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

donsutherland1 said:

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.

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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.

Gander said:

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.

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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?

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.

donsutherland1 said:

With respect to the job market, which appears to have stabilized, and is possibly in the early stages of a resumption of growth...

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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?

misterman said:

To what extent do you think the consumer confidence impacted aggregate demand, and what evidence do you have to support your conclusion?

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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?

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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.

Gander said:

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.

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Sure, but perceptions are usually based at least in part on reality.

misterman said:

Sure, but perceptions are usually based at least in part on reality.

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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.

Gander said:

To what extent do you think the fiscal stimulus impacted aggregate demand, and what evidence do you have to support your conclusion?

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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.

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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.

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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.

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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.

donsutherland1 said:

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.

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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.

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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.

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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.

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?

donsutherland1 said:

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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People have been assuring us of "labor market stabilization" for months now, so color me unimpressed with these latest reports, which deviate little from our present, flatlined job situation.

Wake me up when we start to see consecutive months of accelerating job growth.

Taylor said:

People have been assuring us of "labor market stabilization" for months now, so color me unimpressed with these latest reports, which deviate little from our present, flatlined job situation.

Wake me up when we start to see consecutive months of accelerating job growth.

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Okay, go back to sleep.

no spin but pure empirics:

1. it takes 125,000 to 200,000 jobs per month just to keep pace with population growth

2. we are looking at 4.5 million more foreclosures in 2010, up 60% from 2009 which was beyond-belief bad

3. at&t had to book an extra bil for first quarter 2010, verizon did 980M---what's that gonna do to employment?

4. consumer confidence in february, 2010, hit a 10 month low

U.S. Economy: Confidence Falls to Lowest Since April (Update1) - Bloomberg.com

Gander said:

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?

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Three quick things:

1. Tax cuts work well to remedy supply shocks e.g., the early 1980s was an ideal time for the use of that remedy. The tax cuts pushed the supply curve to the right, helping boost production relative to demand. As a result, coupled with tight monetary policy, the supply side remedy helped tame inflation.

2. Spending increases work well during demand shocks. As aggregate demand was collapsing, increased government spending was the appropriate remedy. Cutting taxes would have only led to fearful firms hoarding the cash rather than using it to sustain production in the teeth of crumbling demand. The result might well have been little or no economic boost and a higher probability of a destructive deflationary episode.

3. Government has demonstrated a bias toward accommodation. It has demonstrated little appetite in the past either for repealing tax cuts or spending hikes when sustainable economic growth unfolded. That bias toward accomodation has helped contribute to the nation's structural budget 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.

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Unfortunately, the nation cannot grow its way out of its structural budget deficits. It is also highly unlikely that the federal government will substantially cut discretionary spending (which would require a sizable cut in defense spending, too, which would be difficult to justify given the national security threats/challenges facing the nation). Moreover, even sharp discretionary spending cuts would not alleviate the long-term burdens associated with the nation's mandatory spending programs. At this time, dramatic restructuring of Social Security, Medicare, and Medicaid is not likely. Furthermore, restructuring Medicare will require fundamental health care reform aimed at addressing the excessive cost issue, something that the recently enacted law did not address. Hence, a middle ground that includes some tax hikes appears to be the most feasible course, but even that pragmatic approach is not assured in the near-term.

At some point, foreign capital will not be as easy to come by and long-term interest rates will rise. As those rates rise, the overall cost of capital will increase and that will have a drag on the economy. In that context, to the extent that modest tax hikes help ensure low long-term interest rates via a demonstration of a credible fiscal consolidation policy, that development would be economically beneficial.

foreign demand for us treasuries drops by record amount, december, 09:

Foreigners cut Treasury stakes; rates could rise - Yahoo! Finance

service of the national debt, mere interest alone, will approach 1T per year by about 2017 as interest rates are adjusted to reality, new york times, november:

News Headlines

The Prof said:

service of the national debt, mere interest alone, will approach 1T per year by about 2017 as interest rates are adjusted to reality, new york times, november:

s[/url]

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Obama will be long gone by then, so the republican president can deal with that.

The Prof said:

no spin but pure empirics:

...at&t had to book an extra bil for first quarter 2010, verizon did 980M

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As noted previously, the companies are not facing higher expenses from the legislation. They have merely been barred from treating tax-free government income as an expense and deducting that income to gain an additional tax benefit. By no reasonable accounting standard is an income stream an expense.

