September Jobs Report Confirms Economy Remains Anemic
Another month, another bad jobs report.
The last employment report before the mid-term elections confirms yet again that while the economy may be not be in recession, any recovery we are in is a recovery in name only:
The economy shed 95,000 nonfarm jobs in September, the Labor Department reported Friday, with most of the decline the result of the layoffs by local governments and of temporary decennial Census workers.
The steep drop was far worse than economists had been predicting.
While total government jobs fell by 159,000, private sector companies added 64,000 jobs last month. The unemployment rate, which measures the percentage of workers who are actively looking for but unable to find jobs, stayed flat at 9.6 percent.
The recovery that officially began in June 2009 has slowed considerably in recent months, raising concerns about the long slog the country will have to endure before the economy finally starts to feel healthy again. Private payrolls have been growing throughout 2009, but at a rate too sluggish to make much of a dent in unemployment. The outlook for the rest of the year is equally discouraging, economists say.
“We’re looking for companies to get more confident in the pace of recovery and start to hire around 150,000 jobs a month, which is what we need just to keep the unemployment rate flat,” said John Ryding, chief economist at RDQ Economics. “But I just don’t see that happening between now and the end of the year. There’s too much uncertainty.”
And that uncertainty is likely to continue at least until the end of the year, or whenever it is that Congress gets around to taking action on matters ranging from the Bush tax cuts to health care reform. What’s clear at this point, though, is that there are no arrows left in the government quiver, and there is no quick fix for what is looking more and more like a long-term employment problem.
This much is clear, though; there is no good news in this report for the Obama Administration or the Democratic Party as we head into the final three weeks of the campaign. When it comes to the “are you better off now than you were four years ago ?” question, the answer for most Americans is clearly no. And that’s bad news for the incumbent party.
On Morning Joe the quasi-Republicans were all about “what’s Obama’s plan to create jobs?”
These are the same quasi-Republicans who are usually like “government should get out of the way.”
Now, the simple truth is that there’s not much a President can do about a business cycle, let alone a credit bubble that is past the bust phase … but you know, its easier for talking heads to demand an easy answer than to explain why there isn’t one.
I’m also frustrated that some quasi-Republicans will bridge the problem with a “just so” story, cut taxes (again) and “just so” everyone will get a high paying job. Never mind (no really, put it out of your head) that this didn’t work in the 2000’s.
We need to restructure our taxation to make it more uniform, and we need to restructure our spending to make it work within the budget. Dems who want to maintain or extend the structure are wrong, obviously, but so are Repubs who respect the structure, wanting only to hold it in check.
Especially now, gridlock is not a sollution. Gridlock is a ticking budget bomb.
I thought Republicans like yourself thought cuts in govt jobs were a good thing Doug? And that’s where most of the loss occurred(159,000). The private sector added jobs(64,000) but if you want to increase that pace then the economy needs added stimulus beyond a declining dollar (which will help exports), demography and slowly recovering consumer demand.
Is Christie’s cancellation of the tunnel project likely to aid or hinder job growth in NJ do you think? This is why the Fed is considering some QE but this is really pushing on a string when interest rates are already on the floor but it’s an admission that the Republicans are blocking the requred fiscal stimulus to get the economy back into high gear. Tell me Doug, which is a more surefire creator of jobs: buying a trillion dollars worth tunnels, bridges, highways, mass transit systems etc or buying a trillion dollars worth of long bonds?
Those were temporary census jobs, they add nothing to the economy. As with most government workers, they were dead weight collecting a pay check made up of my tax dollars. Good riddance.
Also Joe, going into debt to build a tunnel that the State of New Jersey cannot afford will not create any real economic growth. It will just shift funds from one party —- taxpayers — to a politically favored party —- construction unions and politically connected (and largely corrupt) construction companies).
That’s not my idea of economic growth.
