Observations: The QandO Podcast for 07 Oct 12
This week, Bruce, Michael, and Dale talk about the election.
The direct link to the podcast can be found here.
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August employment report in one word? Awful (UPDATE)
Of course the spin will be that the unemployment rate has dropped to 8.1%.
Unstated is the fact that the reason the unemployment rate dropped is because 368,000 more Americans left the labor force.
In fact, the labor participation rate in the US is at its lowest level since September of 1981. Had we not seen 350,000 dropped from the labor force last month, the unemployment rate would be 8.4%. And if the labor participation rate was the same as the day Obama took office, unemployment would be at 11.2%.
96,000 jobs, while better than nothing, isn’t even close to what is necessary to get this economy going again. And don’t forget, the average monthly gain in 2011 was 153,000 a month. In fact, the U-6, which includes part-time workers looking for full time work, is at 14.7%.
I keep telling you that when you talk about jobs or lack thereof and what that means to individual Americans, it’s personal. While they may care or not care particularly who has the best record in foreign policy or whether or not abortion is something they believe in, being jobless, struggling, and/or knowing someone in the family who is, has much more of a direct effect on a potential voter than the other issues.
14.7% fall into that category with probably twice to three times that many effected by what those 14.7% are struggling with. Believe what you will about the polls right now, but if history is any indicator, Obama isn’t going to get a round 2.
Oh, and just as a reminder of the depth of the failure:
UPDATE: Meanwhile at the Ministry of Truth the “Spin-o-matic” is in overdrive:
While there is more work that remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to recover from the worst downturn since the Great Depression.
It does? Wow … who knew? Certainly not the 350,000 who dropped out of the labor force this month. But hey, be happy, don’t worry … and ignore the chart.
~McQ
Twitter: McQandO
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Indicators: Enthusiasm among critical voters down for Obama
So the question of the week is can the DNC via Obama reignite the “magic” of 2008 in dispirited voters?
Charlie Cook, the dean of Democratic strategists, takes a look at three demographic groups critical to Obama’s 7 point margin of victory in in 2008. While he finds one of the groups, African-Americans, still with Obama in numbers similar to 2008, two other groups are not at all showing the same enthusiasm they had then. They are voters 18-29 and Latinos. Obama leads comfortably in both demographics. However, the question is, will they vote in the numbers necessary to push Obama over the edge.
Cook says it doesn’t appear so.
In each case, the percentage who say they will definitely vote is significantly lower than it is among other demographic groups who view Obama less charitably.
Groups among those who see Obama “less charitably”, as Cook puts it, includes seniors (65 and older):
Voters ages 65 and older favor Romney by a 15-point margin, 54 percent to 39 percent, and 86 percent of those in that oldest cohort say they definitely plan to vote, compared with just 61 percent of those ages 18-29. Romney has a statistically insignificant 1-point edge (46 percent to 45 percent) among those 30 to 49 years of age, but 80 percent of them say they will definitely vote. Among the 50-to-64 age group, Romney leads by 3 points, 48 percent to 45 percent, with 86 percent of that cohort saying they will definitely vote.
Cook believes it is a matter of enthusiasm, or lack thereof:
But the study also found “consistent evidence that President Obama’s 2008 first-time voters are less supportive than other Obama voters, reflecting a decline in enthusiasm among a key voting bloc in the 2012 elections.”
Note, both polls are those of “registered voters”, however, the point is clear – enthusiasm for Obama isn’t at all near the fever pitch it was in 2008 and experts like Cook know that. As he says, there’s “consistent” evidence Obama’s support among those groups has eroded when it comes to enthusiasm. Cook also knows what has to happen for Obama to again grab the edge and win. How critical is the Democratic convention to that?
Very. It is there the spark needs to be lit again, where a message that resonates and energizes the same demographic groups that put him over the line last time.
Will it happen? Well that’s the “big question”.
