corporations and businesses, it ain’t too high wages, powerful unions, an unprecedentedly huge tax hike (as if corporations don’t pay much less taxes today, and not even that with all the loopholes) or the prospect of being nationalized or somesuch. It’s the ailing and ridiculous health care system Obama has started to improve.
Axel Edgren

June 1, 2011 at 1:20 pm

Ending Medicare, so that millions can no longer consume as much as before in one pretty fell swoop? That doesn’t create uncertainty!

Making the US default, setting off another really big financial crisis and recession in the middle of a slow recovery? The prospect of that sure doesn’t make any businesses nervous!

But food stamps and Pell grants? THE POOR ENTREPRENEURS ARE LYING SLEEPLESS!
legion

June 1, 2011 at 1:52 pm

Indeed. If “Obamacare’ went through, at least companies would have some vague idea of their expenses. The Republican response is to take _all_ possibility of guessing correctly out of the equation – typically, they blame Obama for what they themselves are actually doing.
Axel Edgren

June 1, 2011 at 1:54 pm

If “Obamacare’ went through, at least companies would have some vague idea of their expenses.

“YEAH, 100 % OF ALL THEIR PROFITS HURF DURF!!”
ej

June 1, 2011 at 2:16 pm

Axel,

“Obama’s stimulus was predicted by the most prominent Keynesian today to be insufficient and poorly aimed, according to macroeconomic calculations. This was due to the input of republicans.”

Nice revisonist history there. Think a link is needed on that one. .

But what people miss here is that fiscal policy regardless of what you do only has an effect on the margins. There are actual real dynamics going on that drive economic events.
ej

June 1, 2011 at 2:24 pm

mantis et al,

Just out of curiosity, what percent of income do you currently think oil companies pay in taxes?
ej

June 1, 2011 at 2:25 pm

and a correlary to that question, who do you think are the people who ultimitaly pay those taxes?
Axel Edgren

June 1, 2011 at 2:34 pm

Nice revisonist history there. Think a link is needed on that one. .

No, you disrespected me by not even bothering to write correctly when addressing me, so you can find the actual prognosis yourself. Krugman predicted the stimulus would be insufficient, and he is the best prognosticator out of all candidates and a very prominent Keynesian. Google, you silly goose.

and a correlary to that question, who do you think are the people who ultimitaly pay those taxes?

If it writes like a troll, and habitually gives oil companies total deference like a troll, it might just be a troll. Or a freeper.
legion

June 1, 2011 at 2:35 pm

Well, ej, in about 10 seconds looking through my rss feed, here’s something from Noble Laureate Paul Krugman titled, appropriately enough, “How Did We Know The Stimulus Was Too Small?”
Secondly, what exactly are you suggesting? That all corporate taxes get passed on one-for-one to consumers, so all corporate taxes are pointless & should just be converted to income taxes? I wonder how the richest of the rich would feel about that…
ej

June 1, 2011 at 3:42 pm

Axel,

The beauty of these things is that you can’t possibly know what the effect of it is after. If it doesnt work, then you can just say well we needed more. Even if more was ideal, the projections on this thing where for it to do much more than what accually happened. You can then say well the problem was bigger, but theres no way to test this. All this becomes is a useless projection game of faith – either you believe or not. Do you really think you get your spending preference because you understand macro models or because you are a liberal who like spending regardless? Even krugman is not an expert in this area. He did all of his work in international trade – he has done nothing nothing with macro theory. So he is just as much of an expert on this area as any other economist – and this is an area that is not well agree upon. Hes just willing to become a political hack for NYT readers.

And what Krugman, and most people neglect to include in his analysis in that article is that the stimulus was not in isolation of itself. The automatic stablizers (safety net spending increases and tax reductions) that occur automatically with the slowing economy already added hundreds of billions of dollars to deficit spending, plus the budget that year also added hundreds of billions and was often dubbed “stimulus II.”

The output gap was about $ 1 – 1.1T per year as 2009 was starting (2 trillion over a two year period, which is what Krugman states). The anuual deficit increased from 170 billion in 2007 (at zero output gap) to 1.4 trillion in 2009 for a net fiscal stimulus of about 1.2 trillion. The federal government borrowed and spent an amont similar to all the gap that was present at the start of 2009.

I guess i’ll give him at least some pre consistancy in his calls for even more spending – but he always calls for more sending regardless of what is going on (and somehow the deficits following the 2001 recession were not stimulatory but following 2008 where) but that was not the choir that was going on that the time – strong advocates of this stuff where not screaming for more and it was just big bad powerless republicans that somehow made it smaller.
ej

June 1, 2011 at 3:46 pm

legion,

what im interested in is knowing what you and others actually think the status quo it? What do you think big oil companies pay in tax currently?

Because people like you always think theres more to tax – no level is ever “fair.” What exactly is a company’s “fair” share anyway? What rate do you think they should be paying?

