Looks like we’re in for another Recovery Summer:
The latest jobs report is a total disaster. We got 69,000 new jobs in May which is well below already tepid expectations and is below the labor force trend growth rate. Terrible.
But it gets worse!
“The change in total nonfarm payroll employment for March was revised from +154,000 to +143,000, and the change for April was revised from +115,000 to +77,000.” In other words, we gained 69,000 new jobs in May (estimated) but lost 49,000 in revisions. That leaves us with a net increase in employment of just 20,000. Disaster disaster disaster.
Yglesias is overstating the case, I think. What we were going through three years ago, when we hemorrhaging jobs by the millions, was a disaster. This is just bad.
To be honest, I’m kind of surprised it isn’t worse, given what the economy is enduring right now:
I’m sure the Left will start jumping up and down that we need more stimulus (since this has worked so well so far) and the Right will start jumping up and down that we need more tax cuts (ditto). Rumor has it that Paul Krugman had to be hauled away in a strait jacket this morning. But even if these were wise policies — and I don’t think they are — we simply can’t afford them right now. The only possible thing we could afford is more quantitative easement (i.e, inflation) from the Fed. But they’re already taking fire for following the economic ideas of Milton Friedman. Streamlining regulation, overhauling the tax system and suspending the more onerous bits of Dodd-Franks/SOX would also help, but I don’t see the will in Washington.
Five years ago, I said this was going to be a long haul. We were in debt up to our eyeballs, leveraged in the wrong way and turned around. Five years later, I still think the same thing. We’re slightly better off — consumer and personal debt is way down; unemployment is at 8.2% and the economy isn’t falling like a brick. But real recovery is still some distance in the future, closer but not here yet.
The interesting thing is to see what will happen as unemployment benefits run out. This is going to test yet another economic theory: that unemployment benefits create more unemployment. If the job numbers start to come up, there may be something to this. But I’m not optimistic. Work just doesn’t appear because you want it to.
Update: I want to quote Yglesias again, because this is important:
A lot of this is already getting fed through an election-year-politics lens, but it’s important to remember that this is first and foremost a human tragedy for unemployed and underemployed people, and for employed workers who’ve been stripped of bargaining power due to persistent labor market weakness. If growth stays dismal and Barack Obama loses the election, he and Michelle and Jack Lew and Tim Geithner and all the rest will go on to have happy, healthy, prosperous lives. Other people’s careers are much more in the balance.
I don’t care who the hell is in office if the economy improves. If we got a huge surge in jobs and that pushed Obama to re-election, I would not shed a tear. Frankly, I think we are best off with a divided Washington. For all the problems the ridiculous showdowns have produced and their inability to come to a budget agreement, we have seen a modicum of spending and regulatory restraint over the last two years — far better than we ever got when Republicans controlled both the Capitol and the White House. The GOP is half-crazy but, on the budget, they have held Obama’s feet … well, not to the fire, exactly, but at least in the general vicinity of it. At least they’ve admitted that there is a fire … somewhere.
In the end, this is about people who have been out of work for, in some cases, Five. Fucking. Years. There are solutions both sides can agree on — see Tom Coburn’s recent interview with Ezra Klein. But they won’t do them because it a fucking election year.
Screw that. Stick ‘em all in Washington and don’t let them out until they’ve done something that does not involve exploding the debt even more. Either that, or we can create 460 brand spanking new jobs this fall.