And behind all these problems isn’t the “war on women”, “race” or “inequality”. It’s the economy. If, in fact, the Democrats concentrate on the diversion of the first three, the likelihood of them reenergizing their voters isn’t high. It may, however, even further energize the other side.
So you may see them tip-toe around mentions of the economy and attempt to push it off on Bush again. They’re already trying out “the Bush recession”, “the Bush economy”, etc. That’s unlikely to impress many (most polls have indicated that voters think, after 3 years, Obama owns the economy now), but it’s about all they have in that arena.
Of the two conventions, the DNC is likely to be the more interesting of the two by a long shot.
~McQ
Twitter: McQandO
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Jobs, jobs, jobs …
We’ve been told for months now about all the jobs that have been created by the laser-like focus on jobs that Barack and Sheriff Joe have given us.
Of course the inconvenient statistic that keeps dogging their claim is the unemployment rate.
As for the jobs themselves? Well, per the New York Times, not so hot:
While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.
[…]
Lower-wage occupations, with median hourly wages of $7.69 to $13.83, accounted for 21 percent of job losses during the retraction. Since employment started expanding, they have accounted for 58 percent of all job growth.
Another of those indicators. Again something that effects voters personally. Not only are those in the 8.2% unlikely to be particularly happy about the current economic situation and those in charge, but those that are employed but earning far less than they were are unlikely to be very happy either.
~McQ
Twitter: McQandO
Facebook: QandO
Obama: The private sector is doing fine
When I first heard this I thought, “I want what he’s smoking”. Because you have to be high on something and totally unaware of reality to make a statement like that.
So, I thought, it has probably been taken out of context or shortened or something, because even understanding that it is being attributed to Obama, no one would be that out of touch.
Giving him the benefit of the doubt I waited until I could get a transcript of the whole exchange.
Boy was I wrong. Not only can someone be that out of touch, it was indeed Obama:
Question: What about the Republicans saying that you’re blaming the Europeans for the failures of your own policies?
President Obama: The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone.
The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
And so, you know, if Republicans want to be helpful, if they really want to move forward and put people back to work, what they should be thinking about is how do we help state and local governments and how do we help the construction industry? Because the recipes that they’re promoting are basically the kinds of policies that would add weakness to the — to the economy, would result in further layoffs, would not provide relief in the housing market, and would result, I think most economists estimate, in lower growth and fewer jobs, not more.
If you’ve ever wondered what word salad looks like, feast your eyes.
The way back to prosperity is creating jobs in the government sector? More spending? I’m sorry, that’s just ignorant. The whole answer is incoherent. Don’t they know better than to let him loose without his teleprompter?
Nick Gillespie is as stunned as anyone else:
The stammering, halting, tentative delivery of Obama strikes me as symptomatic of a whiskey priest who’s dying for a drink right after saying Mass. He doesn’t believe what he’s saying but also doesn’t have a clue as to how to move forward or address his failings. Yes, the private sector is doing fine, if by fine you mean pretty goddamned awful.
Oh, and fyi, it looks like the fight is going to be a little different this time around. Already out? An ad with the remark.
Nice.
~McQ
Twitter: @McQandO
Observations: The QandO Podcast for 06 May 12
This week, Bruce and Dale talk about what the Trayvon martin case says about the media.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.
Are the recent employment gains real?
Over the last several months, we’ve seen moderate gains in non-farm payroll jobs, with the rate of job creation running at about 200,000 jobs a month. That’s seems good, as does the continuing drop in initial claims for unemployment to around the 350,000 level weekly.
The thing is, how real is this job creation, in an environment where the past year showed a rate of GDP growth of 1.8%, and the most optimistic forecasts for this year indicate a 2.5% rate of GDP growth? Those rates of growth are significantly below the long-term trend rate of growth for the US economy, which is between 3% and 3,5% per year. How is employment increasing when GDP growth is so slow?
