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Thread: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by donsutherland1 View Post
    This job growth is an encouraging development. Such job growth will need to accelerate and be maintained if the nation's high unemployment rate is to begin a sustained descent toward a level closer to full employment. The handoff from the public sector's support of aggregate demand through substantial fiscal stimulus to the private sector in coming months will have risks, so the job growth numbers could prove volatile. Ultimately, the private sector will need to regain confidence that rising demand will be sustained. Only then will hiring pick up and continue at a rate necessary to materially reduce the nation's unemployment rate. Gimmicks e.g., tax cuts aimed at creating jobs, will do little. A sustained expansion of aggregate demand will do most to build and maintain private sector confidence.
    To what extent do you think the fiscal stimulus impacted aggregate demand, and what evidence do you have to support your conclusion?

    In my estimation, this recent increase in job growth has more to do with producer and consumer psychology than anything else, i.e., increased confidence in market conditions brought about by steady growth in GDP and consumption; the liquidation of bad assets and the return to market equilibrium has created an environment more conducive to consumption and hence hiring.

    Simply stated, people have convinced themselves that the worst is over and are now comfortable with returning to normal spending and hiring habits.

    As to the remainder of your post, I would say the most important thing we can do to secure steady and stable growth in the future is to shift the economic paradigm from one of endless consumption (public and private) to one of savings and prudence; this could be best effectuated through moderate monetary policy and an incremental phasing out of dependence-perpetuating fiscal programs.
    Last edited by Gander; 04-06-10 at 04:03 PM.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by Gander View Post
    To what extent do you think the fiscal stimulus impacted aggregate demand, and what evidence do you have to support your conclusion?

    In my estimation, this recent increase in job growth has more to do with producer and consumer psychology than anything else, i.e., increased confidence in market conditions brought about by steady growth in GDP and consumption; the liquidation of bad assets and the return to market equilibrium has created an environment more conducive to consumption and hence hiring.

    Simply stated, people have convinced themselves that the worst is over and are now comfortable with returning to normal spending and hiring habits.
    To what extent do you think the consumer confidence impacted aggregate demand, and what evidence do you have to support your conclusion?

    Seriously, all recoveries involve this one way or the other, but couldnt' the stimulus have helped that as well? Wouldn't knowing the government is going to create jobs for sure in the near future help consumers, and some businesses, take risks again?

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Taylor,

    Keep in mind that the details in the BLS report are from February. It was the March employment report that showed net job growth (+162,000 non-farm jobs, including +123,000 in the private sector).

    The theme of a stabilizing labor market was also borne out in the Fed's minutes from March 16 (just released today). The relevant portion noted:

    In their discussion of the economic situation and outlook, participants agreed that economic activity continued to strengthen and that the labor market appeared to be stabilizing... Moreover, the latest labor market readings had been mildly encouraging, with a considerable increase in temporary employment, especially in the manufacturing and information technology sectors.

    Those minutes also reflected developments prior to the second half of March.

    But overall, there does appear to be a growing consensus of labor market stabilization. I suspect that the labor markets are moving into the early stages of a resumption of growth. In coming months, despite some volatility, I suspect that the tendency will be toward net job growth.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by donsutherland1 View Post
    With respect to the job market, which appears to have stabilized, and is possibly in the early stages of a resumption of growth...
    could be

    but if so, it's certainly at the EXPENSE of an entire slew of needless obstacles placed in it's tottering and uncertain path by this clueless administration, keystone economists, in the form of hundreds, literally hundreds, of UNANSWERED QUESTIONS about EXACTLY what the heck this 2700 page monstrosity is gonna do to ME...

    and MINE...

    y'know...

    cuz even the addled admin admits it's done a miserable job of explaining all this stuff

    i mean, that's why, according to this woebegotten white house, the polls are all so universally piss poor

    remember?

    and the STIMULUS---just look at how poorly THAT 862B was accounted for and explained to the american taxpayer and the american businesswoman who's the one person we're all looking to to increase her HIRING again...

    right?

    and the CAP AND TRADE---no one knows exactly how harmful and hurtful and hit-filled THAT little bundle of punishments and "encouragements" is gonna cost, exactly how it's gonna play down...

    on the actual ledger

    and all can see by now that this presidential exec in chief, chin in charge, is the #1 NOT the person to be explaining, y'know, real details of exactly how all these pieces of legislation are gonna, y'know, touch us all...

    the point---UNCERTAINTY, UNCERTAINTY everywhere!

    and i fully appreciate that you know what doubt does to budgets

    this clueless klutz, economics challenged, actively breeds doubt, worry and fear in his every move

    i can remember his second month in the white house when he was so busy talking down this economy

    he doesn't know what he's doing, the improvisational nature of his approach demonstrates his lack of steady hand, he's not reliable

    remember when he cancelled his trip to the pacific? so he could go to iowa?

    don't you find that kinda stuff weird?

