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The Spectacle Blog
Economic data has been mixed and basically stagnant in recent weeks, pointing to an economic recovery which has gone from weak to weaker…and far weaker than we should be seeing at this point in the business cycle, i.e. during a recovery from a deep economic downturn.
On Wednesday morning, the private payrolls firm ADP reported its monthly estimate of private sector employment conditions. The report, for April, came in with a gain of 119,000 jobs, far below the Bloomberg consensus estimate of 183,000 jobs. The prior month was also revised down slightly.
Although the reports do not correlate perfectly, this does not bode well for Friday’s official Labor Department release of the national employment situation. Prior to revisions which may follow the ADP report, the consensus was for 165,000 new jobs to be reported on Friday, including 178,000 new private sector jobs and the loss of 13,000 government jobs.
The unemployment rate is estimated to be unchanged at 8.2 percent, but this is a tricky call because changes in the “participation rate” have had as much impact on changes in the actual number of working Americans in recent months.
The ADP result contrasts with a Gallup survey released minutes after ADP which shows Gallup’s Job Creation Index at its best level since July 2008. Gallup released a separate poll on Thursday which showed a 0.1 percent drop in unemployment from March to April without seasonal adjustments but a substantial rise in the seasonally-adjusted rate.
Also on Thursday, the government’s report on initial jobless claims came in slightly better than expectations, while the prior week’s number was revised upwards (i.e. more unemployed.) For several weeks in a row, new claims for unemployment have come in higher than estimates and most of the revisions have been upward.
And later on Thursday morning, the ISM non-manufacturing report came in below the lowest Bloomberg estimate.
Earlier on the week, on Tuesday, a stronger-than-expected report on manufacturing sent the stock market up to a very strong gain, though more than half of the gain had evaporated by the end of the day. ADP’s weak manufacturing employment number (actually showing a loss of 5,000 jobs) was an odd contrast to the Tuesday report.
On Monday, the Chicago Purchasing Managers Index report was substantially weaker than expected, as was the Dallas Fed’s survey of manufacturing. Personal income and spending data, along with recent inflation data, have been roughly in line with expectations — expectations which are typical of moderate-at-best economic growth.
Last Friday, the important GDP report showed an anemic 2.2 percent year-over-year growth, well below the average estimate of 2.5-2.6 percent. You may recall that the stock market did well on Friday, likely because the weak number perversely gave markets hope that the Fed may come back in with “QE3.” We should all hope not; it is remarkable how little the Fed has learned from its failure thus far.
Beyond showing how useless economists are when it comes to estimating what reports will show, the data — to they extent they are consistent with anything — are consistent with the Obama Non-Recovery.
Many months ago, I had the opportunity to be a guest on Larry Kudlow’s TV show. He asked me if I thought we’d see a “V” recovery or a “W” recovery. I said I thought we’d see a “square root” recovery, i.e. a small bounce followed by stagnancy because Obama’s policies would be somewhere between growth-neutral and anti-growth, but certainly not pro-growth.
I’ve been proven right so far, sadly for America.
But if there is a bright side, it is that many of Barack Obama’s 2008 supporters are actually people who would like to have jobs. And other than tenured university professors and their students, who probably represent a good chunk of his support, they must be disappointed at the lack of improvement in employment opportunity under The One.
As for me, I would gladly forgo some, or even much, of the income I hope to make over the next six months if it would mean the defeat of President Obama in November. I realize that many Americans cannot easily afford having little or no income, even for a few months, and that the Obama economy is a true hardship for many.
But wouldn’t it be better to have a weak economy for six more months, allowing the election of a president and members of Congress who will bring in pro-growth policies, than to have the re-election of Obama and another four years of financial repression, persistently high unemployment, and the tyranny of executive agencies out to “crucify” anybody who disagrees with them?
Although two years ago, when liberals said I wanted the American economy to do relatively badly in order to have the political issue, I said they were wrong. And they were wrong, because nearly three years is too long to want the American people to suffer no matter how beneficial the eventual result. But when we’re talking about a few months instead of a few years, my view has changed. At this point, I do in fact hope that the economy doesn’t improve so that Obama loses.
The bottom line, though, is that what I hope is irrelevant. More important is that the Obama administration’s policies, and those of his henchmen in Congress, are antithetical to economic prosperity. To the extent that there is any job growth, it is a testament to the American spirit, and it is happening in spite of, not because of, Barack Obama.
I may be projecting, but I think Americans are realizing that and may indeed be willing to admit they were wrong in 2008 to elect a man whose economic views were so explicitly redistributionist and unAmerican.
