James Pethokoukis

Politics and policy from inside Washington

Does the jobs report mean a V-shaped recovery?

Jun 5, 2009 20:28 UTC

I will give the last word (for today) on the jobs number to Wesbury & Stein:

The jobs report strongly supports our call that the economy bottomed in May and is now in the early stages of a V-shaped recovery. Businesses are shedding jobs at a much slower pace than earlier this year and we would not be surprised to see payrolls start to increase by the end of the summer. The speed of the turnaround cannot be ignored. …  After the collapse of Lehman Brothers last September, monetary velocity plummeted, with both businesses and consumers pulling back from any activity they deemed unnecessary. Now, restaurants and bars are adding payrolls again, a sign that consumer behavior is returning to normal. While some analysts may focus on the rise in the unemployment rate to 9.4%, much of the increase was due to an increase in the labor force, which has risen by more than 1 million workers in the past two months. Without this increase the jobless rate would be a much lower 8.7%.


Wait a Minute!

If the Work Force has gained One Million, where did they come from? Recent High School, College & University graduates? They swim across from Cuba?

From what I remember, you don’t go straight to the unemployement office to apply for help once you graduate, which is where they get the Unemployment Calculations, so, why is this guy subtracting from the announced figures, in order to show a lower level?

Not a logical premise, and does not compute!!!

I am very suspect, as he is probably an Obama Supporter.

Posted by Jack S. | Report as abusive

An improving job market

Jun 5, 2009 17:21 UTC

I wanted to elaborate a bit on the job market, with my first embedded graph of the blog! It shows the diminishing rate of job losses, though the unemployment rate will continue to rise, especially as more people try and return to the workforce.



John T,

Agreed that there is a problem with the birth/death plug. The problem is not that it is large. That is a seasonal artifact. The plug is large in May every year. The problem is that is it larger than May of last year, in fact, 25% larger than for May of last year. The plug for leisure and hospitality is up 2.7% even though room occupancy has gone through the floor. The plug for construction is up 7.5% despite job losses in construction in every month since last May. The plug for manufacturing is up 75% from last May, even as auto suppliers close down left and right. This is nuts.

Posted by kharris | Report as abusive

The Democrats’ 2010 unemployment trap

Jun 4, 2009 16:25 UTC

In the WSJ today, Karl Rove notices that the unemployment rate may still be really, really high on Election Day 2010: “The difficulty for Mr. Obama will be when the public sees where his decisions lead — higher inflation, higher interest rates, higher taxes, sluggish growth, and a jobless recovery.”

Me: I have been saying for awhile that voters in the congressional midterm elections are more likely than not to think the U.S. economy still stinks — even if GDP is expanding at a steady clip. Unemployment could be around 10 percent with both inflation and interest rates on the rise.

Certainly the recent history of U.S. elections is that the party in power gets blamed. The classic example is 1992. The unemployment rate was 7.4 percent, still close to the cyclical high of 7.8 percent, even though the economy had been expanding steadily since the second quarter of 1991. President George Bush lost to Gov. Bill Clinton handily. Even by 1994, voters thought the economy still dodgy and voted the GOP back into power in Congress. Two things the Dems have going for them is that 1) the GOP has to protect more Senate seats and 2) high-tech redistricting methods have made huge swings on the House less likely.


Tomorrow’s figures will finally prove once and for all what every journalist was saying about the Obama economic policies and plans. The criminals will no longer, those who remained, have any place to hide as the truth in a third party report, and I honestly hope it will be the truth, will rove everything that has been said by analysts for the last 3 years. We are all waiting to see the financial “GUM”, great unwashed/unwilling massaes, investment direction to hedge the mess that will be revealed tomorrow.

Do we need a second Obama stimulus pacakge?

May 29, 2009 14:56 UTC

Back in January when Team Obama was pushing its stimulus plan, the White House put out a self-analysis of the potential economic impact of the plan, authored by Jared Bernstein and Christina Romer.  If Congress passed the president’s plan, the report said, the U.S. unemployment rate would rise to just under 8 percent by later this year and fall to 7 percent by Q4 2010. If the plan was not passed, the reported predicted, the U.S. unemployment rate would climb to 9 percent next year.

Time for a reality check. Unemployment is already at 8.9 percent The consenus private sector estimate is that unemployment will average 9.7 percent next year. Douglas Elmendorf, head of the Congressional Budget Office, says unemployment will peak at 10.5 percent next year.  One conclusion is that we need another mega-stimulus package. An alternatve conclusion would be that the first one isn’t working and it’s time for Plan B.


I would agree that the original stimulus plan isn’t working. The plan was poorly planned and I believe that the Obama Administration rushed this plan due to all the hype generated from Obama’s campaign promises. If the country is going to move forward with another stimulus package, I think the money would be put to better use if it was invested into civil construction projects. Civil Construction projects would not only help boost the economy, but it will also help to decrease the growing unemployment, which at this point in time, getting people back to work is one of the most important issues this country faces.

Posted by Derek | Report as abusive

Unemployment and the 9-handle

May 21, 2009 13:33 UTC

The government’s nastier stress test scenario looked for U.S. unemployment to rise to 10.3 percent. Today’s weekly jobless claims report (631,000) is another indication that we are well on our way to that level. As the econ team at JPMorgan sees things:

Although payroll declines may be easing, continuing jobless claims
indicate that the unemployment rate is still rapidly increasing.
Continuing claims increased 75,000 in the week ending May 9 to 6.662
million, and the insured unemployment rate rose to 5.0% from 4.9%. The
insured unemployment rate has increased a tenth of a percent in every
week since the April household survey week. Given this pattern, the
normal unemployment rate will probably rise from 8.9% in April to at
least 9.2% in May.