Step 1. Steal Underpants

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… add one
  • Maxwell James

    At this point, I’m looking forward to a good 20-year string of 1-term presidencies, with frequent shifts in congressional control. Maybe we’ll even get a viable new party in the next decade or so.

  • Icepick

    Headliine on CNN: “Weak Jobs Report Shocks Economists”

    Unexpectedly, of course.

    Quote from story supporting headline:

    “It was really shockingly low,” said Bill Dunkelberg, chief economist for the National Federation of Independent Business, who said small businesses have pulled back from hiring as customers dried up.

    Oops.

    Also

    The number of long-term unemployed rose to 5.4 million, up from 5.1 million.

    yep, up 300,000 in one month, after hundreds of thousands of people have been dropped from the UE Compensation rolls.

  • I didn’t work them into the body of the post but the details are actually worse. We picked up 33,000 healthcare jobs and lost 28,000 construction jobs. Or, said another way, we lost 28,000 jobs that were purely private sector jobs and picked up 33,000 jobs, 2/3s of the pay of which are picked up by the government.

  • Icepick

    Come on, Dave, saying the internals are bad is a dog bites man story at this point.

  • Two stories of cannibalism have hit the headlines during the past couple of weeks. It’s gonna be a long summer.

  • PD Shaw

    Good news for refinancing. Bad news for those of us who thought rates had bottomed a couple of months ago.

  • Icepick

    Janis, actually there are three stories of cannibalism. The weirdest so far is in Canada.

  • I heard on NPR’s Planet money recently that the margin of error for these jobs reports are pretty large – something like 100k.

  • I heard on NPR’s Planet money recently that the margin of error for these jobs reports are pretty large – something like 100k

    There’s a built-in fudge factor called the “birth-death adjustment” that has been larger than that for years. My general rule of thumb is that when the fudge factors are larger than the margin of error it’s a propaganda vehicle rather than intended for dispassionate analysis. But that makes it all the more interesting. When the propaganda is this discouraging it means that they’ve been frightened into showing a bit of ankle.

  • The weirdest so far is in Canada.

    The weirdest everything is in Canada. They just don’t get as much publicity.

    BTW, Icepick, I understand To Serve Man is flying off the shelves in Florida.

  • Icepick

    I’m not sure why, we eat ’em raw down here. Kind of like a pig pickin’ in NC but without the fire, or the utensils. The best part of the bath salt zombie story was the guy from the PD in Miami saying they’ve already seen several cases of this! Seriously, this story only made the news because (1) both vic and perp were naked, (2) it happened in daylight, (3) it happened in a major metro area and (4) face eating. Any two or three of those things and the story doesn’t even make the local news. Florida is really strange these days, even by Florida standards.

    Apparently not strange by Canadian standards, though. WTF, Canada, WTF’ingF?

  • PD Shaw

    Unfortunately, its behind a paywall, but Krugman has posted a series of arguments for a vigorous federal response to the impending zombie apocalypse. Large R&D expenditures, training and equipping of local anti-zombie security details, a new agency to employ artists and writers to develop a zombie informative body of works . . ..

  • PD Shaw

    What is the deal with May (or Summer in general), the Administration says Mays have been like this for ten years; it certainly seems like it has been for the last few years at least. Are these numbers being seasonably adjusted in a way that is outdated?

  • Icepick

    PD, I can’t tell if you are being sarcastic or not.

  • Drew

    If you want a good belly laugh go over to Doug M’s post on the report at OTB and look at Hey Norm and JP going apoplectic.

    Spinning, spinning, spinning……..

  • Icepick

    john persona: Not good, but only “dismal’ if this whole year has been “dismal.”

    ROTFLMFAO! Yes, dipshit, that’s exactly it! Okay, Drew, it’s as hilarious as advertised!

  • Drew

    So seriously. This is very unfortunate. And I have been saying to friends of mine basically what Dave just observed. Team Obama can talk about 30-40 year old investments and 50 year old haircuts all they want in an attempt to scare and divert.

    But what is really going to scare people is the notion that the economy is going nowhere under this guy and it’s time for an alternative.

    I strongly suspect that Romney is being coached to be respectfully dismissive of the clownish diversion attempts by the Obama campaign, and to focus on a message similar to Bill Clinton’s “it didn’t work, it’s time for a change” message in his election.

  • Icepick

    Almost as funny is JP’s belief that Obama & company had proposed some GRAND PLAN to improve things, only to have it blocked by those nasty Republicans. Obama can’t even get one single vote for his freakin’ budgets, but that’s all the Republicans’ fault.

  • Icepick

    Drew, that really was funny. But then sputtering apoplexy usually is!

  • Icepick

    This is what it reminded me of! Took me a few minutes, but that’s it!