John Personna, you may have missed the part of the program where the Democrat Donny Deutsch said that Democratic CEOs tell him all the time that they are not hiring, and don’t expect to for years, because of low consumer demand, concern over Obama’s tax policies and concern over Obama’s regulatory policies. It seems like Obama could do something about two out of three of those things, and I think it wouldn’t hurt for him to try to find a credible “morning in America” voice.
I didn’t watch all the show today PD, but I did see that and tried to process it fairly. I think consumer demand is most of it. No one hires more machinists when the current crew can handle production. Lower taxes don’t make managers hire people to sit around.
If you have demand, it’s hard to believe that taxes are so high now that turning away work is a better deal than hiring.
Especially given that taxes are not at all at an all time high. In fact, this guy’s data says the total tax burden is at a 40 year low:
http://wallstreetpit.com/22914-average-u-s-tax-burden-at-40-year-low
Interesting graph that contrasts “tax freedom day” based on taxes paid and on the hypothetical if we actually covered what we spent.
So no, I guess I don’t buy Donny Deutsch’s argument. It is more of that “just so” that everything would be better if we paid even less of our bills.
(The health care bill was meant to press the issue and force a flip to full nationalization, I think. Too bad that it might come to that kind of “forward or back” decision in such hard times.)
“Those were temporary census jobs, they add nothing to the economy. “
I”m afraid that’s an economics fail. Any job would be stimulative. Those paychecks were spent, not burned. If you argue that they weren’t enough you end up with Krugman, probably not where you wanted to go.
Doug Mataconis says:
Friday, October 8, 2010 at 09:15
“As with most government workers, they were dead weight collecting a pay check made up of my tax dollars. Good riddance.”
Most govt workers are dead weight and the incomes of the temporary census workers added nothing to the economy. Is this how they teach elementary economics at George Mason? So why are you whining about job losses Doug?
The issue is not simply tax reductions; it’s the uncertain business climate created by an activist government that would behave unpredictabily if given a chance, and tax increases that take more money out of the economy, most likely to pay debt.
Doug Mataconis says:
Friday, October 8, 2010 at 09:19
“Also Joe, going into debt to build a tunnel that the State of New Jersey cannot afford will not create any real economic growth.”
My jaw dropped when I read this. Most major public infrastructure projects in this country are largely financed by debt or didn’t you know this? It’s how public financing works. The Interstate system didn’t contribute to economic in the 50’s? Are you kidding. Even the awful big dig (which no Bostonians would now give up btw) whatever the failings of execution added hugely to economic growth in Mass for godsake.
PD Shaw says:
Friday, October 8, 2010 at 09:44
“The issue is not simply tax reductions; it’s the uncertain business climate created by an activist government ”
Well Christie certainly added to the the uncertainty in the business climate in NJ this morning didn’t he? Spoiled Tony Soprano’s cornflakes.
Joe,
New Jersey doesn’t have the money. It’s that simple.
Would it be great to build a tunnel ? Yea
It would also be great to fund a mission to Mars, but thanks to decades of fiscal irresponsibility from Democrats and Republicans we cannot afford to do those things anymore.
“The issue is not simply tax reductions; it’s the uncertain business climate created by an activist government that would behave unpredictabily if given a chance, and tax increases that take more money out of the economy, most likely to pay debt.”
I’m trying to parse that for content, PD 😉
Seriously, what worries me is that you can always say that, at any tax or spending level. It doesn’t help us narrow in on the optimal. That is, if we are worried about the optimal, rather than taking the politically convenient “always less.”
I should say that I just have this simple outlook. You pay your bills for this month, and then you plan for the year ahead. You make something that works. If you can reduce future spending, that is awesome, but you can’t just wish away current bills.
The Republicans bug me because they don’t want to pay the bills before making the plan. They are still in the mode that a broken budget is better than a balanced one.
Seriously, look at the California anti-25 campaign. Republicans are directly campaigning against balance, because balance might mean higher taxes.