If the economic data persist as disappointing as they’ve been recently, the economy may be Mitt Romney’s strongest selling point — which plays right into his technocrat, businessman wheelhouse.
———————-
One important thing to keep in mind is that the stock market and the economy (particularly employment) are related, but not the same. In particular, large corporations can find economies of scale and efficiencies which can lead to increased profits without increased employment. Thus, a strong stock market, especially in the large-cap sectors (the biggest companies), does not imply broader economic prosperity — and certainly does not imply better employment since those efficiencies are often achieved by firing people. The flip side of the coin is that a stagnant economy does not mean that stock prices are “wrong” for being relatively strong. An argument can be made that if a Republican president is elected, the EPA stopped, and Obamacare turned back, stocks may be very cheap here.
View all comments (26) | Leave a comment
More Blog Posts by Ross Kaminsky
http://spectator.org/blog/2012/05/03/economic-data-continues-to-dis
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Brendan| 5.3.12 @ 9:57AM
I don't bother to hope that the economy will get worse or stay the same so that O and his minions get tossed on their ear. Instead, I am patiently confident that liberal economic policies and regulations will continue to have the same effect they have had everywhere. That is, a negative one. The one thing I fear is O pretending to intend to do a lot of what we would want him to do, reduce restrictions on drilling on federal lands, allow more refineries, open up Keystone, tell his agency heads to lie.... But that is just a fear. Once again, I am confident that O's inner arrogance and belief in fascism and control would never allow him to do that. He will just continue to attack and fearmong. And that will be his undoing (and our salvation).
Mike 3/505| 5.3.12 @ 9:58AM
"165,000 new jobs to be reported on Friday, including 178,000 new private sector jobs and the loss of 13,000 government jobs."
Ross,
The above is what I like to say "economically deceptive." Most economists won't admit this, but the 'loss" of government jobs is actually a gain to the economy and we should show it as such. The unemployment benefits paid to a recently unemployed government worker are almost always lower than the pay and benefits paid to them whilst he is employed. Any way you look at it, it is a net benefit to the economy and the taxpayer to lose government jobs.
Ross Kaminsky | 5.3.12 @ 10:03AM
Mike,
I agree. And the long-term impact of cutting government workers is a huge plus for the rest of us.
Indy| 5.3.12 @ 10:39AM
Is the loss of government jobs at the state / local level, surely it is not Federal? Here is where the GOP fails to educate the public. The Federal goverenment is expanding, IRS, HHS, DHS, GSA etc. What I think happened in the states is the loss of Federal funding from the stimulus bill, when the $ ran out, what were the options? raise taxes? or cut spending? States should server as incubators, we should learn from best practices. The Feds are chasing the CA model which we know ends in failure, which states are doing a good job? If cities like Detroit are going bankrupt, why should the Federal taxpayer bail them out? Those cities in financial trouble need to look to their policies, pension plans, etc. I voted with my feet and will do so again if necessary.
GOP make the point that the Federal government is expanding, do we really need all those employees? NO
Ross Kaminsky | 5.3.12 @ 11:11AM
Correct, it's state/local. It's a start. But you're absolutely right that we need to shrink the federal government, even if just through attrition.
This is one area where I don't think Romney will be good enough, but better than what we have now.
Indy| 5.3.12 @ 11:57AM
I don't buy the attrition argument. The private sector has had to cut, there are many duplications in the Federal Government and many roles that should not be done by the Government. What is attrition for a Federal employee? retirement? death?
Sorry, the time to cut, has passed, use the GSA as an example, if ObamaCare is deemed unconstitutional, immediate cuts to the IRS and other agencies which are ramping up to implement. Cut TSA, expansion to rail, bus stations must be stopped, and privatize many functions.
No, Romney will not be good enough but this is why we must elect as many conservatives to the Senate / House and apply pressure to them to force it...I know it will be hard and I have friends who work for the Federal government, they are Americans and it is hard to let go of employees (I've had to do that, it is an awful feeling) but it has to be done, we are broke.
How many programs at there to teach financial literacy, 50? Anyone see the irony in that, the Feds teaching financial literacy?
"Federal financial literacy efforts are spread among more than 20 different agencies and more than 50 different programs and initiatives, raising concerns about fragmentation and potential duplication of effort."
http://www.gao.gov/products/GAO-11-504T
Ross Kaminsky | 5.3.12 @ 2:07PM
I'm not saying that attrition is philosophically the best answer. I'm saying that it's extremely difficult to fire a federal employee, much of the time. To the extent that it's cheaper to let someone retire than to fight the lawsuit if you try to fire him, we should probably let him retire.
