Wednesday, August 31, 2011

The jobs picture hasn't changed--modest/moderate growth still likely



A quick update on two releases today. The August Challenger tally of announced corporate layoffs reversed some of its gains in July, while still remaining firmly in territory consistent with ongoing growth and, at the very least, no double-dip recession. The ADP estimate of new private sector jobs was a bit below expectations, but still points to gains in private sector payrolls to be announced this Friday on the order of 100K or so, as is currently expected.

I would note, however, that since the beginning of the current recovery, the ADP estimate of private sector jobs has lagged the BLS estimate by some 500K jobs. So if I had to bet on whether the BLS number will be more or less than expected, I would take the over. In any event, given the pessimism that seems to be rampant these days, we are probably overdue for some positive surprises.

18 comments:

Benjamin said...

Glacial progress.

TradingStrategyLetter - Weekly Summary said...

Glacial because of the fear mongering, threats, and incompetence from the fearless political leadership. What businessman in their right mind would want to innovate, invest, and expand while facing a downgraded bancrupt government who is itching to dig their regulatory tax claws into fresh capital flesh?

Dr William J McKibbin said...

Some economists hypothesize that job growth is no longer essential for firms to be profitable -- in fact, profits are excellent these days at the nation's top companies -- people still without jobs in America will probably be forced to emigrate, accept charity, or commit suicide in order to avoid destitution -- America is just not a jobs engine at this point, and may never be again -- well, that's the hypothesis of some -- the initial empirical evidence seems to support such a view -- human capital is no longer essential...

TradingStrategyLetter - Weekly Summary said...

More like a major leadship vacumn I'm afraid! Twisted thought processes, neck deep red tape, acceptable corruption, fractured and flawed policy choices. Basically everything that was not American! Very sad indeed!

Benjamin said...

Trading Strategy:

In many ways you are right.

President Obama missed the chance of a lifetime: Convert the Dems into a pro-business party.

Bush missed an epic opp. to scale down and radically reform the military to modern needs after 9/11.

The leadership does not have the vision thing.

Scott Grannis said...

I suggest you step back and reflect on one unalterable fact: there are two essential factors of production, 1) capital and 2) labor. If there is an excess of one, then there is a scarcity of the other. If the wages of labor are poor, it's because labor is in excess supply relative to capital. When capital is abundant, labor is scarce and wages are strong.

The situation today is almost certainly one in which there is a shortage of capital and an excess of labor. The shortage of capital can be explained by anti-business policies, by high expected tax burdens, by high regulatory burdens, etc. We are in a strange situation where money is abundant but capital (money that is available to fund investments) is scarce. The scarcity of capital explains why jobs are scarce relative to the supply of labor.

These relationships always hold. What changes are the supply of capital and the relative abundance or scarcity of labor.

We need to pursue policies which attract and are favorable to capital formation. That means increasing the after-tax reward to investment.

When capital is super-abundant, as it is in Bermuda and Switzerland, labor is scarce and wages are high. Both countries, not surprisingly, have very low tax and regulatory burdens.

Frozen in the North said...

TradingStrategyLetter

At least be honest, in your opinion the only right investment time is when the GOP are in power...anything else is lawless, socialist, traitors!

Frozen in the North said...

Scott:

Then it means that the only solution is Love Canal, where companies are able to pollute as much as they want. Don't know if you've ever been to China, but its rather gross. You seem old enough to remember Pittsburgh (no offence intended) from the good old day of steel mills...

It seems that the argument here is often that firms can only compete if they ignore all externalities (pollution), that pollution is a free good to the enterprise and that it has no consequence for anyone else (nor is it the corporations' problem).

Dr William J McKibbin said...
This comment has been removed by the author.
septizoniom said...

you last line is revealing.

Frozen in the North said...

@sept

I'm an economist, pollution is a benefit to enterprise and a cost to the population at large! That's a fact, part of the problem now is that there is a perception that pollution is an all or nothing issue.

Fundamentally, if someone wants to pollute, then he should compensate those who suffer from the pollution. An exchange of value if you will -- all very mercantile.

TradingStrategyLetter - Weekly Summary said...

The real 'pollution' has been a tragically disfunctional, corrupt, and dillusional political process. They have all but destroyed the American Middle Class with mumbo jumbo monetary and fiscal nonsence. These criminals produce nothing but misery for the tax paying working class. Throw all these clowns out then watch and see how quick the recovery begins.Time to drain the swamp big time!

John said...

Scott,

Good analogy. Allow me to carry it a bit further.

The means of production are similar to a relationship. Labor is the man, capital the woman. Cooperation is required to be productive at a high level. If the relationship is burdened with conditions, arguments, poor communication, etc. then production is hampered. Either can be difficult but I see a frightened, insecure woman who is being wooed by an abrasive, demanding, and insistent man.

Like a woman, capital needs to be won over with patience, understanding, and above all, consistently good treatment. If that can be accomplished, both are far happier together than apart.

IMO we may need more relationship experts in Washington than politicians.

Benjamin said...

Rates on 5-year ARMs fall to record 2.96%
MarketWatch - ‎1 hour ago‎
CHICAGO (MarketWatch) - Average rates on 5-year adjustable-rate mortgages hit a record low of 2.96% this week, the eighth week in a row the average rate has dropped, according to Freddie Mac's weekly survey of conforming ...

If there inflation pending, then lenders are blindfolded and drugged....

TradingStrategyLetter - Weekly Summary said...

Drain the swamp and watch the economy fly!

Frozen in the North said...

@TSL

Time to up the meds buddy!

Benjamin said...

John-

Well, I don't know if I can weave a romantic tale like John, but definitely we need to be a pro-business nation.

I bet John is quite a ladies' man.

John said...

ONE lady's man, Benj. Just one.

Thank you, though.