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by misterman View Post
    To what extent do you think the consumer confidence impacted aggregate demand, and what evidence do you have to support your conclusion?
    I said producer and consumer confidence, which is basically the entire private sector. I'm not sure what evidence you would need to prove that the private sector's confidence in future outcomes greatly impacts their incentive to produce and consume. Basically, I'm taking a microeconomic principle and assuming it aggregates over the entire economy.

    Seriously, all recoveries involve this one way or the other, but couldnt' the stimulus have helped that as well? Wouldn't knowing the government is going to create jobs for sure in the near future help consumers, and some businesses, take risks again?
    I never said the stimulus had zero effect. I just doubt it was very significant. I'm of the opinion that perception and confidence are the key drivers of economic growth and recovery; this creates an economic "chicken or the egg" scenario in which market psychology is either the cause or the effect of growth and recovery. When discussing macroeconomics, it can become a bit nebulous.
    Last edited by Gander; 04-06-10 at 04:26 PM.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by Gander View Post
    I never said the stimulus had zero effect. I just doubt it was very significant. I'm of the opinion that perception and confidence are the key drivers of economic growth and recovery; this creates an economic "chicken or the egg" scenario in which market psychology is either the cause or the effect growth and recovery. When discussing macroeconomics, it can become a bit nebulous.
    Sure, but perceptions are usually based at least in part on reality.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by misterman View Post
    Sure, but perceptions are usually based at least in part on reality.
    Once again, I'm not discounting the effect fiscal and monetary policy have on economic recovery and growth; I'm simply stating that they are only effectual to a certain extent, and that consumer and producer psychology (which is often arbitrary and certainly nebulous) are the key factors in play. Basically, it's the "invisible hand" at work. The problem with contemporary economic dialog (as I see it) is that it constantly seeks to explain market conditions and outcomes without accounting for this simple economic principle. This results in blame being placed upon and credit being given to people who had very little to do with the actually state of the economy.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by Gander View Post
    To what extent do you think the fiscal stimulus impacted aggregate demand, and what evidence do you have to support your conclusion?
    Aside from noting the mainstream economic research e.g., as published by the IMF, concerning fiscal stimulus packages has found immediate positive impacts that, as a percentage of GDP, at least match the size of the stimulus and long-term impacts that exceed the size of the stimulus, I believe it is too soon to really try to assess the precise impact. Subsequent research into the U.S. fiscal stimulus package will be required to gain a better understanding of the magnitude of that package's impact. As noted earlier, at a minimum, it reduced the size of the fall in aggregate demand. Moreover, as the onset of the economic recovery and its magnitude has been greater than anticipated, at least so far, that might offer anecdotal evidence that the stimulus has been providing a robust boost to the economy.

    In my estimation, this recent increase in job growth has more to do with producer and consumer psychology than anything else, i.e., increased confidence in market conditions brought about by steady growth in GDP and consumption; the liquidation of bad assets and the return to market equilibrium has created an environment more conducive to consumption and hence hiring.
    It should be noted that the sustained boost in consumer confidence (University of Michigan survey) didn't occur until April 2009, somewhat after the stimulus package was enacted. My guess is that a large combination of factors, including but not limited to, extraordinary monetary policy response, fiscal stimulus, stock market rebound that commenced in March, etc., all contributed to a larger degree of confidence. Real Personal Consumption Expenditures picked up beginning in 2009 QIII.

    Net hiring, as is typical, lagged the pickup in the stock market, rise in consumer confidence, and uptick in real personal consumption expenditures. My guess is that the initial stabilization and early growth in the labor market concerns the need to rebuild inventory. Later, as aggregate demand picks up further, such hiring will reflect a renewed need for business expansion.

    Simply stated, people have convinced themselves that the worst is over and are now comfortable with returning to normal spending and hiring habits.
    So far, real personal consumption expenditures have been growing at a more subdued rate than the 1990-2009 average. So, I don't think one can suggest that "normal" spending has resumed. In part, spending has likely been restrained by continuing household deleveraging and a tighter credit environment.