Where we can fire, especially in the many unconstitutional departments of government, which is to say most of them, we should.
TLP| 5.3.12 @ 10:06AM
I don't understand.
What do you mean by: "The Economic Data Continues to Disappoint"? I don't understand.
How can anyone be disappointed, when they know that These "Numbers" were INEVITABLE?
In my world, we get Disappointed when we THINK Something good is about to happen: More Money, a Better Car, a Girlfriend with a Bigger Rack, and then it doesn't happen and your Hard Drive fried, so you can't go on any more of those sites with all of the Fake Nude Pictures of all of the Movie Starletts and......wait.
What?
What was I saying? Oh, yeah.
You're the Great White Trader. You, of all people, ever in your Lustful Quest for the Once Mighty Dollar, has to KNOW that are Days are Numbered.
It's my belief that, as in other forms of Cataclysm - A giant Meteor that we KNOW will be here in a Month, and that the Earth's total Anihilation is certain - I believe that things are being withheld from us. I think that the situation is Enormously WORSE, than we are being led to believe.
I think that we are getting ready to witness an Exodus of American Companies, the likes of which, we've never seen before. I think that the FEDS lame attempt to stop this Ship from sinking, by drilling more holes in to the bottom, to let the water out, is about to unleash an Inflation Tsunami, that we haven't seen since the FIRST Jimmy Carter was President.
It's okay. You can tell me. OBVIOUSLY, I'm the only one who can stand you, today.
OBVIOUSLY, three days in a row of you, is more than most people wanna deal with.
And, OBVIOUSLY, you didn't go look at what I wrote about that Pant Load - Ed Shultz, day before yesterday.
So, how bout it?
What's REALLY fixing to happen?
And, should I be stocking up more food, than I already have?
And, where do you live, in case I decide I'm gonna blame all of this, on YOU?
Ross Kaminsky | 5.3.12 @ 10:33AM
TLP,
Sometimes I just don't get you.
You alternate between apparently wanting to have a conversation and tossing out what you must perceive as insults, or at least jabs.
For the record, I don't tend to read a lot of the comments on articles other than my articles. I just don't have time. So, no, I have no idea what you said about Ed Shultz.
Anyway, by "disappointing", I don't mean so much that it disappoints me (or you) but rather than a lot of the data has come in at the low end of (or lower than) the estimates of the so-called experts.
As for your point about expectations, from my personal view, I agree with you. In particular, I agree that we should not expect better results from policies as bad as those being implemented by this government.
In that sense, as I've said repeatedly, what economic growth there is is a testament to the American entrepreneurial spirit; it is in spite of, not because of, anything the Obama administration has done or is doing.
As for stocking up on food and that sort of thing, I'm not of that mindset...though I am well-armed.
And with that last fact in mind, I suppose I can tell you that I live in the foothills near Boulder, CO...surrounded by leftists.
TLP| 5.3.12 @ 11:24AM
Too bad.
I guess we'll just go back to the way it was before.
Me being Clever and Right, and you being Borinig and Humourless.
I look forward to your Hostage Tape, from your Arab Captors.
Evidently, guys like YOU, guys who think there the smartest guy in every room they're ever in, never seem to LEARN from others, who, like you, think that their Self Importance makes them immune from the realities of the Planet.
Danny Pearl comes to mind.
I guess we'll soon find out.
Ross Kaminsky | 5.3.12 @ 2:10PM
You're a strange bird, TLP.
Not sure what I've said that makes you think I think I'm the smartest guy in the room.
It's sorta funny that you accuse me of that immediately after describing yourself as "clever and right."
Project much?
Ross Kaminsky | 5.3.12 @ 2:19PM
Oh, I'm only going to be in Arab countries for a few days...most of the trip, as I said, is Sri Lanka, where the vast majority of the people are Hindu, not Muslim.
TLP| 5.3.12 @ 5:25PM
It only takes ONE Day.
Matty| 5.4.12 @ 2:43AM
Isn't most of the Sri Lankan population Buddhist, with a minority Tamil Hindu community?
Good Luck| 5.4.12 @ 8:58AM
Good luck with your trip Ross!
I'd not worry too much about kidnappers in Sri Lanka, but be careful nonetheless.
I find you to be one of the smartest guys at TAS and one without bias or hatred. I wish frequent TAS commentator had the same qualities.
For someone who actually lived under communist rule, your articles are always a lang-full of fresh air.
Clint| 5.3.12 @ 10:10AM
We're Still Experiencin' Bathtub Model Unemployment Flow.