  • Icepick

    I strongly suspect that Romney is being coached to be respectfully dismissive of the clownish diversion attempts by the Obama campaign, and to focus on a message similar to Bill Clinton’s “it didn’t work, it’s time for a change” message in his election.

    Yeah, it doesn’t look like he needs to invent anything new this time around. I thought they looked rather adroit yesterday with the combination of showing up at Solyndra HQ and flash-mobbing Axelrod’s “surprise” appearance in Boston.

    Of course they’re having their own problems with unforced errors: Amercia, “Etch-a-Sketch”, some of Romney’s more thoughtless comments. Hard to complain about Obama’s errors when you keep making the same ind yourself. The biggest advantage they’ve had so far is that the Obama campaign can’t seem to find a message to stay on. One day it’s this, the next day it’s that, and any traction they might gain just gets lost by the constant changes in direction.

    Looks like a miserable summer and fall campaign season.

  • ROTFLMFAO! Yes, dipshit, that’s exactly it!

    He phrased it that way because he wanted to change the subject to talking about prior months of this year. The problem with that, as I suggested in my post, is the revision to April that May’s report included. That was revised from an anemic but defensible 115,000 to an unacceptable 77,000. There are only three alternatives for defending the trends since the start of the year

    1) It’s actually fine. It’s the reports that are wrong (which is delusional).

    2) It’s not my fault!

    3) I propose ______________________

    I think those are all political non-starters.

    It’s not okay. It hasn’t been okay. The only way that you can think it’s okay is to ignore the people who are unemployed.

  • Icepick

    The only way that you can think it’s okay is to ignore the people who are unemployed.

    That’s what the declines in labor force participation are all about!

  • jan

    What can Obama’s campaign actually latch onto that will stick?

    If the past 3 plus years had been under a Republican administration can you imagine how the press would have played it. Headlines every day blaring about the UE numbers (they were lambasting Bush when the numbers were in the 4’s), the sluggish economy, the disappearing work force, adult kids returning home, the devestating deficits — there would have been endless arrows shot into the republican president from the dems, the MSM, gleeful pundits. What if a republican administration had leaked information about the OBL take-down, to the detriment of the team initiating it? If you just turn all the mistakes of the Obama administration around and say it was an R who was Commander-in Chief doing it, the outcries, condemnation would have sealed the upcoming election as being a goner for the incumbent.

    However, as it now stands, Obama is still in the lead with very good chances of being reelected.

  • Icepick

    jan, it doesn’t matter what the press would have done to an (R). What matters (if one is an (R) that wants to win an election) what do you do about it. Find a message that resonates and STAY ON MESSAGE.

    Right now (R)s can and should focus on the economy. Side trips to discuss competence are fine, but keep bringing it back to the economy.

    And I find Obama’s lead unconvincing. The economy is terrible. This only counts as a recovery in a technical sense, and most people are still feeling the squeeze as though we were still in a recession. (Look at median income levels as well as UE figures.)

    Against that is Obama’s “likability” factor, which is over-stated. But you’ve got a lot of people that still don’t want to admit that they don’t like him and they REALLY don’t like his policies. In the last week I’ve seen two examples of conversations critical of the President come to a complete halt when black people entered the room. Nothing was being said about Obama that wouldn ‘t be said about him if he were all white instead of half-white, but whites and some hispanics just don’t want to get caught saying anything bad about a black man in public, even if race has nothing to do with their criticisms. They know for damned certain that someone is likely to call them racist. No one wants to deal with that crap. So they keep their mouths shut.

    We’ll see come the fall. It’s not going to matter much anyway, because Romney will only shift the focus somewhat from what Obama has been doing, so I don’t expect much to change even if Romney and the other (R)s somehow manage to win the Presidency and both Houses of Congress.

  • Icepick

    Headline of the day, from CNN:

    Dow Erases 2012 Gaines

    Makes me wonder where FB closed…. Down to $27.72! I’d be hating life if I bought at $45. Hating Zuckerberg, too. He’d better spend some of his remaining fortune on more protection, before they declare open season on hoodies.

  • steve

    Hate to break up the GOP cheering section, but your choice is between the party that got us in this mess, and the one which has not been able to get us out. Not really such a clear choice, but history tells us the incumbent loses in this situation.

    Steve

  • Icepick

    You mean me? Hmm, let’s see what I wrote:

    It’s not going to matter much anyway, because Romney will only shift the focus somewhat from what Obama has been doing, so I don’t expect much to change even if Romney and the other (R)s somehow manage to win the Presidency and both Houses of Congress.

    Yeah, I’m a real cheerleader for the (R)s.

  • Hate to break up the GOP cheering section

    I hope you didn’t construe what I wrote that way. My preference would be for the administration to stop sitting on its laurels, blaming the Republicans and/or the Bush Administration, and actually formulate a plan that they feel strongly enough about to put some political capital behind.