Doug Mataconis says:
Friday, October 8, 2010 at 09:57
Joe,
“New Jersey doesn’t have the money. It’s that simple.”
No it’s not that simple and were not talking about missions to Mars but a massively beneficial public project. But I can see you prefer rather silly over simplifcations rather than attempting to back up the utterly absurd (not to say weird) assertion that this project would not create economic growth in NJ.
Beneficial or not Joe, they don’t have the money
Or, to put it another way, which parts of the state budget would you suggest be cut to pay for this ?
Doug Mataconis says:
Friday, October 8, 2010 at 10:23
Beneficial or not Joe, they don’t have the money
“Or, to put it another way, which parts of the state budget would you suggest be cut to pay for this ?”
What a stupid question since I’m not familiar with the details of NJ budget. Many are pointing out a modest rise in the gas tax would have covered the over run but its been rejected on ideological grounds. I don’t know why, Christie promptly reneged on his no tax hikes pledge and raised property taxes when he took over. This is an exceptionally dumb move as even your buddy Mr Joyner seems to understand.
It may be a dumb move in the long term, it may not.
My point is that, realistically, there was no other choice. Austerity is the only answer to government spending that has gotten out of control.
Only an idiot would vote to balance the budget with democrats in charge of spending. The only way to balance the budget is to decrease spending. Increasing taxes only adds to the problem. As the tax base gets smaller and more people depend on Government for their paychecks, the taxes on the only two people working in the private sector will get high. Which is what most of the lefty commenters here are doing. Getting high.
Zels, the Repubs have not even suggested a reduced spending plan. The only promise one later, after they lock in some more tax cuts. Fool me once, ….
> it’s the uncertain business climate created by an activist government
Really? The fact that the previous administration left office with the economy teetering on the brink of a depression has nothing to do with it?
> they don’t have the money
Sort of like the billions we spent In Iraq, both on prosecuting the war and infrastructure projects that the iraqis seem to have very little interest in. The GOP was pretty much silent on spending that money which we did not have.
Here in SF we have major, long overdue infrastructure projects up and running with stimulus funds. At least we are running up debt on projects that will benefit Americans. I can’t fathom why the GOP has no problem with debt funded projects in Iraq, but goes ballistic over debt funded rebuilding of our crumbling infrastructure here at home.
BTW, Mars fails on three counts. 1) current and near future tech makes it a brute force effort. 2) few are willing to talk about what that kind of brute force effort would cost. 3) whatever meager benefits might be found will still be there in 50 years.
GWB only liked the promise of mars as a distraction – not like he’d have to pay for the promise.
The current policies are failing us. New policies can’t hurt and will likely help. Why can’t are resident liberals understand that?
anjin-san, pay attention, the question is whether there are things the federal government can do to improve the jobs situation today. Unless you want to borrow $1 trillion to study creation of a time machine.
Uncertainty.
Tax Policy.
Regulatory Policy.
The loss of the public sector jobs is fairly tragic since it could have easily been prevented with minor deficit spending and from everything I’ve read seem to be coming mainly coming from law enforcement, education and social programs, which will only hurt us in the long run. I don’t see the argument that public jobs are a drain on the economy. that statement needs to be thought out and explained. A dollar spent by a teacher is just as good a dollar spent by a lawyer.
At the very least government jobs are redestributive, which I don’t see as a bad thing, because it gets some small amount of money back to the middle class where it is needed.
Corporations (and the upper class) are holding on to money, rather than put it back into the economy. I don’t buy the argument that regulations or high taxes are keeping them from spending; if that were the case then they wouldn’t have any money to spend, but they aren’t having any problems buying off debt or shoring up stock prices… which doesn’t help anyone but themselves and that only in the short term.
I’m not willing to directly tell corporations how to spend their money, but it seems to me if they are unwilling to take risks, in as favorable an environment as this is, to expand their product lines and/or improve service, then public policy needs to be adjusted to increase competition. Let’s get rid of the companies that are no longer “hungry” and unwilling to take chances. Blow up the near monopolies that were created over the last decade, they are only a drain on the economy.
