MacroScope

Uncertain about the effects of uncertainty on jobs

Job number one at the Federal Reserve these days is to bring down high U.S. unemployment without sparking inflation. Job number two, it sometimes seems, is explaining just how unemployment got so high in the first place.

Two recent papers published by the San Francisco Fed offer what look like opposite takes on the topic.

“(S)tates in which businesses cited poor sales also registered disproportionately sharp drops in jobs and household spending,” wrote Princeton University professor Atif Mian and University of Chicago Booth School of Business professor Amir Sufi in a February Economic Letter.

This supports the view that a drop in aggregate demand led to job losses during the recession…While business concerns about government regulation and taxes also rose steadily from 2008 to 2011, there is no evidence that job losses were larger in states where businesses were more worried about these factors.

In other words, it’s not uncertainty over government policy that hurts jobs, it’s lack of demand.

Although it seems routine, rising euro zone unemployment is still shocking

 

Another month, another rise in the number of jobless in the euro zone.

As expected, the unemployment rate hit a new record 12.2 percent in April, according to Eurostat on Friday, meaning some 19,375,000 euro zone citizens are out of work.

That’s more than the populations of Austria and Belgium combined and almost a quarter are aged under-25.

However, it’s worth remembering that not so long ago, hardly any economists expected to see unemployment climb to these levels.

Greek bond rebound masks stark economic reality

Ten-year Greek government bond yields tumbled to their lowest in nearly three years one day after Fitch upgraded the country’s sovereign credit ratings.

Borrowing costs fell to 8.21 percent – the lowest since June 2010, just after Greece received a bailout from the International Monetary Fund and European Union. The difference between 10- and 30-year yields was also at its least negative since that time.

The move comes after Fitch Ratings raised Greece to B-minus from CCC citing a rebalancing of the economy and progress in eliminating its fiscal and current account deficits that have reduced the risk of a euro zone exit.

Help not wanted: U.S. online job ads see biggest two-month decline since recession

U.S.job seekers saw online job ads dwindle this summer, according to a survey from The Conference Board. Advertised vacancies fell 108,700 in August to 4,684,800, the industry group said.

Jonathan Basile at Credit Suisse noted that the combined drop of 262,000 jobs for July and August was the biggest two-month decline since the last recession.

This measure of labor demand suggests businesses have become a lot less willing to hire in the last two months. Jobless claims in recent months are not showing a deteriorating picture for the layoff side of payrolls, but help wanted online ads are showing weakness on the hiring side.

U.S. payrolls ‘wild card’: public school teachers, employees

The “big wildcard” in making July payroll projections is the size of the swing in public school teachers and other school workers.

Because of the size of teacher layoffs and the effect of the July 4th holiday on the data, the July seasonal adjustment factor can vary significantly from one year to the next, and the variation can be extreme, says Ward McCarthy, managing director and chief financial economist at Jefferies & Co in New York.

Many public school teachers, in addition to some other public school employees, are hired on a ten-month calendar that runs from September through June, large-scale layoffs occurring in July and large-scale hiring occurring in September.

Israel’s new-found jobless

Following on from Nigeria’s rebasing of its GDP numbers, giving it a huge growth boost on paper, it is Israel’s turn to tinker with the numbers.  This time, though, the end result was not positive.

The country’s Central Bureau of Statistics said on Monday that the first-quarter jobless rate was 6.7 percent. This a good 1.3 percentage points higher than the announced fourth-quarter figure.

It does not, however, signal a sudden cull of workers across Israel. It is the result, rather, of Israel adopting a new way of counting employment designed to bring it in line with the way leading Western economies do it. So the equivalent fourth-quarter number would have been 6. 8 percent, slightly higher.