Brad DeLong's Semi-Daily Journal: A Weblog

I'm told the local weather man predicted sun for today, but it must be behind all those gray clouds.

First, how is a difference of 13,000 jobs so huge? Isn't that basically staying the same? I know The Journal said "slightly less optimistic," but why try to draw a distinction at all?

Second, politically speaking, we have two more months left, but you could even argue we have only month left. I'm not really expecting a huge increase for August. If it's under 100,000, it could look very weak. It's anything less than the 32,000, it will look very week - especially if we actually lost jobs, although I don't know how likely that is. We then turn to September. And if August is bad and September is not that much better, worse, or just downright awful, I don't see how he could even think of trying to run on the economy.

It is more than the nationwide jobs picture, because the election is state by state and employment varies from state to state. In general, the rural states are doing pretty well thanks to the massive farm subsidy. Farmers were supposed to be on their own, but are receiving more price support than ever.

Unemployment is not distributed evenly, with unemployment for blacks substantially higher than unemployment for white men. Unemployment among white men is not far off from numbers under Clinton. What is hurting white men is many are now in jobs paying far less than what they were making before. Youth employment is another story. It is bad. No wonder the youth vote is breaking heavily for Kerry.

As for running on "the economy", it is not terrble overall. However, the jobs picture is abysmal. The high gasoline/energy prices will hurt the economy more than the sheltered administration believes. With energy prices likely to be high or higher, the economic expectations need to be lower.

You know, bakho, you are absolutely right. Things do vary from state to state. I was just going on the notion that if things are crappy overall, they cannot be particularly great in any state.

Late last winter the Labor Department changed the number of jobs added automatically each month to the business survey to account for small company job creation. The number went from 35,000 to 300,000. I am not sure how to i8nterpret the change. Would you care to help?

Is there any reason to pay attention to this claim for the job creation surge recorded in March and April? I can find no significant discussion:

http://www.gold-eagle.com/gold_digest_04/richebacher082004.html

For decades, the BLS has aimed at small businesses when measuring job creation in times of recovery, especially those not captured by its established monthly survey. Until 2000, this statistical adjustment was fixed at 35,000 each month, called the "plug factor."

The recent sudden jump in these figures towards 300,000 each month results from a computer model based on a calculated "net birth/death adjustment," which is supposed to measure how many jobs small firms have created and shuttered. In this way, the former monthly 35,000 figure exploded into numbers that are almost 10 times greater.

Ahhhhh.

http://www.j-bradford-delong.net/movable_type/2004_archives/000988.html

What about the allegations that the DOL is juicing the job growth number with it's Net Birth/Death Adjustment?

Posted by: Matthew Saroff on June 10, 2004 01:42 PM
____

Matthew,

Unless we want to go probing for a personal agenda, I think we can take Robert Reich at his word when he says that the birth/death calculation has been steadily improved, and while not perfect, is not bad.

As regards the piece in question, I understand why economics and politics go together, but I don't understand why the Post thinks that one individual (Weisman, in this case) necessarily has any expertise in one area simply because he is thought to have expertise in another. Why does the Post think that it is necessary to make strong (and debatable) assertions about economics in the same piece in which strong assertions about politics are being made? If voters don't like the state of the economy, shouldn't we at least suspect there something wrong with the economy? Don't economists assume that when we buy gasoline, newspapers, shoes and stocks, the combined views of the public on the prices they are willing to pay are more or less correct? Given that, why would we be benighted about the overall state of the economy - more benighted as a group than Weisman, with his necessarily narrower knowledge of conditions in the economy?

Posted by: kharris on June 10, 2004 02:16 PM

http://www.j-bradford-delong.net/movable_type/2004_archives/001326.html

I am having the same problem with your analysis here that I had with your radio interview the other day.

You or concentrating on specifics of individual data that are really almost inconsequental.

Who really cares if the next unemployment
report shows 25,000 or 250,000 except for a few policy wonks or boggers that can argue over how many angels can dance on the point of a neddle.

Read the consumer confidence and political polls. The overwhelming bulk of the population realizes that the economy is doing poorly and one more or less good or bad unemploymnet report will not change anyones vote.

On the radio interview you got sidetracked into a meaningless discussion of specific data observations and were not able to deliver your message.

The message is that these weak data show that the Bush policy is not working. Last year, to use their own bragging point real GDP growth was the strongest in 20 years. Yet only a few peole at the top of the income pyramid benefited from this. The middle class is being squeezed by
economic trends that Bush thinks are great and he is completely ignoring the pain his policies are causing. Moreover, the decine in real weekly earnings data show that the number of people suffering is still growing even worse than it did last year.

We are now in the 4th year of the Bush administration. How long are we going to let them get away with blamming their poor record on the Clinton recession that was over almost 3 years ago. The Bush economic recovery is the weakest in histroy and that is largely a product of their misguided policies. Their trickle down economics has not trickled down.

