For the second month in a row, the jobs report was a major disappointment. The January jobs report, released Feb. 7 by the Bureau of Labor Statistics (BLS), showed only 113,000 jobs added, falling far short of the more than 180,000 expected. The unemployment rate dropped to 6.6 percent.
The miniscule revision of 1,000 jobs to the December report compounded the shock. Many had dismissed the December report of 74,000 jobs added claiming it would be revised upwards with this report. (video after break)
NASDAQ.com says that the Dow Jones Industrial Average closed down 58.56 points today. The S&P 500 lost 1.13 points, while the NASDAQ lost 2.96 points. In percentage terms, those losses were 0.39%, 0.07%, and 0.08%, respectively.
Even though there's usually a large element of speculation relating to why the broad markets go up or down on any given day, the pretend know-it-alls at CNNMoney.com seem to have had a pretty obvious preset agenda in their post-close email, as will be seen after the jump:
In a Saturday afternoon dispatch, the Associated Press marred a mostly decent presentation of the August employment situation reported by the government yesterday in three ways.
The first is the story's misleading headline: "The Job Market Fed Faces: Healing But Still Ailing." Whether there's genuine healing going on is highly debatable, given that the labor force participation rate fell to 63.2 percent, its lowest level since 1978, and the clear trend towards part-time work. AP Economics Writer Paul Wiseman's treatment of that trend and another related one represent the report's other three weaknesses, as seen in the following three paragraphs (bolds are mine):
The August Jobs Report showed 169,000 jobs were added, less than many had predicted and revisions from previous months even included a drop of 74,000 jobs. So the jobs total for the month was really just 95,000.
The stock market continued to rally, but CNBC’s Rick Santelli, who covers the Chicago Board of Trade, said that such a contrast was upsetting. “What are we, a banana republic?” Santelli asked. “I just think it’s absolutely horrible that we’re in a marketplace where we get a lousy report. 35 years since we’ve seen these participation rates, and listen: you can’t hide the spread of four to four-and-a-half percent between the advertised unemployment rate and what it would be if you would go back a few years on that participation rate,” he explained.
It's fair to say that about the only holdouts against the idea that part-time work is up and that employee hours are being reduced around the economy are the Obama White House and a few Obama White House alumni. It's also fair to say that there are very few holdouts against the idea that the cause for this is Obamacare's 30-hours-per-week definition of a full-time employee, which is causing far more businesses than usual to cut existing workers' hours and to limit their hiring to part-timers. Even Obama-sympathetic NBC did a report on Obamacare's impact earlier this week. The White House dismissed what NBC found as "merely anecdotal."
All along, everyone — yes, this includes yours truly — has been concentrating on overall changes in the average work week, which have been very minimal. But Jed Graham at Investor's Business Daily, doing work which apparently no one else in the business press has been willing or discerning enough to do for all these months as the issue has raged, identified four industry sectors where average weekly hours have dropped significantly, and where it's hard to claim that anything except Obamacare could be the culprit.
A new economic report from the Federal Reserve doesn't offer much hope. On the front page of The Washington Post, Ylan Q. Mui underlined "the Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992."
Furthermore, "the data represent[s] one of the most detailed looks at how the economic downturn altered the landscape of family finance. Over a span of three years, Americans watched progress that took almost a generation to accumulate evaporate. The promise of retirement built on the inevitable rise of the stock market proved illusory for most. Homeownership, once heralded as a pathway to wealth, became an albatross." What's more interesting is that Mui's article doesn't mention Obama once -- in a front page piece during an election year -- right after he told reporters the private sector is "doing fine."
Each month before the jobs report is released by the Bureau of Labor Statistics, the hosts and guests of CNBC make predictions about the payroll employment number and unemployment rate.
On April 6, when the March data was released Steve Liesman was the high end predictor, with 290,000, and former Obama economic adviser Austan Goolsbee was low, with 180,000. But everyone turned out to be wrong, when the BLS report showed gains of only 120,000 jobs. The unemployment rate dropped from 8.3 percent to 8.2 percent.
