Counterparties: Even more bad job market news

May 4, 2012

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Another month, another troubling jobs report. The summary: 115,000 jobs created in March, 8.1% unemployment, 342,000 people leaving the labor force and a labor force participation rate that hasn’t been this low since 1981. (Felix has the rundown of the worrisome implications of people deciding to simply stop looking for work.)

The NYT has a nice Storify of the Twittersphere’s reactions; HuffPost has an even more in-depth liveblog. The award for the most apt reaction to the report goes to the NYT‘s @BCAppelbaum: “What if these are the good times?”

The reaction from analysts and economists, who predicted we’d see about 160,000 jobs created in April, was muted, with a few saying that a warm winter essentially just pulled forward spring hiring to earlier in the year. Ray Stone of Stone & McCarthy (no relation, sadly) suggested some of the shrinking workforce could be chalked up to austerity:

We suspect the decline in the labor market participation rate is in part an artifact of the exhaustion of extended unemployment benefits, and the related shortening of benefit periods in some states.

The idea of government cutbacks as a drag on the labor market became something of a theme:

@Reddy: “Government jobs down by 607,000 since Obama took office, all due to state & local cuts. Federal govt jobs up by 31,000.

@JustinWolfers: “When 106% of jobs lost since January 2009 are in the public sector, should we conclude the stimulus failed, or we never really tried it?”

We’re now short roughly 12 million jobs. In a study released today, Pew reports that 29.5% of the unemployed some 13.3 million Americans have been out of work a year or more. Nearly 23 million people couldn’t find work in April.

And on to today’s links:

New Normal
95% of job losses during the recession came in “middle-skill” occupations – Bloomberg Businessweek

Investigators are looking into allegations that DSK raped a prostitute in 2010 — NYT

Today’s markets are like particle physics, and that’s a very bad thing — Nick Dunbar
The neutrino arbitrage – Felix

America’s second-largest pension fund is suing Wal-Mart execs for alleged bribery
Wal-Mart bribery scandal may complicate its U.S. expansion plans – NYT

Ezra Klein interviews Paul Krugman (full transcript) — Wonkblog
The U.S. productivity farce — MacroScope

Facebook’s S-1 filing by the numbers  — Dustin Curtis
Is Wall Street hustling Facebook? – John Carney

Mea Culpas
Yahoo: CEO’s fudged resume was an “inadvertent error” — WSJ
In 2009, Yahoo’s CEO didn’t correct an interviewer about his college major All Things D

A two-notch downgrade could mean BofA will post $6.2 billion in collateral — Bloomberg

Long Reads
China’s Communist Party faces its biggest threat since Tiananmen Square — Bloomberg Businessweek

NY Post columnist goes full-racist on Jay-Z, Brooklyn Nets – Daily Intel

Voter registration falls for Hispanics, blacks — WashPost


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“Voter rolls typically shrink in non-presidential election years and registrations among whites fell at roughly the same rate”

Is it just me, or does this take most of the air out of the rest of the story?

Posted by dWj | Report as abusive

Yet another article (in the WSJ this time) on the imagined economic efficiencies of renting. It explains quite neatly how the homeownership frenzy of 2005-2006 didn’t work out, then jumps to the conclusion that owning your home must be a Really Bad Idea.

Two problems with that:
* If you intend to pay $12k a year of rent in retirement, rather than the $6k it might cost to own that property, you will need to arrange an additional ~$8k of income (necessarily adjusted for inflation). At the present payout rates, we’re talking hundreds of thousands of dollars of additional savings, just to pay the rent. Is your typical renter saving that kind of money?

* Renting isn’t really cheaper than owning long-term, or landlords would all go broke. Most calculators skew the results by assuming an ownership period of less than a decade (over which time the buying/selling costs dominate). Also, rented properties are generally inferior to those that are owner-occupied. E.g. the “cardboard bungalow” cited in the article.

Posted by TFF | Report as abusive

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