  • Calling it now, recession very soon. With jobs looking this weak, we are on the brink.

  • To be clear, I’m thinking in 3 – 6 months we will be in recession. It will take the NBER several more months to call it, but they will date it in the time span of September through November.

  • I was thinking they would call it in September or October and date it to June.

  • jan

    Steve

    The party that supposedly got us into this mess had complicity from a Democratic Congress, the 110th Pelosi/Reid-led Congress who ran the show in those last two years. Somehow that is either lost in the mist of Bush criticism, or is discounted completely.

    However, in the current age of passing the contribution basket around, when assessing the party who has not been able to take us out of this mess, one would think that the House republicans have single-handedly taken control of our economical woes, leaving the democratic senate and Obama as nothing more than impotent bystanders. It’s interesting, because many economists are saying that much of the House’s part in today’s economy is simply to have slowed up the rate of spending.

    Icepick,

    I agree with your post: What matters (if one is an (R) that wants to win an election) what do you do about it. Find a message that resonates and STAY ON MESSAGE.

    It seems that is what the R nominee is attempting to do, exemplified by his unexpected stop at the Solyndra plant yesterday.

    No one can make any slam dunk assertions on what Romney will be able to accomplish, should he win the election. I think, though, that he is more pragmatic than Bush was, and has vastly more experience with making business decisions, and understanding the business community’s concerns. Romney has already talked about assessing what is working and what isn’t in government, and getting rid of the latter. I’ve read countless of stories and commentaries describing him as a thoughtful, astute leader in bringing a wide spectrum of minds into the formulation of plans and making decisions. This is the opposite of what Obama has done, except for constructing a few photo opt meetings for the purpose of showing the press his bipartisanship.

    As for reelecting Obama, I think there is much more a probability of getting more of what we’ve been muddling through the past 3 1/2 years, than equating a Romney presidency as being just like Bush.

  • Oh and do a wee bit of Krugman channeling…..

    Obama is the new new Hoover! Going to finish his first term with unemployment worse than when he started….an amazing accomplishment considering that he started during one of the worst recessions and saw said recession end during his first year.

    :p

    Back to you steve….lulz

  • Oh and I bet we’ll hear a shit ton about how many jobs Obama saved during his presidency. Cause he sure can’t brag about the jobs created, oops no lost.

    The new gold standard for Presidents when it comes to jobs…a phantom number that is completely made up.

  • Icepick

    The new gold standard for Presidents when it comes to jobs…a phantom number that is completely made up.

    People were doing that shit at Disney back before Obama started running for the Presidency. Changing the metric to some phantom number that can’t be verified in any way is old hat.

  • Icepick

    a shit ton

    What’s the metric equivalent?

  • More than the national economy, I think the fortunes of the candidates will depend on the handful of states that will actually decide this election. It doesn’t matter much if California’s economy remains in the shitter – the President is going to get those electoral votes. We’ll have to see how the states that are in play fair.

  • jan

    Politico had an article today about how Obama is looking at some of the swing state’s improving economies, in trying to tie himself to their successes rather than the dismal one in the national economy. However, many of the states noted in the article, such as FL, OH, VA, Nevada all have republican governors, and most have republican legislatures as well. Only CO has a democratic governor in place. Another place that is digging out of it’s financial hole is WI. And, the June 5th recall vote will be telling to see how aware the voters are of this in that state.

  • steve

    @jan- You need to have a consistent metric. If you want to blame the POTUS AND Congress, be consistent.

    @Ice- Not really aimed at you, as I agree. I dont think this is the mega-important election people claim. On the domestic front there is not a lot that can be done to create jobs. We need balance sheets repaired and the housing inventory worked off. On the foreign policy front, I hope James is correct and Romney is just talking nonsense to rev up the base. I dont think we do tax reform or finish health care reform until we have to do so.

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

    “Oh and I bet we’ll hear a shit ton about how many jobs Obama saved during his presidency. Cause he sure can’t brag about the jobs created, oops no lost.”

    You think it was possible to have a robust recovery. Could you please explain how that would have happened? I will start for you. We voted in McCain and Palin and they would have……

    Steve

  • jan

    “You need to have a consistent metric. If you want to blame the POTUS AND Congress, be consistent.”

    Steve,
    Consistent metric???
    Democrats are blaming the House, under republican leadership, for obstructing, aiding and abetting our continuing economic problems, right?

    With this ‘metric’ in mind, which I am defining as ‘measurement,’ I am bringing up the fact that Bush had both a democratic House and Senate during the two last years of his presidency. So, I am questioning why the democrats aren’t also partially responsible for aiding and abetting the sub prime mortgage debacle?

  • jan

    …..the sub prime mortgage debacle which Obama is always saying he inherited from Bush. It’s that circular blame game, in which the democrats seems to leave themselves out of the circle.

