EMPLOYMENT REPORT
It is nice to finally report that the employment report was encouraging as nonfarm payrolls rose some 290,000 in April. Even if the 66,000 temporary government employment for the census are excluded the job gains were significant.
Even the increase in the unemployment rate to 9.9% was actually a positive as it largely reflected individuals who had earlier dropped out of the labor market thinking things had improved enough that they resumed their job search.
Moreover, the index of aggregate hours work rose significantly and is up 1.8% from its October bottom.
Because of the rise in hours worked average weekly earnings are also rising nicely. But the increase in weekly earnings is almost all due to the increase in hours worked as average hourly earnings growth is still slowing. Of course this has positive implications for lower inflation and means that the Fed does not need to be in a hurry to tighten. Inflation does not appear to be a significant threat and the situation in Greece and other European debtors has significant deflationary implications.
Obama’s team (Summers, Geithner, Romer) are talking about the “new normal” of near permenant high unemployment, especially among males.
Is Obama throwing in the towel on this or just lowering expectations?
STL: I think both. These are encouraging numbers, but no where near what they would have to be to expect a return to a sub 6% unemployment rate any time in the forseeable future. I have argued that we need some sort of catlyst to see that happen, not even vigourous Keynesian policies will do the trick and I think the smart folks in Obama’s administration buy my argument. I actually think that Obama has gotten things about as right as he can on the economy although I am distinctly unhappy with the employment picture and would probably foster more socialist policy if I was king. I think the real danger is that with unemployment remaining high, the GOP will take over Congress in the fall and work hard to stop the turn around to improve the chances that in 2012 they can recapture the White House and enact more tax cuts for the rich while gutting government spending for everything but the military industrial complex. The other fear is that Obama like FDR will be pushed into trying to bring the deficits down too quickly by increasing taxes too much, cutting too much or the wrong kind of government spending or some combination. That he has done it right so far is no assurance he will keep it right particularly if he has to battle a resurgent GOP. My other concern is how we react as a country to the failure of one of our constituents like California. Europe is not exactly showing us the way.
Yes, they are just reflecting standard or consensus thinking.
Just do not expect any radical or off the wall thinking by this administration.
The duration of unemployment series pressed higher in the April report – directly related to expectatins of persistent higher unemployment (unemployability). Unemployability is also kind of a hitch to assessing the odds of wage gains in the medium term. If we have created a substantial class of former workers who will have a very hard time getting work, they will stop functioning as much of a drag on wages. Only at the lowest level would those people represent a “labor pool”.
If, instead, many of the 33-week-and-up unemployed are ready to make a significant contribution to output in short order, then they do represent a drag on wages. Either way, not good for somebody.
Terry, I’m a bit confused. You said you “would probably foster more socialist policy if I was king”, but then lamented that “Europe is not exactly showing us the way.” Isn’t western Europe largely socialist and aren’t at least some of their economic woes self inflicted because of the same policies you would prefer more of here in the US?
Why is nobody asking how transportation and warehousing lost jobs even as manufacturing supposedly gained? This is physically impossible. These numbers are fishy.
http://www.surviveunemployment.com/april-jobs-report-questions-05-07-2010
My son is a student/musician in Nashville, and he has had 4 job offers this morning.
I made certain he had the skills to work in maintenance, cleaning, remodeling, landscaping etc. so now he will be busy for a while (passing down a tradition from my father, who taught us to finish concrete at age 14).
Son says Nashville is a really tragic mess.
Anonymous, I think you are looking at two different issues–one on a political unit basiis–country or state- and one on a group basis–European Union or United States. Certainly, some countries in Western Europe are considerably more socialist than the United States and some of those countries–as opposed to the European Union– are doing relatively well. My own view is that if you redistribute wealth through work rather than handouts you can avoid fostering a permanent underclass which admittedly has developed in some countries of Western Europe. I would have preferred it if the stimulus bill had less tax cuts and more boondoggles and the boondoggles would have been in things that would be around in 50 years–ie infastructure. Where Europe is not setting an example is handling Greece where the problem is that the government spends too much compared to what it takes in. Greece is not really an example of socialism because while it hands out lots of goodies to the population it does not take money from anyone. I think this is like California where because of the difficulty raising revenue, California simply can not provide basic government services without bailout funds from the Federal government. That should be contrasted with Wisconsin which has also had very substantial budget problems, but tradionally has taken in a lot of revenue. Wisconsin’s problem is that it supports a lot of government services. In good economic times that works pretty well. people grouse about their taxes, but get a lot for them. When the economy tanks, the tax revenues tank as well and people are loathe to give up the government services/aid just when they need them most. The difference is that while Wisconsin may get back on its feet with little change to taxes or spending if the economy improves, Greece and California still face the problem–less severe perhaps–in good times–they do not collect enough to pay out what the people want/need/expect.
Given the need to rebuild after the floods I would hardly use your son experience in Nashville as an indicator of labor/economic conditions in the rest of the country.
But this is not to disagree with your point about his having these marketable skills as important.
Text if you get work.
140k of those jobs was created in the birth/death model.