PD, you forgot tariffs 🙂
As for the NJ tunnel project, I have no real opinion since I’m not in that area, but it is the governor’s job to make these kind of decisions. I’m a wouldn’t get into any long term project that I didn’t have a pretty damn good idea how expensive it was going to be and I wouldn’t expect a state to either. I understand the short term argument of no money over the long term benefits. The real disappointment is that cost overruns on these sort of projects are normal and expected as opposed to unusual, that screams corruption to me.
That being said, NJ is never going to get a better deal than they are now, and to blow it up over a little debt now, as opposed to having to do it later at higher price tag does not make much since AND this will hurt the economy of northern NJ, that can’t be denied. So I’ll just hope this was weighed out carefully and the answer just came up “we can’t do it” and not just some sort of knee-jerk ideology thing.
Doug,
I’m going with Brummagen Joe on this tunnel. What if we just had tax cuts and no interstate system. The interstate system added to commerce. And this is what the problem is with republicans. They give tax cuts, but it is spent money. What return did we get with the Bush tax cuts? We have nothing to show for it. You invest in your country, in your people, and in the future so that we have something to go on. China is building great things. Some may come out to be white elephants, but just the same, they are modernizing their country. We have water and sewer lines that are a hundred years old. Our country looks older than many European countries. And our public transportation system is third world. And with our jobs going overseas, we are going to have to find out what will work in our country to put people back to work.
I don’t know NJ, and so will only make a general comment that I mistrust “Cadillac projects.” They are often driven by the mindshare and funding they can accrue rather than the hard cost-benefit accounting. Out here in California we have a broken budget and a high speed rail project. I think that’s more about the excitement of high speed rail and the proposition process, rather than that this would actually be the best leverage for future growth.
Is the tunnel the best project for possible return, or just the one with institutional momentum? That’s what I’d ask.
“Why can’t are resident liberals understand that?”
“That” being…:” New policies can’t hurt and will likely help.”
You are right Steve. This liberal just can’t understand that. To be honest, not only can I not understand it, it strikes me as one of the dumbest things I have read in a long time. You really think that “new policies” (whatever they might be) could not possibly end up hurting us? Really? How does that work?
New policies can’t hurt
I do love magical thinking.
Doug,
Would you favor a cancellation of all big budget military items (ships, planes, etc.)? They would be beneficial, but they are expensive and we have perfectly fine ones now.
Doug Mataconis says:
Friday, October 8, 2010 at 10:31
“My point is that, realistically, there was no other choice. Austerity is the only answer to government spending that has gotten out of control.”
This conversation borders on the surreal. Actually there were many of other realistic choices. I have to say, Doug only someone with your economic savvy could publish a thread bemoaning the lack of job creation in the private sector and then applaud a decision to cancel a project that is being two thirds funded by others and will create literally tens of thousands of jobs in the private sector in NJ over the next ten years. I expect this sort of bumper sticker balls from the financially unsophisticated but not someone with JD.
“Is the tunnel the best project for possible return, or just the one with institutional momentum? That’s what I’d ask.”
Perhaps if you lived in NYC/NJ you’d know the answer. And if we’re outlawing projects with “institutional momentum” that disqualifies just about every major public infrastructure project undertaken in the country in the past or future.
It’s still astonishing to me that for Republicans, there is simply no alternative to cutting all spending on all public works. They’re so ideologically blinded they can’t even remember that there is indeed an alternative. Taxes are at a historic low, and having taxes at this low level has done the nation absolutely no good.
We managed boom times when the top marginal rates were in the 90s. Now it’s the end of the world if we even suggest raising the top rates to where they were ten years ago — back when the economy was strong.