Don't look now, that tidal wave might be a drop in the bucket instead.
On her MSNBC show Monday, Rachel Maddow cited a trio of reports warning of massive job losses if $61 billion in Republican-pushed spending cuts take effect.
The Economic Policy Institute, which Maddow described as a "liberal group," predicts the GOP budget plan "would likely result in job losses of just over 800,000. A confidential new report" from Goldman Sachs says spending cuts passed in the House "would be a drag on the economy, cutting growth by about two percent of GDP, according to Jonathan Karl at ABC News, the source cited by Maddow. The third warning along these lines came from McCain '08 campaign adviser Mark Zandi, writing at Moody's Analytics, that the Republicans' proposal "would mean some 400,000 fewer jobs created by the end of 2011 ... and 700,000 fewer jobs by the end of 2012."
Late last week (covered at NewsBusters; at BizzyBlog), a Goldman Sachs economist issued a dire warning cutting current-year federal spending by a measly $61 billion, or about 1.75% of the administration's full-year projected spending total, would significantly reduce economic growth in the coming quarters. If this were so, the economy would booming beyond belief right now, given that the Obama administration ran a $800-plus billion so-called stimulus plan during the past two years, and is on track to run up over $4 trillion in reported budget deficits in a three-year period by the end of the current fiscal year. Readers will note that the economy is not booming beyond belief.
The Associated Press chimed in on Friday after the latest report on the nation's Gross Domestic Product (GDP). Expert, presumably including some geniuses at Goldman, thought it would be revised up from an annualized 3.2% to 3.3%. Oops; it came in at 2.8%. Befuddled AP reporters claimed incorrectly that reductions in state and local government spending seriously held back reported growth during the final quarter of 2010. Zheesh; the impact was only -0.29 points. The real problem is that private investment is seriously lagging, and has really never stopped lagging since the recession began in 2008.
The "Keep spending like mad or else" chorus got more help today from chief economist Mark Zandi of Moody's Analytics. This morning, the Washington Post's Lori Montgomery dutifully relayed the pile-on (bolds are mine):
GOP spending plan would cost 700,000 jobs, new report says
A sharp drop in the unemployment rate from 9.8 percent to 9.4 percent "surprised" analysts on Jan. 7, but Mesirow Financial's chief economist Diane Swonk warned CNBC viewers that it was an "anomaly."
The drop in unemployment rate confused some because in the same report the Bureau of Labor Statistics reported only 103,000 overall nonfarm payroll gains in December 2010.
CNBC's "Squawk Box" panel reacted to the falling unemployment rate by calling it "sort of a fluke," an "anomaly" and predicting it would rise again. CNBC's Rick Santelli suggested the rate dropped "because people are disenchanted' and dropping out of the labor force."
Shortly after 5 p.m. yesterday, Time's Michael Scherer laid out his reasons why he believed Democrats would eventually come around to President Obama's compromise with congressional Republicans on tax policy.
To many, it's hardly a revelation to most, but when someone keeps taking the same action over and over again, even to his detriment, it can reveal a lot about that individual's belief system.
This was an observation CNBC "Squawk Box" host Joe Kernen made about the Obama administration's willingness to embrace a populist "soak the rich" tactic against the wealthy in the United States, even though it isn't winning him favor with the American people, according to opinion polling. A new ABC News/Washington Post poll shows more people now think President Barack Obama's policies have hurt the economy than have helped. And Kernen called the unwillingness to change course evidence of the president's ideology - proof he does believe in the redistribution of wealth.
"When push comes to shove, the left wins out with this guy," Kernen said on the Sept. 8 broadcast of "Squawk Box." "Axelrod calls the shots when push comes to shove. And this will make the case for a populist argument that these rich people - soak the rich - they do not need this and we're going to cut for the middle class and we're going to pay for it by soaking the rich. And it's right down - but it also - he said it all along, but to his critics, those critics, it's more evidence of a redistribution that when it all comes down to it, the overriding mandate of this administration - it's a redistribution of wealth."
