The Economy and the Cold

The winter has been so cold around here that we’re running out of snappy “it’s so cold” lines, and have lately been reduced to likening it to certain unmentionable portions of witches’ and well-diggers’ anatomies, but the fine folks at the Bureau of Labor Statistics have helpfully provided us with a brand new cliché. Whenever the arctic breezes push the wind chills down to double-digits below zero we can now say “It’s so cold that the jobs report is lousy.”
In case you couldn’t hear the news over the chattering of your teeth, the past two monthly jobs reports have been unexpectedly lousy. We say “unexpectedly” because all the media stylebooks now require that any bad economic news be described that way, as they apparently expected the economy to be chugging along toward egalitarian utopia with Barack Obama in the White House, but even the most enthusiastic cheerleaders in the press have been forced to admit that the jobs numbers — along with other data ranging from consumer confidence to manufacturing activity to the trade deficit — have indeed been lousy. Reluctant to stop telling their favorite tale of a rebounding economy, the press has endeavored to explain the recent bad news as a mere interruption caused by various factors having nothing to do with administration policies. The devaluation of some third world currencies has been one common explanation, as is whatever mischief those darned Tea Party Republicans have been up to lately, but the most popular excuse has been the cold and snowy weather.
This explanation has the obvious advantage of plausibility. The weather has indeed been miserable the past two months in much of the country, and it’s bound to have had some chilling effect on the economy. Here in Wichita the streets have been covered with enough snow to deter the hardiest car shopper from taking a test drive, workers have stayed home to mind children taking an unscheduled winter break from school, and commerce has been frozen as solid as the Arkansas and Little Arkansas Rivers. We hear it’s been worse elsewhere, and almost as bad in places even more unaccustomed to such icy hassles, and those warm weather regions that have been spared the worst of it are probably used to taking life easy. Such awful weather likely explains some of the recent economic data, but we are not reassured that those long awaited green shoots will soon start to sprout through the melting snow.
Even before winter set in the jobs reports were pretty lousy by historical standards, showing just enough job creation to keep pace with population and not nearly enough to make a dent in the record number of long-term unemployed and labor force drop-outs, and it’s hard to see what might have brought improvement even in a mild winter. The Federal Reserve Board’s quantitative easing of gazillions of newly-printed dollars into the stock market seems to have worked well enough to entice so many discouraged workers out of the labor force to push the official unemployment rate down to 6.6 percent, just a tick ahead of the announcement benchmark for ending the scheme, and the markets have responded with a two-month slide that has abated only on the hope that things are still bad enough to keep the presses running at the mint. There’s also been an energy boom based on fracking and drilling on private lands, but the administration has been working on stopping that and the recent problems with the trade deficit suggest it might be succeeding. The economy is increasingly controlled by people who think it’s a good thing that Obamacare will pay a couple million workers to stop working and live on the dole, and that more job-killing regulation is needed to stop global warming.
An economy that is truly chugging along toward utopia, egalitarian or otherwise, should be able to plow through a few feet of snow. Many of the economic effects of the weather can be blamed on the failure of state and local governments to competently deal with the foreseeable challenges of the weather, and their inability to acquire enough salt for the frozen streets should cause some doubt about their ability to run the entirety of the economy and make it fair and sensitive and hurtful to no one’s feelings. A change in the political climate is required, and that is at least two more winters away.
If the weather is to blame for the past two months of economic data the next jobs report should be another lousy one, as February is proving the worst month yet. At this point we have no optimism regarding March, and we expect the April showers will bring a flowering of new excuses.

