James Pethokoukis

Politics and policy from inside Washington

The horrendous June jobs report

Jul 8, 2011 17:07 UTC

When economists are expecting 100,000 or so net new jobs, and the Labor Department reports measly gains of just 18,000 (plus an increase in the unemployment rate to 9.2 percent), the reaction sounds like this:

– “All in all, an employment report with no redeeming features whatsoever – employment, unemployment, hours and wages all disappointed.”- Barclays

–  ”The June jobs report was a shocker. It was far worse than expected, and weak on all key dimensions – job creation, unemployment, the length of the workweek, and hourly earnings. The recent pattern of jobs suggests that the economy hit a brick wall in May.” — IHS Global

– “Overall the June Employment Report was quite disappointing, with basically no positive offsets to the poor headline results.” — Goldman Sachs

–  ”The June employment report was universally weak and undoes the modest improvement in the economic data we have seen over the last two weeks. We are back where we started; the risk of a cold summer, similar to last year, is palpable.” — BofA Merrill Lynch

–  ”It is hard to excuse this report on supply-chain disruptions and it suggests that growth momentum evaporated as the second quarter drew to a close.”- RDQ Economics

–  ”Unfortunately, leading labor market indicators like temporary help employment, aggregate hours worked and first-time jobless claims remain weak and thus do not suggest an imminent reacceleration in the labor market.” — MKM Partners

Indeed, if the labor force, which shrank again, was as big as it was when President Obama took office, the unemployment rate would be north of 11 percent. As it is, the broader U-6 measure surged to 16.2 percent from 15.8 percent. But with an economy growing at just 2 percent or so, expectations should be low.  If the economy picks up in the second half, so should job growth.

But we have a long way to go before getting the unemployment even back to 8 percent or so by Election Day 2012, needing some 255,00 jobs a month. Obama’s political team seems to think the unemployment rate does not matter. We shall see. At his new conference today, Obama offered plenty of excuses, including blaming uncertainty over the debt ceiling:

We’ve always known that we’d have ups and downs on our way back from this recession. And over the past few months, the economy has experienced some tough headwinds — from natural disasters, to spikes in gas prices, to state and local budget cuts that have cost tens of thousands of cops and firefighters and teachers their jobs. The problems in Greece and in Europe, along with uncertainty over whether the debt limit here in the United States will be raised, have also made businesses hesitant to invest more aggressively. The economic challenges that we face weren’t created overnight, and they’re not going to be solved overnight.

Hardly the stuff for a soul-stirring campaign ad. A few other observations:

1) Will Obama now make a renewed push for a payroll tax cut extension to be part of the debt ceiling negotiations?

2) Will Tim Geithner leave sooner rather later to be replaced by someone with a job-creation background like GE’s Immelt or Facebook’s Sandberg?

3) Will Rs dig in even further against raising taxes?

4) Will Obama’s approval numbers fall below the plateau they’ve sort of been stuck on (not counting the OBL  bounce.)

5) Will the weak economy nudge another GOPer to get into the 2012?

 

 

COMMENT

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Why the GOP should reject tax increases, in one chart

Jul 8, 2011 00:20 UTC

Why are Republicans demanding a debt deal that has big spending cuts but no tax increases? (Besides, of course, the fact that spending is the problem and the last thing this weak economy needs is a tax hike?) Maybe it’s because the last time they agree to one of these “$2 in spending cuts for every $1 in tax hikes” agreements, they got snookered.

An explainer from Americans for Tax Reform (which created the chart):

In 1990, President George H.W. Bush was promised $2 in spending cuts for every $1 in tax hikes by Congressional Democrats. That’s not what happened.

All $137 billion in tax hikes went through. Most notable was raising the top marginal tax rate from 28 percent (the Reagan low) to 31 percent (itself a setup for the 1993 Clinton tax hike of this rate all the way up to 39.6 percent). There were also increases in “sin” taxes and the Medicare payroll tax, as well as the yacht “luxury tax” that President Obama seems so intent on re-visiting on the jet plane manufacturers.

Not only did the $274 billion in promised baseline spending cuts never materialize–baseline spending was actually $22 billion higher than what CBO projected it would be before the deal. This despite another tax hike/baseline spending cut deal in 1993 (the Clinton tax hike) and the GOP takeover of Congress in 1995.

 

COMMENT

In case anyone does not know, “The Economist” is an über-left-wing publication that parrots the DNC. The ONLY reasonable path to fiscal responsibility is TO CUT TAXES on job-creators (i.e., the “wealthy”, and TO CUT SPENDING. This is the paradoxical truth touted by JFK in 1962, and proved every time it was tried in modern history, from JFK to George W. Bush. Tax cuts increased revenues to the Treasury that Tax-N-Spend liberal politicians eagerly used on new spending programs. The problem is NOT revenues, but SPENDING!

Conservatives may tentatively control the House, but ruling-class RINO’s still hold the Senate and hold some powerful positions in the House. These closet-liberal Republicans are too willing to deal with Harry Reid and Nancy Pelosi clones in Congress.

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