With Bonddad on vacation, I thought I would step in and summarize this less than stellar jobs report (its me SilverOz).
Let's start out with the headline numbers, which showed 0 job creation on the Establishment Survey and included downward revisions for both June and July as well. The report also showed that several leading indicators from the report also declined (hours worked and pay) marginally. And while the official U-3 unemployment rate remained unchanged at a very high 9.1%, U-6 picked up a tenth of a point to rise to 16.2% and my personal favorite measure, U-5, did decline a tenth to 10.6%. In good news (if this can be called that), both the participation rate and employment-population ratio gained a tenth of a point and in even better news, the Household Survey showed a gain of 331,000 jobs last month.
In other "good" news, the number of both those not in the labor force and those not in the labor force that want a job declined as over 350,000 people entered the labor force last month. And while we need these re-entrants, we must also recognize that they will have a dampening effect on the U-3 unemployment rate as they return.
Obviously, the Verizon strike had an impact on the numbers, but even discounting that (since it will be added back in next month and needs to be discounted then as well), we would only be up 45,000 jobs. Government continues to be a drag on employment, shedding another 17,000 with all of those losses essentially coming from local governments.
Once again we are also seeing the real return of an educationally bifurcated economy, as those with either some college or a college degree gained (Household Survey numbers) 449,000 jobs last month, which was offset by losses of 581,000 jobs by those with just a high school diploma (all numbers are for ages 25+). The economy actually appears to be doing ok for those with a post-secondary education, but still mired in losses for those without.
Overall, this report was particularly bad as not only did it show no headline job growth, but 2 of the leading indicators from the report dipped this month and it continues to showcase a deceleration of the economy and the jobs picture that has materialized over the past few months. Once again though, this seems (at this point) relegated to those without higher educational attainment and the youth (ie under 25) as opposed to broad based declines (again, at this point). the report for September should be especially interesting, as it will be the first report that would fully include the fallout of the recent spate of negative numbers and loss of confidence (as we must remember that hiring decisions are typically made at least a full month prior to actually taking place).
And once again, this summary was brought to you by SilverOz.
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10 comments:
I'm confused as to who wrote this.
This is a very bad report, which shows that the GOP default threat greatly damaged the economy, and may have started another recession. Most likely, we lost jobs in August because since the recession began, nearly all initial jobs reports are adjusted downwards. There is nearly a 100% chance that the revised jobs report next month will show a net job loss. The big question is whether Americans will be able to recover from the psychological damage that the GOP lawmakers inflicted upon them. Unfortunately, this works to the GOP favor, so look for the GOP to continue their abusive and immoral strategy towards the American people.
@esong
First, as New Deal has pointed out here many times, virtually all of the initial jobs reports since the recession officially ended (June 2009) have been revised UP, not down. This is why it is so worrisome that the last couple months have seen downward revisions.
Also, while I think the debt ceiling debates definitely impacted confidence, the fact that those debates could have had such a profound effect showcases how weal the economy was already.
Sorry, I was thinking about the weekly unemployment claims, which always seems to be revised upwards (in other words, the intial report showing a better economy than the revised reports). I absolutely do not believe this is the case, but I've heard some TV commentators accuse the Obama Administration of having a policy of overly optimistic initial reports, because they tend to get more publicity than the revised reports.
Can you provide me a link that will compare the initial reports with the revised reports?
However, the economic numbers show some improvement in economic activity in July, and I believe the default debacle really did freeze business activity in early August. I myself sold stocks because of the default debacle. The default debacle is a game changer, which caused public perception about Obama to change from a fairly strong to a weak leader (although progressives have probably viewed Obama to be a weak leader for a longer time). Thus, Obama is now on the same course as Jimmy Carter was in 1979. Of course, the economy and political fortunes can change. But it will be difficult when so many people have lost faith in Obama.
I would like to see one of you on the blog staff to do a statistical study that compares initial versus revised reports (weekly claims and monthly unemployment reports).
One last comment. What the GOP did to hold the economy hostage really was morally reprehensible, and I think you are underestimating the power of a credible threat of default on the economy.
It'll be a shame if Obama gets compared to Carter, because the comparison is wrong.
Carter's stumbling block, of course, was the hostage crisis in Iran. On foreign policy, something he has more control over, Obama has generally been very good. The Bin laden raid was such a contrast to Carter's failed Desert One rescue attempt of the hostages. While it's too soon to see what happens in Libya, I think Obama's approach there has been vindicated.
His struggle has been that he has to deal with a party in the Congress which wants him to fail. The GOP leader in the Senate says he wants Obama to be a one term president. This is a person who has lot of power in the Senate, and that Obama is supposed to work with.
esong, I do agree with you on the debt ceiling debacle though. A default would have been unprecedented, and the fact that it almost happened, due to the stubbornness of a political party, was definitely going to have some effect on the economy.
That said, even some of the August data wasnt bad. Auto sales were up. I think retail sales look okay. Manufacturing didnt contract, and only slipped slightly. I think initial jobless claims were flat. Taken with the July data, it doesnt seem to show a recession to me.
One thing that bothers me though is gas prices. They are 2.65 nationally, and have been up in the last few days. I expected a big drop considering oil has been in the 80s, albeit rising recently too. I dont know if it has something to do with Hurricane Irene or maybe it will drop after Labor Day, but it's something to watch, given the way oil can restrain economic growth.
It's poetically fitting that the number is exactly 0 this month because that is how I would characterize the economy right now. Between positive and negative with an even chance of going in either direction. I really hope Congress can agree on at least some type of plan and the Fed does something creative because it's too important to leave up to chance. Politics is fine and all but when you're arguing over who gets to rule the rubble you've all lost.
J, I don't want to give the impression that there is no hope for Obama and walking on the Carter path is inevitable. For example, the resolution of the Libya crisis should benefit the long term economy through lower energy prices.
When comparing Obama with Carter, I'm talking about that there is a lot of malaise and pessimism around. In foreign policy, Obama learned from both Carter's and Bush's mistakes and has been quite successful in this arena.
However, the impression that Obama tends to cave in on domestic issues to the GOP is beginning to take hold with the general public. I don't think its because Obama is weak, but rather Obama believes that political negotiations should be about problem solving rather than be competitive. Of course, Obama is correct. However, his problem solving style to negotiations does not work when the other side wants to be competitive. This is the source of Obama's perceived weakness.
I think progressives perceived this weakness early on. However, the average voter on the street, and conservatives did not perceive this in the first two years of his administration because Obama did get some things done. Although Obama gave the store away during negotiations, it was hard for conservatives to see that because they view everything that Obama passed as extreme socialism. Thus, they can't tell the difference between incremental change to big change. To the conservative, everything was big change and in the wrong direction.
esong, I gotcha, I understand what you are saying. And I'm not trying to say Obama hasnt made mistakes, or has always taken the right approach.
I just feel like the biggest problem for Obama isnt him, it's that he needs the Congress to get anything significant done on jobs, and Congress, at least the House, has no interest in helping him for purely political reasons.
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