As the Obama administration’s “Recovery Summer” crumbles, CBS’s Early Show on Thursday noted how the poor economic data has made many Americans deeply pessimistic about the future, with 37% saying that the economy “is in permanent decline.”
So does that mean Obama's $862 billion stimulus is a failure? Not according to economist Mark Zandi, who was interviewed by co-host Erica Hill. Zandi asserted that “the recession ended about a year ago, in large part because of the stimulus efforts,” and the current sluggishness was because “the stimulus is now fading,” and thus “the benefit to growth is winding down.”
Of course, Zandi has been a consistent enthusiast for the stimulus, as far back as early 2009, a fact which was not disclosed today. “We need stimulus,” Zandi championed on the January 28, 2009 Early Show. “It’s about preserving jobs.”
Here we go again. We've already seen how ineffective the previous $787-billion stimulus Congress and the President forced through earlier this year has been with curbing unemployment, as it has raced into double-digits over the previous months. But will there be an effort to force through another one?
"John, what would you say, I don't know, the chances of some sort of an additional jobs stimulus - however you'd like to characterize that, or whatever form it would take or price tag it might have ?" Burnett asked.
"Fool me once, shame on you; fool me twice, shame on me" That's a saying once bungled by President George W. Bush, to the loud delight of the liberal media. But that same media should keep it in mind as Washington mulls a second round of stimulus spending.
A July 7 Bloomberg story by Shamim Adam reported that Laura Tyson, an economic advisor to the Obama administration, had put forward the notion that the $787 billion approved in February was "a bit too small," and that government should consider a second stimulus package "focusing on infrastructure projects."
Although Senate Majority Leader Harry Reid, D-Nev., maintains there is "no showing that a second stimulus is needed," other members, including House Majority Leader Steny Hoyer in a July 7 Politico article, say it shouldn't be taken off the table.
Some financial indicators took somewhat of a shock over swine flu fears on the first day after the swine flu fears were realized.
"But on Wall Street today and overseas, travel-related stocks took a beating over flu fears," NBC correspondent Tom Costello said on the April 27 "NBC Nightly News," reporting that U.S. airline stocks were hit hard, down a little over 8 percent on the news.
"If this lasts two months and spreads across the globe, then the global downturn will intensify," Zandi said. "Millions of more jobs will be lost, unemployment will rise, and this recession will last well into 2010."
On Monday’s CBS "Early Show," co-host Harry Smith talked to economic analyst Mark Zandi about the state of the economy and asked: "Oil's up, gasoline's up, food prices up, stocks, way, way, way, way down. Home owner -- home values are down. Is there an end in sight to all of this bad news?" Zandi replied: "You just made me depressed. No. It's just bad news. It really is...It's just a really tough time for many Americans."
Later, Smith commented on how all the bad economic news seems to contribute to bad economic events: "It just seems like we're in this cumulative cycle that, you know, once one threshold of bad news gets reached, we reach to yet another one." That comment sparked this exchange with Zandi:
ZANDI: Yeah, it's a self re-enforcing negative cycle. You know, that's what happens during recessions, and that's what we're in the middle of right now.
SMITH: Whoa, is this a recession?
ZANDI: You know that -- that's a debate among economists and policy makers. But in the minds of the average American household I think there's no debate, this is a recession. I mean they're worth less today than they were a year ago, they're purchasing power is lower. I mean, for most people that's the definition of recession. So, economists can debate it but I think most people think this is a recession.
With the housing market sinking and causing panic about the American economy, Moody's Economy.com Chief Economist Mark Zandi thinks the time is right for the government to invest in the housing market.
"They're very difficult to tackle these - but I think they are coming forward with plans that eventually will have some benefit," Zandi said on CBS's March 14 "The Early Show." "But they do need to do more. I do think this is a very large problem, and it's going to require a big answer - probably taxpayer money at the end of the day and I think we're headed down that path."