  • Drew

    I’m with Jan and Steve V, but I usually am. But I want to comment on Dave’s remark.

    “My preference would be for the administration to stop sitting on its laurels, blaming the Republicans and/or the Bush Administration, and actually formulate a plan that they feel strongly enough about to put some political capital behind.”

    I agree. I think it is a convenient falsehood that “the Republicans got us in this mess.”. As Jan pointed out, the Democrats had control of the Congress. The housing bubble started before Bush even took office, and was cheerlead by the Dems the whole way. But let’s put all that aside.

    Dave makes the correct point. Shut up and lead. You all know what I do. We have had troubled investments and have made management changes. A guy we hire who is in 3 and a half years and still blaming his predecessor and externalities gets fired. Check that. He doesn’t make it three and half years. This is just absurd. I’m well aware of the difficult situation Obama walked into, but he acts like the only guy ever to be dealt a tough hand. I told you guys and gals he was no executive, and it’s being proven out in spades.

    At OTB JP challenged anyone to put forth a positive policy prescription that would help the economy. Like taking candy from a baby I immediately pointed out energy. No response.

    I could have gone to taxes, regulation or just plain setting of a positive tone. Obama is a loser type executive. All excuses and no meat; no accountability. People in business understand this in their bones, and look at him and question the viability of taking any risks while this guy is around. The ship is rudderless.

  • steve

    “Like taking candy from a baby I immediately pointed out energy.”

    We have record energy production. Your plan would be an even bigger record?

    “I could have gone to taxes, regulation or just plain setting of a positive tone. ”

    Ok, I like numbers. Make your supply side argument. Given record levels of private debt, followed by a crash in real estate prices, how do you get tax cuts to increase output or consumption? Make this work with construction at extremely low levels. Why would tax cuts work now when they didnt do much in the 2000s? Those same tax cuts are still in effect. Why dont they work now?

    I would agree more with regulation, especially of small business. I think Obama missed the boat here. I dont think it would have had immediate effect, but would be along term positive. The big banks should have been broken up, so I fault Obama on that account.

    A positive tone. It helps, but is no good w/o substance.

    “As Jan pointed out, the Democrats had control of the Congress. ”

    This is disappointing. I know you are used to looking at economic data. Given the damage in the subprime market, what legislative action was going to correct things at that point? Who effectively regulates and controls the banks? How exactly was Congress going to dictate policy to the Fed and Treasury? But, ok, let’s lay that aside.

    Query- That guy you might have to fire. Does he have hiring and firing authority? I do with my employees. It makes management much easier. When serving on the hospital board, we have not, until recently, had that kind of authority over the docs at the hospital. It is a much different story.

    Steve

  • steve

    Oops. Meant deregulation of small business.

    Steve

  • michael reynolds

    Getting back to the important issue here: Canada’s got creepier cannibals than Florida? So we’ve lost the lead in steel, cars, semiconductors and psychos?

  • jan

    “Why would tax cuts work now when they didnt do much in the 2000s? Those same tax cuts are still in effect. Why dont they work now? “

    If Bush hadn’t made the tax cuts during his presidency how do you think that would have effected the revenue flow? Do you think with the economic jolt that 911 had on the economy, that revenues might have been even higher should the tax levels have stayed the same?

    I don’t. I think they would have been lower.

    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?

    I don’t. Most people I know are waiting for the outcome of Obamacare — whether it’s going to be upheld, or not —- and if Obama gets another shot at the helm of our economy, or not.

    If Healthcare is deemed constitutional, and stands, and if Obama is reelected, all bets are off on this economy being able to regenerate itself. If Healthcare is thrown out, along with Obama, it will be like a new day, a new way, along with more reason to invest in business ventures once again.

    That’s how I see it.

  • Icepick

    Reynolds, Wisconsin is America’s true leader in cannibals, not Florida. I don’t know what Wisconsin is doing about closing the far-more-fucked-up-than-usual-fucked-up-cannibal-shit gap with Canada.

  • Icepick

    Drew said taxes, which may or may not mean tax cuts. A major revision to America’s tax code (especially on the corporate side) would facilitate better commerce and business just by reducing drag. Eliminating a tax structure that favors the big and well-connected (think GE) over new and smaller growing businesses would be a plus too. Cutting corporate tax rates & capital gaines tax rates would be a plus too.

    sorry for any typos, my bobtail cat has been assisting me.

  • Icepick

    Excuse me, a major and GOOD revision to America’s tax code ….

  • Icepick
  • 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

    “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.

    http://arts.nationalpost.com/2012/05/19/the-importance-of-zombies-to-canadian-life/

    Steve

  • jan

    “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 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.

    Sheeesh.

    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.

  • 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

    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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