Well, the answer is, it may not be. Take a look at the charts below, They are taken from the historical A tables of the Bureau of Labor Statistics’ (BLS) household survey. This is the survey where households provide employment data.
The first chart shows the number of people in the Household survey who’ve declared themselves to be employed since January of 2002.
That does indeed indicate a moderate rate of employment growth since January of 2010. So far, so good.
The next chart, however, shows those who are employed as a percentage of the civilian, non-institutional, adult population.
This provides a far more negative picture of employment. Essentially, the percentage of the population that is employed has crashed, and the percentage of employed was lower in 2011 than it was in 2010. As a percentage of the adult population, peak employment has declined every year since 2007.
Essentially, a additional 4% of the adult population is now jobless, compared to 2007, and that jobless percentage has been increasing, not decreasing, over the last two years, despite mild declines in the official unemployment rate.
~
Dale Franks
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So, is America “back” economically?
Two good jobs reports back to back has got the Obama campaign trying out some new campaign rhetoric about how what they’ve done has worked and that America is “back”.
Is it? Or is it premature to make that claim? Well, on the one side, most economists will tell you that job growth is usually a lagging indicator and good job growth usually means the other underlying numbers for positive growth are good too.
But are they?
Well, not necessarily. In fact, one of the other leading indicators of a strong economy, GDP growth, isn’t going to be so hot according to many economists. David Leonhardt reports:
But the jobs report isn’t the only measure of economic activity, and another major measure — of gross domestic product — doesn’t look quite so cheerful. The most likely situation is that job growth will slow in coming months, economists say, which will make President Obama’s economic narrative a bit more complicated than it now is.
On Friday, Macroeconomic Advisers, one of the most closely watched forecasting firms, reduced its estimate of economic growth in the current quarter to an annual rate of 1.8 percent, from 2 percent. And 1.8 percent growth does not generally lead to very strong job growth. In the fourth quarter of last year, by comparison, the economy grew 3 percent.
Beyond the current quarter, forecasters expect the economy will grow at an annual rate of 2 to 2.5 percent for the rest of the year, according to Bloomberg.
Based solely on the gross domestic product numbers, the obvious conclusion is that job growth will slow in coming months. Over the last six months, the average monthly gain in nonfarm employment has been 201,000; over the last three months, the average gain has been 245,000.
Sure enough, most forecasters do expect job growth to slow. Barclays Capital expects 200,000 jobs a month for the rest of the year. IHS Global Insight forecasts a slowdown to 180,000 jobs a month. Macroeconomic Advisers says it will slow to 140,000 jobs a month in the final three quarters of this year.
So what’s the drag on the GDP? What is it that is causing this less than optimistic forecast for job growth?
A combination of things:
Why do economists expect growth to slow? The warm winter has probably pulled some spending forward into the last few months and will reduce spending in coming months, says Joshua Shapiro, an economist at MFR Inc. in New York. Rising oil prices also play a role. So does the continuing debt overhang, which makes a sustained recovery difficult.
Spending slowdowns, rising oil prices and the debt overhang all combine to slow growth. Of course there are other things too that will effect it – increased regulation, for instance.
Annie Lowrey reports on other concerns:
First, economists say that temporary trends increased growth in the fourth quarter and may not continue into next year. Second, the economy faces significant headwinds in 2012: some from Europe’s long-lingering sovereign debt crisis, and some from domestic cutbacks beyond the control of President Obama, whose campaign would like to point to a brightening economic picture, not a darkening one. Even the Federal Reserve is predicting that the unemployment rate will remain around 8.6 percent by the time voters go to the polls in November.
The fourth quarter benefited, for instance, from wholesalers restocking inventories of goods like petroleum, paper and cars, giving a jolt to growth.
“We had lean inventories, so those required additional production to satisfy demand,” said Gregory Daco of IHS Global Insight. “But once inventories are restocked, there is no need to restock them anymore. That means there’s going to be less production,” he said.