The alternative to cancelling the tunnel because “they can’t afford it” is to raise taxes on gasonline a penny a gallon. You may not like this, either because of ideology or because you don’t enjoy paying that extra penny, but to say it’s not an alternative is insane.
” You may not like this, either because of ideology or because you don’t enjoy paying that extra penny, but to say it’s not an alternative is insane.”
I was literally open mouthed at the economic ignorance/denial(whichever it is) betrayed by Doug’s comments here and on another thread that drifted in the same direction of “da tunnel.” Even that partisan hack McArdle at the Atlantic thinks this is loopy. Perhaps I shouldn’t have been since a couple of weeks ago Doug was extolling the superior economic knowledge of Victor Hanson over Paul Krugman. I think Jim needs to get some conservative economic writer who understands the fundamentals at least because Doug is out to lunch here.
Krugman is an idiot.
Krugman is obviously not an idiot. He might be a caution though, about the way smart people can talk themseleves into things, or defend not-so-good things with excellent arguments.
The sad thing is that it’s hard for us outsiders to tell. Krugman might be defending a bad idea (that we needed a bigger stimulus) or he might be right.
A lot of folks are looking at recent jobs numbers and saying “hmm, that level of stimulus didn’t work.” So the alternate paths were more stimulus, or less.
I warned in these pages that austerity was in our future, months ago. I warned that no one really wanted to think about what that meant.
For those who don’t follow the economics: austerity does not mean the government has fitured a way to create new jobs. It means we are hunkering down to take the pain and wait for the natural recovery, whenever that comes. See also: Greece.
“It means we are hunkering down to take the pain and wait for the natural recovery, whenever that comes. See also: Greece.”
The natural recovery is occurring which is why the Dow broke 11,000 today. And there’s not much similarity between our situation and Greece who are having to spend 9-12% to borrow long term money while we’re paying just over 3.5%.
Since I think market economies always come back, given time, I guess I say in that sense recovery is happening. But in the sense that the first derivative is improving at this moment, not so much.
I’ll outsource to Felix Salmon for a summary:
Time’s running out for job growth
Oh, I know employment is a lagging indicator, but we normally don’t see the signal “ring” to a new stability at a high level. I look (as a physical scientist) at the up and down numbers convertging and I see “ringing,” not a roll over in a new direction.
Ah, and we must remember that fear of QE2 can drive up equities, not for future (natural) earnings:
http://moneywatch.bnet.com/economic-news/blog/maximum-utility/the-employment-report-why-is-the-stock-market-rising/914/
john personna says:
Friday, October 8, 2010 at 17:12
“Since I think market economies always come back, given time, I guess I say in that sense recovery is happening.”
At some point you will be right. There will be another recession.
anjin-san, pay attention
PD, pay attention. I will post in any manner I please. If you want to be a hall monitor, start your own blog, or go back to high school. You can get a cool orange vest and run around telling people they are breaking the rules.
> Democratic CEOs tell him all the time that they are not hiring, and don’t expect to for years, because of low consumer demand, concern over Obama’s tax policies and concern over Obama’s regulatory policies
Well, they are probably not going to come out and say “we are not hiring because we have actually been able to let a lot of people go. yet still have large productivity gains because the employees we retain will work like dogs to keep their jobs. Also, we had a great deal of fat in our operations, which is one reason we were in so much trouble not long ago”. Nope, it’s a lot easier to pass the buck.
You don’t need a time machine to know that CFOs throttled way back on spending in 2008 Q4, and that they have not turned the faucet back on in terms of hiring. There has been an improvement in the capital spending picture this year, because equipment wears out and becomes obsolete, and you can only defer some things for so long.
Are CEOs unhappy about Obama’s regulatory climate? Of course they are. Obama actually has a regulatory climate. Bush handed corporate America a wild west environment where they could do pretty much as they pleased. So we end up with Enron screwing the entire state of California, where millions of the taxpayers the right professes so much concern for live. Oh yea, Bush’s good friends at Enron made out like bandits. Literally.