— Bud Norman

Happy Days Aren’t Here Again

Until last Friday we’d been hearing a lot a giddy talk about an economic recovery, but it all seems to have abruptly ended with the release of the latest jobs report.
The numbers were so abysmally bad that even the giddiest talkers didn’t bother to deny it. There was yet another dip in the unemployment rate to a almost respectable-sounding 6.7 percent, but by now everyone knows that isn’t good news. A mere 74,000 new jobs were created in December, most of them low-paying, and the decline is due more to the 535,000 who gave up trying to find work and are thus no longer counted among the unemployed. The number of Americans with jobs is now about the same as it was when the recovery supposedly began in 2009, the number of Americans who have resigned themselves to permanent unemployment is the highest since the days of Jimmy Carter, and the best that the bull such as Heidi Hartman of the Institute for Women’s Policy Research can say about it is “Let’s not panic.”
We expect Hartmann will be satisfied with the lack of panic that ensues. Now that the dismal jobs figures have run their course on the news cycle the press can get back to covering the scandals of Gov. Chris Christie or anyone else who might challenge Hillary Clinton in the next presidential race, the bureaucrats will continue writing regulations and bothering businesses, the Federal Reserve will continue printing money even if enough people drop out of the labor market to achieve that 6.5 percent benchmark that was supposed to put an end to it, Democrats will keep on advocating for bringing in millions more illegal immigrant workers to flood the job market and raising the minimum wage and any other crazy scheme that might worsen the situation, while the Republicans will offer whatever futile resistance they can muster as they bide their time until the mid-term elections. The general public, as least those gainfully employed or with unemployment benefits still coming in the mail, will continue to regard it as normal.
A record number of Americans relegated to permanent unemployment ought to be a big story, prominent enough at least to inform the debate about illegal immigration and the minimum wage and whatever it is that the president hopes to do about income inequality, but the popular preference for other topics is understandable. A significant change in the country’s economic policies can’t occur until after the next president is elected, and if the press can successfully assassinate the character of any of Hillary Clinton’s challengers it will take at least another four years, so for the moment there’s really nothing to be done about it.
Still, we though it worth noting.

— Bud Norman

Something to Crow About

The latest official economic reports were released last week, and all the big news media began singing “Happy Days Are Here Again.” There was enough hoopla to make one forget about Obamacare and Iranian nukes, if not the government shutdown and sequester budget cuts that were supposed to cause economic catastrophe.
The “headline numbers” did sound good, with the third quarter’s gross domestic product increasing by a respectable 3.6 percent and the unemployment rate ticking down to five-year-low of 7 percent, and most of the news stories were content to leave it at that. Those obsessively curious sorts who read past the headlines were likely less impressed, however, as the underlying numbers don’t show the economy has stopped being lousy.
Although the jobs report brings good news for the 203,000 Americans who found work last month, there are still 1.1 million fewer Americans working than there were when the recession started in 2008, and 3.6 million fewer with full time jobs than in 2007. While the unemployment rate might have dropped, the more telling employment rate — the percentage of the country’s potential workers who are employed — is still stuck at November 2009’s rate of 58.6 percent, and at the current rate that is being celebrated by the media it will take another five years to get back to pre-recession levels. Also worth noting is that most of the new jobs were in the public sector, which is a mixed blessing at best and not a sign of robust private sector growth, and that the record numbers of long-term unemployed seem to have found little relief.
That supposedly surging growth in the GDP also looks less reassuring on closer inspection. The report reveals that private businesses increased their inventories by $116.5 billion to account for 1.68 percent of the increase, and if this is true the most likely explanation is that the goods customers aren’t buying are starting to pile up on the shelves. Some smart people suspect that it isn’t true, and that the government has overstated the growth until the less-watched revisions are released in some future and perhaps more friendly news cycle, and in the wake of revelations that the pre-election unemployment numbers were fudged such conspiracy theories no longer seem at all far-fetched.
Still, the numbers are good enough that the president and his remaining loyal supporters in the news media will shout them loudly enough to be heard over all the grumbling about Obamacare. They’ll boast that the progress comes in spite of those stingy Republicans and their sequestering and shutting-down ways, ignoring the possibility that even such a feeble amount of fiscal restraint by assuring jittery investors that the nation’s bankruptcy might come a little later rather than a little sooner, and argue that it proves the need for ever more “investments” in phony-baloney “green energy” and community-organizing scams and infrastructure projects that never seem to be shovel-ready. After five years of slow growth and high unemployment and rapidly expanded government this will be a hard sell, but it beats talking about the rest of news.