Inventories have been restocked and oh yeah, there’s the European sovereign debt crisis to contend with. As well as:
Consumers also pulled back on their savings, helping to finance a recent spurt in spending. a trend that forecasters doubt will continue. Other short-lived factors include falling gasoline and commodity prices, and an increase in orders from Japanese companies returning to business after the devastating spring tsunami.
And finally we have the Chairman of the Federal Reserve:
He acknowledged that rising oil prices were “likely to push up inflation temporarily while reducing consumers’ purchasing power.” But the Fed expects the overall pace of increases in prices and wages to remain “subdued,” Mr. Bernanke said …
Bernanke also mentioned the continued depression of the housing market as a factor and he believes growth this year will be between 2.2 to 2.7 percent. Such growth would indeed put a damper on employment growth.
Whether or not the forecasts will prove true obviously remains to be seen. However the elements that should slow growth seem to be in place. Consequently, the forecasts are less optimistic than Obama’s political campaign would have you believe.
After many “false dawns” (remember “green shoots”?) the possibility of another one looms large. Sure, the economy is making progress. And yes, that’s good. But overhyping that progress and then seeing the numbers go south again could be very damaging to an incumbent president’s reelection hopes. Not that I expect that possibility to slow him down a bit from claiming to have saved the country from the abyss when in fact we’re simply crawling out from the one he helped create.
~McQ
Twitter: @McQandO
Economic Statistics for 2 Dec 11
Today’s economic statistical releases:
The big number today is the monthly employment situation. The BLS released the headline as "Unemployment rate falls to 8.6% in November; payroll employment rises by 120,000". The numbers behind the headline are less impressive. Actually, the headline isn’t all that impressive, considering that 120,000 new jobs is, at best, an anemic rate of job growth. Also, it’s the time of year when a fair amount of hiring is seasonal, for temporary Christmas jobs, which can make the employment situation look better than it actually is, despite the seasonal adjustments to the data employed by BLS. Looking deeper, the labor force participation rate continued to fall -0.2% to 64% as nearly half a million workers left the labor force.If the labor force participation rate was at the historical average of 66%, the unemployment rate would be 11.41%. 2.6 million persons were marginally attached to the labor force, about the same as last November. The average workweek is unchanged at 34.3 hours, where it has been since September. Even worse, average earnings declined this month with the average hourly wage dropping 2 cents an hour to $23.18. So, I think we can say that the drop in the unemployment rate is mainly due to people leaving the labor force, as the rate of job creation is weak. Also, the lack of change in the workweek, and decline in wages implies that hiring pressure among firms is essentially non-existent as there has been no increase in the workweek for three months, and a glut of labor still exists as upward pressure on wages reversed this month. The only positive thing I can glean from this report comes from the household survey, where the number of respondents who are employed rose 278,000 to 140,580,000.
Monster.Com reports their employment index fell 4 points in November to 147 as online recruitment slowed.
~
Dale Franks
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We’re creating green jobs!
The president’s Green Jobs loan guarantee program, which we’re hearing a lot about, thanks to the Solyndra fiasco, does not appear to be a complete bust. In all fairness, it has to be said that this program has been instrumental in directly creating jobs. Indeed, the Washington Post reports that, after having spent $17.2 billion of the original $38.6 billion appropriated for the green jobs program, the Administration can now claim the creation of 3,545 permanent new jobs as a direct result. That’s 3,545 of our fellow Americans who now have gainful employment, thanks to the Obama Administration’s Green Jobs program. I’m sure they, and their families, are grateful.
Of course, if you do the math, that comes out to a cost of $4,851,904.09 per job. That seems…inefficient. I’m pretty sure that if the government gave me $4.8 million, I could at least double that rate of job creation.
At this rate, once the entire $36.8 billion is spent, we may employ 7,000 people via the Green Jobs program. Or to put it in other terms, 4,000 fewer people than the increase in those who claimed unemployment compensation for the first time this past week.
~
Dale Franks
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