    As to the remainder of your post, I would say the most important thing we can do to secure steady and stable growth in the future is to shift the economic paradigm from one of endless consumption (public and private) to one of savings and prudence; this could be best effectuated through moderate monetary policy and an incremental phasing out of dependence-perpetuating fiscal programs.
    I agree. I believe fiscal consolidation will need to follow the stimulus, perhaps beginning as early as 2011. Moreover, given the nation's long-term imbalances (separate from the additional debt accumulated during the severe recession and measures to help combat the recession), more than a rollback of stimulus measures will be required. I believe a combination of discretionary spending reductions, modest tax hikes, and a strategy for addressing the nation's long-term mandatory spending imbalances will be needed. In other words, a credible strategy for beginning to tackle the nation's structural budget deficits will be required. Otherwise, there will be a growing risk that long-term interest rates could rise sufficiently fast to weaken the amount of economic growth that takes place. At the same time, U.S. households will need to save a larger share of their income than in the past. Notions that equity or real estate price gains make it unnecessary to save are without empirical foundation, though it remains to be seen whether the lessons of the most recent recession will be forgotten. U.S. companies will also need to improve their competitiveness so as to help reduce the nation's chronic current account deficits.
    Last edited by donsutherland1; 04-06-10 at 04:50 PM.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Quote Originally Posted by donsutherland1 View Post
    Aside from noting the mainstream economic research e.g., as published by the IMF, concerning fiscal stimulus packages has found immediate positive impacts that, as a percentage of GDP, at least match the size of the stimulus and long-term impacts that exceed the size of the stimulus, I believe it is too soon to really try to assess the precise impact. Subsequent research into the U.S. fiscal stimulus package will be required to gain a better understanding of the magnitude of that package's impact. As noted earlier, at a minimum, it reduced the size of the fall in aggregate demand. Moreover, as the onset of the economic recovery and its magnitude has been greater than anticipated, at least so far, that might offer anecdotal evidence that the stimulus has been providing a robust boost to the economy.
    Suppose the stimulus had entered the economy entirely in the form of tax cuts? The effect on the deficit would remain the same, but an arguably more efficient allocation process would have taken place. Is there any reason to believe that large tax cuts are any less efficacious than large fiscal stimuli in increasing aggregate demand? Furthermore, isn't it more likely that the government will eventually raise taxes as opposed to cutting spending?

    So far, real personal consumption expenditures has been growing at a more subdued rate than the 1990-2009 average. So, I don't think one can suggest that "normal" spending has resumed. In part, spending has likely been restrained by continuing household deleveraging and a tighter credit environment.
    Agreed, it was the wrong word to use. But an approach towards normalization seems likely, yes?

    I agree. I believe fiscal consolidation will need to follow the stimulus, perhaps beginning as early as 2011. Moreover, given the nation's long-term imbalances (separate from the additional debt accumulated during the severe recession and measures to help combat the recession), more than a rollback of stimulus measures will be required. I believe a combination of discretionary spending reductions, modest tax hikes, and a strategy for addressing the nation's long-term mandatory spending imbalances will be needed. In other words, a credible strategy for beginning to tackle the nation's structural budget deficits will be required. Otherwise, there will be a growing risk that long-term interest rates could rise sufficiently fast to weaken the amount of economic growth that takes place. At the same time, U.S. households will need to save a larger share of their income than in the past. Notions that equity or real estate price gains make it unnecessary to save are without empirical foundation, though it remains to be seen whether the lessons of the most recent recession will be forgotten. U.S. companies will also need to improve their competitiveness so as to help reduce the nation's chronic current account deficits.
    I agree with everything except the tax increases. I don't see our longterm fiscal imbalances as being a revenue problem, but a spending problem. The excessive spending has created and perpetuated an entitlement mentality amongst our populace, which is having a deleterious psychological effect on already vulnerable demographics. If we are going to start weening them off government social programs, we should at least keep taxes low, so as to increase the incentive to earn a better living, as well as allow businesses to reinvest more into their operations. There won't be any painless solutions either, and I think it is incumbent upon our officials to be realistic about the need for sacrifice on the part of the American people, though I doubt that is even remotely likely to happen.

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    Re: U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

    Seriously guys, get a grip.

    All of you who are saying that this is ho hum or not really a good thing: Shut up.

    All of you who are saying that this is a fantastic thing: shut up.

    The fact of the matter is that, yes, this is a good sign for our economy. However, we do need to face reality and realize that plenty of these new jobs are from the census and gov't work. That's not a bad thing. These people are still getting paid and their income will continue to flow through our economy buying goods and services, which in turn will help the companies who sold them those goods.

    I think its important to note something that was mentioned earlier and then completely ignored due to the partisan spin the poster put on it. The economy needs to add about 175k new jobs a month just to keep up with population growth so we still have a negative net gain.

    To sum it up: Yes, it looks like things are getting better. No, it doesn't look like everything is peachy. Recoveries take time. Nobody knows if this is a true recovery or the beginning of a double dip recession. Hell, if things were that easy to predict we wouldn't be in this situation in the first place now would we?
    Affiant further sayeth not.

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