On Wednesday, Christopher Rugaber at the Associated Press was tasked with covering ADP's morning report on January private-sector payrolls. At 8:15 a.m., the payroll and benefits giant estimated that the economy added 205,000 seasonally adjusted private-sector jobs last month.
Rugaber also attended the 8:30 a.m. conference call which followed the report's release. It's clear that he was on it because his coverage, time-stamped at 9:18 a.m., contains quotes from economist Mark Zandi dealing with a key topic the sunnyside-up Moody's economist addresssed in that call. So why did the AP economics writer fail to report Zandi's acknowledgment that fourth-quarter economic growth, which the government estimated was an annualized 0.7 percent on Friday, could close in on zero in its February or March revision?
It's not like Rubager ignored GDP as a topic, as seen in the fourth excerpted paragraph below (in bold). The excerpted text also demonstrates that the AP reporter addressed a topic on which Zandi spent several minutes, namely trying to explain how GDP can be so weak when the economy continues to add 200,000 or more jobs per month, which he presupposes is a sign of economic strength (bolds are mine):
"All this turmoil in financial markets hasn't done any damage yet, that I can see," Mark Zandi, chief economist at Moody's Analytics, said. "That is a very good sign." Moody's helps compile the ADP data.
... the data suggests that layoffs and weak hiring are confined to the oil and gas drilling and manufacturing sectors.
"Outside of that, job growth is very strong," Zandi said.
Solid hiring numbers contrast with weak data on the overall economy, which expanded at just a 0.7 percent annual rate in the final three months of last year. Economists expect growth figures will improve in the current quarter.
But the gap between the jobs and growth data also reflects very weak growth in productivity, or the efficiency of the workforce.
Productivity measures the average output of workers per hour. It has risen at just a 0.5 percent annual rate in the past five years, far below the post-World War II average of about 2 percent.
That means employers have to hire more workers to generate more output. While it may help boost job gains in the short run, sluggish productivity growth also slows wage gains and economic growth. Rising productivity allows employers to raise pay without having to push up prices.
On the conference call which followed, in response to a question from yours truly — strangely, the only question asked on a call I'm told normally has a half-dozen to ten attendees and which I know normally has 3-4 questions — Moody's economist Mark Zandi acknowledged that last week's report on fourth-quarter economic growth will likely be revised down from its current annualized 0.7 percent to somewhere between 0.0 percent (that's right) and 0.5 percent. Zandi agreed that the writedown is likely because, as I noted in a NewsBusters post over the weekend, the 0.45-point GDP hit caused by inventory changes will almost certainly worsen to a figure closer to Moody's pre-release prediction of a negative 1.3-point impact.
As already noted, Rugaber's writeup clearly shows that he was on that conference call with Zandi; but he somehow failed to devote a single word to the Moody's economist's predicted GDP downgrade. Though he was eager to vaguely allude to Zandi's theories as to why productivity is so low, the AP reporter didn't consider Zandi's take on GDP important enough to relay to his readers and news outlets which subscribe to the wire service's content. Apparently, he would prefer that they remain ignorant.
Reinforcing the belief that Rugaber would prefer that his readers and AP's subscribing outlets stay uninformed is his vague reference to how "Economists expect growth figures will improve in the current quarter."
Some "improvement": Both the Atlanta Branch of the Federal Reserve and Moody's itself, which has historically tended to be overoptimistic, are currently estimating that first-quarter growth will come in at an annualized 1.2 percent. I believe Rugaber would have been quite willing to cite a specific growth figure from either site, if only it was 2.5 percent or more.
I contend that the final sentence of the second paragraph in Rugaber's dispatch (in bold) explains why he chose to ignore Zandi's dour fourth-quarter GDP assessment, and why he refused to specify how pathetic the estimates of the first quarter's "improvement" currently are:
SURVEY: US EMPLOYERS ADDED A SOLID 205K JOBS IN JANUARY
U.S. businesses added a solid 205,000 jobs last month, lifted by robust gains in services and construction and extending a streak of steady hiring, according to a private survey.
Payroll processor ADP said Wednesday that financial services, retailers and professional services firms also hired at a steady pace. The figures suggest that companies focused on the domestic economy remain healthy, despite gyrations in the financial markets and slowing global growth.
In other words, it's all about preserving the "all is well" narrative about the Obama economy, even though, as Investor's Business Daily noted in a Wednesday editorial, it's rapidly falling apart.
Shame on you, Chris.
Cross-posted at BizzyBlog.com.