— Bud Norman

The Shutdown, Obamacare, and the Jobs Report

As we write this the latest jobs report has not yet been released, but it is so widely assumed to be horrible that the stock markets took an early plunge on Thursday and the administration has already started blaming the Republicans.
This time around the administration’s rationale is that nobody was hiring because of the government shutdown, which of course was entirely the fault of those mischievous Republicans, but the familiar ploy might prove harder to execute. This time around will require reminding a forgetful public that there was a government shutdown, which went largely unnoticed by anyone who wasn’t so unfortunate as to be taking trip to a national park during the brief interregnum, as well as a plausible explanation for why anyone in the private sector would have been deterred from hiring someone just because some non-essential public sector employees were enjoying a paid vacation at some private sector and happily operating locale. There was a chilling terror of a governmental default and consequent economic apocalypse, we are told, but anyone who had such an irrational fear could have only gotten such a crazy idea from the administration.
Blaming the government shutdown also runs the risk of reminding voters that it had something to do with the Republican’s unified opposition to Obamacare, which the administration is now hoping will be soon forgotten. Even the most loyal media were compelled to concede that the roll-out was a glitch-ridden fiasco, and the resulting ridicule was followed by harrowing stories of disillusioned Obama voters suddenly finding themselves without health insurance and facing exorbitantly higher costs as a result of Obamacare, and attempts to blame the Republicans and their unified opposition to the law have thus far proved unconvincing. The poll numbers have reached such a sorry point that the president went to the endlessly forgiving reporters of the NBC network to say how sorry he was for all the people who liked their insurance but lost it despite his repeated pledges that if they liked it they could keep it, period, even if it is the greedy insurance company’s fault. Even such a half-assed apology, delivered with the apparent arrogant expectation that it somehow will make things right to the president’s screwed-over former voters, amounts to an act of desperation by an administration so disinclined to apologize to anyone but Islamist terror regimes and communist tyrannies.
Today’s dismal jobs report does reflect the economic activity during the government shutdown, a point that will be widely noted in the obligatory news reports, but it also coincided with the botched Obamacare debut. That event also called into question in the full faith and credit of the federal government, and in ways that are seemingly permanent. Obamacare offers incentives for workers to cut back on their hours and earnings in order to qualify for its subsidies, and irresistible incentives for employers to cut back on their workers’ hours and earnings, and the administration is left with the unenviable task of convincing people those workers and companies are to blame to reacting according to their economic self-interests.
As the government shutdown fades further into an already memory, and the consequences of Obamacare linger in the jobs reports, apologies and finger-pointing will prove even less persuasive.

— Bud Norman

In Search of Silver Linings

How bad was the jobs report released on Tuesday? So bad that the unemployment rate went down by a fraction, the stock markets went up by a percent, and Democrats openly admitted their disappointment.
None of these seemingly positive developments should be mistaken for good news, however, given the currently convoluted nature of the American economy. The unemployment rate dropped only because many thousands more Americans gave up any hope of ever finding a job and joined the record number of economic drop-outs. The stock markets surged only because the jobs report was so dismal that it will almost certainly force the Federal Reserve to continue the incessant money-printing that has fueled the deceptive rally. Even the grudging acknowledgements of failure from the Democrats offers little solace, as it’s all a set-up to blaming the “sequester” budget cuts and the temporary partial government shutdown and other Republican perfidy.
An increasingly anxious American public isn’t likely to be misled about the state of the economy by obviously obfuscated unemployment numbers or obviously overpriced stock markets, but there’s always a good chance that that it will buy the part about Republican perfidy. Both the “sequester” and the partial government shutdown had little effect on most Americans, and went entirely unnoticed by almost all of the significant number of blissfully ignorant folks who avoid reading or hearing the news, but there’s a nasty ring to both of them that can be easily exploited. Any fair-minded observer would concede that the Democrats share at least some of the blame for both the “sequester” and shutdown, and that the currently dismal numbers come long after the former and before the latter, but the fair-minded are an insignificant voting bloc these days. One could make a strong argument that Obamacare, other excessive regulations, higher tax rates, growing governmental debt, and the ever more apparent incompetence of a government that daily acquires ever more control of the country have more to do with the sluggish economy than a slight cut in misspending or paid vacations for nonessential government workers, but strong arguments are easily countered by caricatured villains.
Should the Democrats succeed in their blame game, there’s really no good news in the jobs report at all. There are 148,000 new jobs, and we’re glad for that tiny minority of newly-hired workers, but that number is lower than the already-puny annual average and doesn’t offset the exodus of former job-seekers from the work force. At a time when good news is actually bad news we try to remain hopeful that the bad news presages the good news that the people will at last become fed up and try to reverse course, but the people might just agree that what’s required is more of the same.