For those who are unaware of this issue, here's how it worked (hypothetical numbers):

Company X:
- Pays $800,000 for its retirees' qualifying health expenses
- Federal government provides an additional $200,000 for that company's retirees' qualifying health expenses.
- Company X's tax rate is 20%

If the company properly accounted for its expenses, it would book the $800,000 expense and receive a $160,000 tax benefit, leading to an after-tax expense of $640,000 for its retirees' qualifying health expenses.

What AT&T, et al, were doing was, claiming both the $800,000 company payment and $200,000 government subsidy amounted to $1,000,000 in expenses. It was then deducting $1,000,000 for tax purposes and receiving a tax benefit of $200,000. Hence, its net after-tax payment was $600,000.

In other words, not only were taxpayers funding some of the company's retirees' qualifying health costs (income that was treated as tax-free to the company), the company was claiming additional tax benefits as if it, not taxpayers, were paying the $200,000.

Aside from ethical issues, such a practice amounted to bad accounting. The loophole that allowed for such a practice was closed.

i know, you already explained that, and like i said way back then, you did a really good job, thanks

but, either way, the company x is out that extra 40G, right or wrong, income stream or brook

which, at times like these...

The bottom line is, companies just don't know how to interpret or project anything right now.

Uncertainty is no friend to the CFO, and the word "growth" doesn't even get uttered during such times. Treading water is the goal. Shedding jobs is far more attractive than adding them at times like these.

Some additional encouraging economic news...

From the Business Roundtable's just-released survey of CEOs:

• Optimism for companies' sales outlooks continued to increase. Nearly three-quarters of surveyed CEOs expect sales growth over the next 6 months

• The number of CEOs planning higher U.S. capital spending at their companies has continued to rise.

• For the first time since the start of the recession, more CEOs expect higher employment at their companies than those expecting lower employment over the next 6 months. Those hiring plans/expectations suggest that the resumption of net job growth in March could be sustained through at least the next 6 months.

donsutherland1 said:

Some additional encouraging economic news...

From the Business Roundtable's just-released survey of CEOs:

• Optimism for companies' sales outlooks continued to increase. Nearly three-quarters of surveyed CEOs expect sales growth over the next 6 months

• The number of CEOs planning higher U.S. capital spending at their companies has continued to rise.

• For the first time since the start of the recession, more CEOs expect higher employment at their companies than those expecting lower employment over the next 6 months. Those hiring plans/expectations suggest that the resumption of net job growth in March could be sustained through at least the next 6 months.

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CEOs are the cheerleaders and usually overly optimistic. That's one thing that led to the economic collapse in the first place. Wouldn't put too much stock into what CEOs say.

USA-1 said:

CEOs are the cheerleaders and usually overly optimistic. That's one thing that led to the economic collapse in the first place. Wouldn't put too much stock into what CEOs say.

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Exactly (we're agreeing a lot in this thread). Who wants a CEO that's gloom and doom; they're the Cheerleading Executive Officers.

When commericial real estate collapses, look out. Plus, multifamily developments (apartments, high-rises, etc) are in major trouble because they aren't bringing in enough rent to make the mortgage payments, and balloon loans are coming due in force in 2010 and 2011.

FOXNews.com - New Jobless Claims Rise



The number of newly laid-off workers seeking unemployment benefits rose last week, a sign that jobs remain scarce even as the economy recovers.

The Labor Department said first-time claims increased by 18,000 to a seasonally adjusted 460,000. That's worse than economists' estimates of a drop to 435,000, according to a survey by Thomson Reuters.

The report covers the week that includes the Easter holiday, and a Labor Department analyst said seasonal adjustment for that week can be difficult since the Easter holiday occurs in different weeks each year.

The tally of people continuing to claim benefits for more than a week fell by 131,000 to 4.55 million, the lowest level since December 2008.

USA-1 said:

The number of newly laid-off workers seeking unemployment benefits rose last week, a sign that jobs remain scarce even as the economy recovers.

The Labor Department said first-time claims increased by 18,000 to a seasonally adjusted 460,000. That's worse than economists' estimates of a drop to 435,000, according to a survey by Thomson Reuters.

The report covers the week that includes the Easter holiday, and a Labor Department analyst said seasonal adjustment for that week can be difficult since the Easter holiday occurs in different weeks each year.

The tally of people continuing to claim benefits for more than a week fell by 131,000 to 4.55 million, the lowest level since December 2008.

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This time they're not blaming it on the weather, but on the Easter holiday :roll:

Overall, jobless claims jumped but the overall trend is down. So on the Taylor econo-meter this gets a :shrug:.

Taylor said:

Overall, jobless claims jumped but the overall trend is down. So on the Taylor econo-meter this gets a :shrug:

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For some reason, i do not trust the "Taylor econo-meter" to display accuracy. All i have heard lately is partisan tidbits.