Step 1. Steal Underpants

by Dave Schuler on June 1, 2012

Unless something explodes, bursts into flame, or is hijacked the big news of the day is likely to be the Bureau of Labor Statistics Employment Situation report for May. The report is not good. A net of only 69,000 jobs was added to an economy that needs almost twice that just to employ the new people who enter the labor market as a result of the natural increase. To add insult to injury April’s tepid 115,000 was revised down to 77,000. Here’s what Barry Ritholtz said in anticipation of the announcement:

Net new jobs has clearly been on a downslide since the peak 5 months ago.

A variety of other data points suggest a slowing of the economy, but not an imminent recession. However, it wont take much int he way of negative data to raise those fears again.

The overall trend in employment has been muddling along, 100-200k for most of the past year. Consensus is for 150,000 new jobs following the punk April report of 115,000.

When you combine the very slow (or no) GDP growth announced yesterday to this jobs report, it paints a picture of an economy that has passed the peak of the present business cycle and is slowing towards the trough of the next recession. This was a point at which we really needed robust growth.

It’s been clear for some time that the strategy of the president’s re-election campaign is to produce fear, uncertainty, and doubt about Mitt Romney, the presumptive Republican nominee. It is a strategy not without risks—for example, it jettisons the hope and change campaign of 2008 and at least some of the voters who supported Barack Obama for those reasons.

One thing that could derail the strategy entirely is a domestic economic situation that is itself so frightening coupled with a lack of any plan for altering its present trajectory that is so obvious that they overwhelm any fears, uncertainty, or doubt about what the other guy would do on the grounds that anything would be better than this. This month’s employment situation report is not good news for the president’s re-election campaign strategists.

{ 57 comments… read them below or add one }

Icepick June 2, 2012 at 10:48 am
Dave Schuler June 2, 2012 at 1:16 pm

I don’t know what Wisconsin is doing about closing the far-more-fucked-up-than-usual-fucked-up-cannibal-shit gap with Canada.

Maybe after the recall election.

steve June 2, 2012 at 1:36 pm

“If Bush hadn’t made the tax cuts during his presidency how do you think that would have effected the revenue flow? ”

Based upon past experience, see the 1990s, I think tax revenue would have been higher.

“As far as Obama extending Bush’s tax cuts, do you think that a one year extension is going to be enough to motivate business to risk more capital outlay into a an already struggling economy?”

The tax cuts have been in place for ten years. They have had minimal impact since passed, and are having no impact now even thought they have been extended well past their expected expiration date.

“I don’t know what Wisconsin is doing about closing the far-more-fucked-up-than-usual-fucked-up-cannibal-shit gap with Canada.”

We are just recently back from our yearly trip to Canada. I would like to report that we saw no cannibalism. There ere reports of zombies.


jan June 2, 2012 at 3:20 pm

“The tax cuts have been in place for ten years. They have had minimal impact since passed, and are having no impact now even thought they have been extended well past their expected expiration date. “

I know that. But, as you could tell, I was referencing Obama’s decision to extend them, a move that has been relatively neutral, because it was such a short extension.

Also, we apparently agree to disagree on the impact of the cuts, upon the enactment of the original bill.

Steve Verdon June 4, 2012 at 10:32 am

Steve V.- So unemployment is a leading indicator? You are an economist?

An economist? Yes. Is unemployment a leading indicator? No, it is a lagging indicator and it is has been crap for 5 months. GDP on the other hand is a leading indicator and, oh it has been crap too. Everywhere we look we see a weak economy, very weak. So yeah, I’m thinking we’ll be in recession in short order.

And I’d see a colleague about getting your sense of humor looked at.


You think it was possible to have a robust recovery. Could you please explain how that would have happened?

Those were the predictions/claims. We’d see a strong rebound in the economy. We saw those claims from Krugman and DeLong. When Mankiw expressed doubts and was backed up by Arnold Kling those two had an apoplectic fit. Now we know they were right.

I love your, “Oh I knew we’d never have a robust recovery all along….” line though.

As for robust growth it might have been possible….maybe. How would I do it? That is just it, I don’t think there is a policy we can put in place that can “do it”. When we had robust growth after the Great Depression it was nearly killed off by a government policy.

Things like Cash for Clunkers, the various housing subsidies, and the massive deficits have had limited benefit and are going to act as long term drags. If interest rates go up, then deficits will go up as well…additional drag. People know this. They aren’t stupid.

I know you think it was a good thing to prop up failing banks so that the financial system didn’t totally collapse, but I think the side effect is that we have kept in place the very processes that have lead to our current state. We may have saved the banks and financial institutions, but we have given a clear signal: business as usual is just peachy!

Basically, I don’t think our problems are going to have technocratic solutions.

We voted in McCain and Palin and they would have……

Wow, that is stupid. Stupid because presidents have very imprecise and dubious control over the economy. Stupid in that it is mired in the same old partisan bullshit. Stupid because after all this time you still have to fall back on lumping me in with Republicans.

Steve Verdon June 4, 2012 at 10:41 am

Oh and Icepick is right. Wisconsin is the leader in weird ass cannibal stuff. Ed Gein and Jeffery Dahmer so far are front runners in serious weird ass shit. New York gets and honorable mention for Albert Fish who liked eating children…the letter he sent to Grace Budd’s parents…yeeesh.

Icepick June 4, 2012 at 10:52 am

Yeah, Albert Fish was one seriously messed up individual – by the standards of serial cannibals.

Oh and Icepick is right.

I need to start book marking these for future reference.

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