— Bud Norman

A Part-Time Nation

Perhaps the best measure of how badly things are going is what people now regard as good news. Consider the case of last Friday’s jobs report, which was greeted with popped bottles of champagne and much jubilation.
Those who are temperamentally inclined to search for good news anywhere they can will be able to find some in the Bureau of Labor Statistic’s monthly report, which showed that the nation gained 195,000 jobs in June. The number was better than most economists expected, which isn’t saying much, but anything that exceeds even the low expectations for the economy always rallies the stock market, heartens the press, and is assumed to be good news by the general public. Although the unemployment rate remained at an unpleasant 7.6 percent, a record-setting 54th month above the 7.5 level, the optimists could boast that was because the booming economy is luring workers back into the work force and are thus officially counted as unemployed.
Whatever psychic benefits those idled workers might gain from being officially counted as unemployed, a closer look at the numbers reveals that they’re not more likely to find full-time employment. Indeed, the household survey shows that full-time employment actually declined by 240,000 in June, and the same jobs report that has all those champagne bottles popping showed that the U-6 rate that includes discouraged and underemployed workers actually increased from already dire 13.8 percent to a downright depressing 14.3 percent. The vaunted economic recovery seems to be on a part-time basis.
Apologists for the Obama administration will insist this has nothing to do with its recent decision to postpone until after the mid-term elections an employer mandate in the Obamacare law that provides huge financial incentives for businesses not to hire anyone for more than 29 hours, and we expect that some people will even believe it. Anyone who is not obliged to toe the Obama line will conclude that Obamacare is part of the problem, however, and will wonder why the government will settle for postponing the disastrous consequences rather than averting them altogether by repealing the mandate. While they’re at it they might also wonder why the government’s deep thinkers think now is a good time to bring in another 10 million or so low-skilled workers to compete for those part-time jobs, or to impose a variety of costly regulations intended to drive up energy costs, or why the political class seems more concerned with same-sex marriage or gun-grabbing than the plight of the unemployed.
On the other hand, perhaps one should just go with the media-approved flow and be satisfied. About 47 percent of American adults have a full-time job, and that’s got to be beating somebody’s expectations.

— Bud Norman

Frolicking With the Bears

Here’s hoping that everyone had a happy weekend. After all the dreary economic news that arrived on Friday, it couldn’t have been easy.

Just a day after the government quietly revised its estimate of the gross domestic product’s growth in the first quarter down to a mere 1.9 percent, a report released Friday by the Bureau of Labor Statistics showed that the economy added a meager 69,000 jobs in the past month, the smallest total in two years, and an increase in job-seekers pushed the unemployment rate up to 8.2 percent. The more telling U6 rate, which includes people forced into part-time work and those still “marginally attached to the labor force,” rose from an already staggering 14.5 percent to 14.8 percent. Oh, and the Leading Economic Indicators declined this month, too. Throw in another slew of stories suggesting that Europe is on the verge of economic implosion, China’s growth is rapidly slowing, and the emerging of economies of India and Brazil are also feeling sluggish, and it was enough to send the Dow Jones down by 274.88 points, with similar carnage on the other boards leaving the stock markets down for the year.

Even the peppiest cheerleaders in the press didn’t try to pretend that it wasn’t completely awful. Some reports alleged that the increase in job-seekers indicated some optimism, however brief and futile, and several added a few perfunctory from the eternal optimist Mark Zandi of Moody’s Analytics blaming it all on the weather, but that was the best they could do. The Hill, a publication that prefers to accentuate the positive when reporting on the economy in the age of Obama, even quoted an unnamed White House official who described the jobs report as an “Oh sh*t moment.” The elision is The Hill’s, so we’re not entirely certain what the unnamed official was saying, but it can’t be good.

Gloom and doom has long been the default mood here, so we welcome the company, but it’s nonetheless unsettling to see such unabashed despair in the popular press. Worse yet, no one seems to be sincerely hopeful that anyone has a solution that will avert further decline if not utter collapse. There’s talk both here and abroad about another round of “quantitative easing,” but after the gazillions of dollars, euros, yuan, and whatnot that have already been printed up in the past few years there is no reason to believe that it will have any positive effect in the short term and every reason to believe that it will have catastrophic effects in the long run. The necessary reforms of entitlement programs and public sector compensation seem to be politically untenable, both here and abroad, as people everywhere seem to be as intent on defying economic reality as the politicians they have elected.

Americans might still choose another path, and what most seemed to alarm the press about Friday was a general consensus among the chattering class that it had been a good day for Mitt Romney. Should the current trends continue into November, and no one seems to have a good theory about why they won’t, the Obama campaign won’t even be able to continue making its conspicuously modest claim that at least we’re making some progress. We expect the president will say that it’s not his fault Europe’s over-taxed, over-regulated economy collapsed under the weight of its lavish entitlements and bloated public sector, but it won’t be Romney’s fault, either, and the Republicans should be able to point out the rather ironic nature of Obama’s excuse.

— Bud Norman