Oldefarte| 5.3.12 @ 11:22AM
I'll keep this as brief as possible, since G-d forbid I don't want the TAS PARAGRAPH GOON SQUAD hot after me again. Anyway, I agree with I think TLP that this economic/financial implosion should not be shocking/surprising to anyone with half an economic brain. It is/was predictable on 11/4/08, and quite frankly, I'm only shocked that it is not worse than it currently is. OMG, after these DOMESTIC TERRORISTS have done anything/everything imaginable to destroy this country and its economy from their anti-business, anti-capitalistic programs/policies, why would not anyone be so also? It goes without saying [to some of us at least] that IT'S THE DEMOCRATS......AND YES WE'RE STUPID [for electing these domestic terrorists in 2008]. WAKE UP AMERICA [or sell your motor vehicles and replace same with a donkey and wheel-cart, 'cuase we're headed toward a Cubian economy if the Democrats are re-elected in November]!!!!! :
http://youtu.be/U6DVOqdayU8
Did I break the TEN COMMANDMENTS OF PARAGRAPH IMPLEMENTATION??????
aware| 5.3.12 @ 6:15PM
Then you'd better prepare for a Cubian(pretty sure you mean Cuban) economy.
“Democracy is a pathetic belief in the collective wisdom of individual ignorance. No one in this world has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby.”.....H.L. Mencken
Mike 3/505| 5.3.12 @ 9:55PM
Olde Farte,
I'm old also....Paragraphs help me process what you are saying. It's easier to read that way. It's not meant as a goon tactic....but as a plea for a little help for my old eyes. Give a fellow old fart a break.
Regards,
Mike
TAS THOUGHT SEAL TEAM| 5.4.12 @ 11:27AM
Dammit [Oldefarte]......DON'T MAKE US come in there and get you!!!!
TexasMom2012| 5.3.12 @ 11:26AM
One example of Obama's poor policies was the loan to Solyndra, over a half billion, (with a B) dollars loaned to an Obama bundler for "Green energy". I could have picked any random 500 people from a phone book, given them $1 million each to invest in the startup or business of their choosing and They would have produced vastly more permanent jobs than any of Obama's green 'investments'. And I am tired of hearing government call these either pie in
the sky or crony tax payer give a ways 'investments'! No where in the constitution does it authorize the federal government to make investments in the private sector nor should it be picking winner and losers, we are supposed to be "equal" under the Law of the Consitution... And the Feds should therefore treat all companies equal, period.
Bill| 5.3.12 @ 11:42AM
Dept. of Labor keeps lying about the labor market, and who's in charge of it: Hilda Solis. A Mexican whose parents broke our country's immigration law and have no respect about America. Hilda Solis initiated a program that will allow Hispanics get high paying federal govt. jobs while thousands of educated whites students are unemployed and cannot find a well paid job.
aware| 5.3.12 @ 6:17PM
Nick isn't going to like that post.
randyinrocklin| 5.3.12 @ 11:47AM
retail sales came below expectations today as well..lots of "unexpectedly" bad news....some recovery.unfortunately, Romeny does not have what it takes to win this. sad.
Bill| 5.3.12 @ 12:21PM
Obama's re-election team: Dept. of Labor.
Kendall| 5.3.12 @ 5:24PM
Thanks for the excellent article, Ross. This preoccupation with monthly unemployment figures seems to reflect the economic illiteracy of most media types. The real issue is the long-term, chronic unemployment, which is much higher than the much tauted monthly figures. It's not 8.2% but, depending on how you measure it, somewhere betwene 10-15%. James Pethoukoukis addresses this on the American Enterprise blog:
http://blog.american.com/2012/.....-isnt-8-3/
It would behoove Mitt Romney and the Republicans to focus on these far more realistic unemployment numbers, particularly among young people and college graduates who are most harmed by Obama's economic policies.
It has always been clear tnat Obama's Marxist views and redistributionist poilicies were never going to spur the economy. Indeed, the more one observes his inane policies, the more one is inclined to believe that he is pursuing Frances Fox Pinhead's (aka Piven) plan to overwhelm the system as a prelude to some kind of revolutionary change, of which the OWS crowd represents the ragged foot soldiers. His anti-energy policies, radical environmentalism, fear of CO2, attacks on business and wealth creators, deficits and debt, and Obamacare are all damaging both short- and long-term chances for economic rejuvention. Better that things stay in the doldroms for a few more months to seal Obama's fate, so we can return to genuine pro-growth policies under Romney and Republican leadership.
But it's also more than just the economy. It's about our freedom and future as a nation. We could have a temporarily growing economy, but still lose of our birthright. To paraphrase Dennis Prager, the upcoming election is less about Obama than it is about "a nation that would elect a Barack Obama."