Friday, November 02, 2012

Job report means little

What will today's job numbers mean for the election? I don't know but I suspect not too much.
What should they mean? Absolutely nothing.
The way in which we await these estimates during election cycles would be amusing were it not so wrongheaded. We act as if some oracle is about to give us the one missing bit of information that will permit the "independent-minded' to pass judgment on the performance of the incumbent.
We'll hear the normal spin today. There are new jobs but the unemployment rate is up. The unemployment rate is up but more people are in the work force. More people are in the work force but labor force participation rates remain down and the "real" rate of unemployment is still much higher than the official rate.
Here is what we know. We've known it for a long time. The recovery has been awful - historically awful. It is one of the worst in our history. There is no room to argue about that.
What we do differ on is why this is so. The President's supporters say it is because the recession was so deep. His critics point to evidence that this is a mistaken assumption - deep recessions tend to be followed by more robust recoveries. They argue that the President has spent mightily - turning the federal government into a fiscal basket case - with no discernible effect.
I believe that the critics have the far better case. You may differ. One month's job report is unlikely to - and really should not - cause either of us to change our minds.

Cross posted at Purple Wisconsin


Anonymous said...

Uh huh.

I see you still refuse to accept any evidence that this recovery is slower because it's a massive de-leveraging by businesses and consumers. De-leveraging takes longer to recover from than high interest rates, ala 1982.

You view this recovery as worse because you want to. If the guy in the White House had an "R" after his name and everything else were equal, you'd be saying what I'm saying.

The difference between us is that I'd be saying it either way.

Anonymous said...

Prof, do you think Romney's "Jeep production to China" ad is, how do you put it, "in good faith"?

Anonymous said...

Better yet Prof, do you think Romney's huge financial bet on a government auto bailout through his "blind" trust is incongruent with his statements as a presidential candidate?

Anonymous said...

"What will today's job numbers mean for the election? I don't know but I suspect not too much. What should they mean? Absolutely nothing."

Yet, once again, the professor couches his statements by making the implication that THE reason for our lack of jobs is Obama's agenda..even though presidential economic policies are ONE of SEVERAL factors for causing a stagnant economy.

Yet didn't the professor pen a column some months back in which job reports DO matter (in this case the story was about Walker)? So, do they only count when it fits a particular narrative and time period?

"We'll hear the normal spin today."

Indeed, professor, indeed. Perhaps look in the mirror first. But, silly me, you are "independent-minded".

Anonymous said...

Presidents don't have a lot of control over the economy, unless I need them to for partisan reasons...

Jobs reports don't mean anything, unless I need them to, for partisan reasons...

Rinse, wash, repeat with no evidence of self awareness whatsoever.

That's the power of emotion related to tribalism. It's all post-hoc reasoning after that.

On both sides.

rodman820 said...

Wisconsin's independent voters should consider the fact that, in many respects the current recovery mirrors that which took place in Reagan's first term; with two significant exceptions:

1. In the last 2 years of Reagan's first term public employment at the state and federal level increased significantly. In other words Government got bigger and employed a lot of people, driving down unemployment.

Public employment under Obama has remained virtually static at the Federal level, is declining now and has shrunk significantly in other sectors (State, county & local). This is accompanied by a predictably stifling effect on unemployment rate reductions.

2. In the last 3 years of Reagan's first term Federal spending increased significantly (because it could), pumping massive amounts of capital into the economy in the mother of all stimulus packages. This injection of capital spurred growth and helped create jobs, albeit at the cost of significant annual deficit increases.

In the last three years of Obama's first term, Federal spending has SHRUNK (yes, really) as a percentage of GDP. Having come into the recession with staggering deficits already in place and a total debt that had doubled under the previous, 'conservative' administration; there was no option for the massive annual injection of new spending that Reagan utilized. Note that while deficits have remained high over the past three years, this is primarily due to revenue losses due to the recession NOT spending increases.

Other significant metrics, such as the creation of new private sector jobs and overall unemployment rate are almost identical. Unemployment was 0.3% lower at the end of October 1984 than when Reagan took office. It currently stands virtually equal to the 7.8% rate that existed when Obama took office. Both Presidents experienced a sharp increase to over 10% during their first 3 years and both saw that increase offset by election time.

But, under these numbers lies yet another difference. The drop in employment was in full swing and much sharper in 2009 than in 1981-82. In fact, unemployment was DROPPING when Reagan took office. The economy had added 10.1 million jobs during the Carter administration. This trend reversed and unemployment spiked mid-way through Reagan's first year. So Reagan inherited a growing economy, which then reversed course, went into a soft decline and recovered again during his first term.

Overall job losses (since the beginning of the down-turn in 2008) inherited by Obama were 256% of those Reagan oversaw, then overcame. In short the problem faced by Obama was 2 1/2 times as large as the one Reagan faced and the recovery path has been largely parallel.

Are we yet where we need to be? No, certainly not but we now are faced with slowly rebuilding a new, real economy without the aid of new spending and new public employment. Of course it will be slower, but it may, if we are patient enough to wait for it, prove to be stronger and longer.

GOP strategists hope that Independent voters will look at the issue simplistically, ask "did Obama solve the problem completely?" and vote accordingly. I think Wisconsin's independents are smarter than that. I think they can and will assess the broader, complex reality and vote to continue our sure, steady climb out of the abyss of the Bush years.

The above facts are derived from the following BLS data series:

Go to the Bureau of Labor Statistics website and enter the series number under "databases and tools".

Anonymous said...


But, those facts are not in line with what I WANT to believe.


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