And yes, corporate taxes have to fall on real people. And they fall in some combination of higher prices for consumers, lower wages for workers and lower returns on capital. Considering the latter can move wherever it wants and has more subsistutes, the burden falls mostly on the prior two.
mantis

June 1, 2011 at 4:20 pm

I’m not really interested in what you’re curious about, ej, but you may want to keep in mind that I made no case whatsoever about the tax burden of oil companies. My point was to demonstrate that if Obama is really going after oil profits, as Jay contends, he’s doing a pretty piss poor job of it, considering their profits are only going up (and up and up).
ej

June 1, 2011 at 4:38 pm

mantis,

Oil company profits are very volatile depending on where oil prices move. Over the long run returns on investment, or sales margins etc, are no higher than any other industry. I’m sure you weren’t complaining when the industry was losing huge amounts onf money in the late 90s or when their profits kept goign “down and down” when oil fell through the floor starting in the summe rof 2008.

But I’d like to still know what percent of income do you think oil companies currently pay in taxes? And what would be a “fair” amount in your opinion?
mantis

June 1, 2011 at 4:58 pm

Oil company profits are very volatile depending on where oil prices move. Over the long run returns on investment, or sales margins etc, are no higher than any other industry.

I am aware.

I’m sure you weren’t complaining when the industry was losing huge amounts onf money in the late 90s or when their profits kept goign “down and down” when oil fell through the floor starting in the summe rof 2008.

I wasn’t, and I’m not complaining now. Just pointing out some relevant facts.

But I’d like to still know what percent of income do you think oil companies currently pay in taxes?

I don’t know what oil companies’ net tax burden is, because they don’t disclose it. I know what their effective income tax burden is (quite high, in the 40% area for some), and what it comes out to after accounting for all the income they shelter overseas (quite low, as low as 0% in US federal income taxes). So most of their income tax goes to foreign governments due to our allowance of deferments and other tricks.

There are a lot of other types of taxes out there, however, and you don’t define your terms, likely because you’re simply trying to bait me. You also don’t specify if you mean taxes paid to overseas governments or to the US government. I’ve seen you here before and know your M.O. I’m not particularly interested in your quizzes.

And what would be a “fair” amount in your opinion?

I’ll give you a starting point, at least as it concerns taxes in the United States: more than 0%. And any calculation must take into account all of the various subsidies, freebie land leases, deferments, and other ways in which the companies avoid US taxes and take advantage of taxpayer land without compensation.
Ben Wolf

June 1, 2011 at 5:17 pm

I like your style, Mantis.
ej

June 1, 2011 at 5:22 pm

mantis,

Glad I got a repsonse. I’m not playing games. When people make claims on here or elsehwere without any evidence or facts, I ask them or call people out if I know its BS. If you have a problem with that “M.O.” of atempting to have something resembling a constructive discussion rather than blathering partisan lines, then I guess your interest in this site is trolling and not conversation. If I make a claim and you want to ask me a question about it, I’ll answer it.

And yes the US tax system is insanely complicated, but tax burdens are not zero. If you want anyone to belive that you need to show something.

I mixed the taxes total because large oil companies also make most of their money overseas. When you said oil company profits keep going up and up I doubt you where reffering to just US profits – so hence my reciprical verbiage.
Ben Wolf

June 1, 2011 at 7:00 pm

@ej

Citizens for Tax Justice estimates Exxon-Mobil’s long-term effective tax rate at 27.6%, and its effective tax rate in the last two years at .4%.

What’s next?
Ben Wolf

June 1, 2011 at 7:01 pm

Typo in the last post, it should say an effective long-term tax rate of 17.6% rather than 27.6%.
mantis

June 2, 2011 at 11:04 am

When people make claims on here or elsehwere without any evidence or facts, I ask them or call people out if I know its BS.</i.

What claim did I make without evidence?

If you have a problem with that “M.O.” of atempting to have something resembling a constructive discussion rather than blathering partisan lines, then I guess your interest in this site is trolling and not conversation.

Cute. “Politics is no place for partisanship!” Who are you trying to kid?

If I make a claim and you want to ask me a question about it, I’ll answer it.

As I’ve pointed out, you were not responding to any claim I made.

And yes the US tax system is insanely complicated, but tax burdens are not zero. If you want anyone to belive that you need to show something.

Again, where did I claim that oil company tax burdens are zero? That’s what we like to call a straw man argument.

I mixed the taxes total because large oil companies also make most of their money overseas.

You mean you were intentionally vague in order to bait me into something? Yes, I know.

When you said oil company profits keep going up and up I doubt you where reffering to just US profits

So you don’t in any way dispute that oil company profits are going up, but thought you could catch me with a vague “gotcha” question in your attempt to attack that straw man you constructed? Ok then. This is why I said I know your M.O., and I’m not interested in your quizzes. Not that I hold it against you, really. I use the same tactics occasionally. I’m just saying I see you coming a mile away.

I’m not playing games.

Sure you are. It’s quite obvious.