This is what you should have said on the radio
and what you should get every progressive economists to repeat and repeat every chance that get.

Do not let someone take you off this meassage.
Clinton said it so nicely, we tried their way for 15 years and it has not worked.

By going around bragging about how strong the economy is when the mass of the population is
experiencing falling standards of living the
President is just demonstrating how removed he is from the population.

"Most say a sustained drop in energy prices and an improvement in the labor market are needed to revive consumer spending."

The world has a finite supply of oil. China will soon be gobbling it up at a per capita rate that matches our own. Short-term, the powers that be can probably squeeze a little more out into the pipelines of the world. Long-term, we're totally fucked without changing our way or life or embracing a massive shift to alternative energy.

It never ceases to amaze me how Ph.D.s and pundits can pontificate endlessly about GDP, etc. without addressing the fundamental paradox and moral dilemma of the fact that North America and Europe maintain their standard of living by absorbing a vastly disproportionate share of the world's resources, meaning that continuing this charade is only possible if we kill or subjugate billions of fellow humans forever.

I am ging to follow up some more on the discussion the other day about your radio address. While the advice others gave you was nice and would be helpful I want to take the advice in another direction.

When I was a young junior economist in Washington my boss sent me down to watch Arthur Burns testify. The lesson you get from watching him or other politicians is that one of the prime requirements of being a top level official is that you can talk for 2 minutes or 60 minutes without saying anything you do not want to.

You have a message to deliver and you want to turn the questions you hear into a way to deliver your message. If you do not have a message why are you wasting your time appearing on tv or radio?

Compare Sect Snow to Rubin. Snow does a poor job because he does not stay on message and does not understand how to take control of a question and answer secession. He keep getting bogged down in details. Can you imagine Rubin ever being caught in the gaffs Snow is regularly caught in. But pay attention to how Rubin answers a question. He does not get invloved in dteails. He delivers a message that makes his point.

The other day when you were asked about a short run economic forecast you should have said I am not a forecaster and doubt that anyone can really forecast. I have no idea if second half growth will be 2% or 5%. However, Bush has cut taxes three times and all we got out of it was 3 good employment reports. It is obvious that the problem is that Bush should have cut taxes 36 times -- than maybe we could have gotten 36 months of rising employment. No really, the republican economic policy is not working and on that basis I suspect 2nd half growth will be weaker than the consensus expects.

If you had approached the interview that way you would have done a much better job and the reporter would have loved it and would love to have you back. Moreover, if ou get some passion in your comments than you do not have to worry about the expression on you face. The whole time you are listening to the reporter are others talking concentrate on how you are going to turn their comments into a way to deliver your message. If you do that you will not look bored.

Spencer

Nice posts as usual. Why should I wonder whether the are dragon flies about, when I find trout jumping? We are passing through a difficult economic period for all too many households, and there is no reason to believe there will soon be a dramatic turn for the better. Job growth, wage and benefit growth are notably poor for recovery from a recession. The recession was over in November 2001. We should be happily growing, but we are not. There is a transfer taking place of corporate revenue from workers to management and owners. We have a structural deficit and low household saving, and little reason to think a change is in the offing here as well. I am worried.

http://www.nytimes.com/2004/08/28/politics/campaign/28econ.html

Economic Squeeze Plaguing Middle-Class Families
By TIMOTHY EGAN

NEWTON, Iowa - Sure, she is upset that she cannot afford health care, and it hurts that higher tuition costs at the community college where she carries a full load have put her deeper in debt. But at the end of this month, Molly Illingworth will suffer the worst blow yet: she is getting laid off by her mother.

"I hate to close the shop," says Pam DeBruyn, Molly's mother, who owns a small party and office supply store here, and also works full time as a graphic designer. She needs the designer job for the health insurance, so she will close the store, and with it will go her daughter's employment.

In this Iowa family, one generation is trying to step through the gateway to the middle class; the other is struggling to stay in it. And it is the middle-class squeeze - rising college tuition and soaring health care premiums at a time when wages are stagnant and job creation is sluggish - that may be the sleeper economic issue of the presidential campaign.

"I feel the squeeze from both ends," said Beth Steenhoek, a mother of two who owns a small insurance agency in Newton. Fewer people are buying insurance, she said, because of a hefty increase in premiums, and her own family insurance costs have gone up as well.

Ms. Steenhoek has refinanced her home mortgage loan, and remembers getting "about $400 a kid" in the Bush tax cut, but she said it still feels like the family budget is shrinking. And she has not even thought of taking a few days off.

"A vacation? No, I can't leave the office."

For Ms. Steenhoek, the economy is the No. 1 issue in the presidential campaign. She is that rare species this election year: the undecided voter. But even solid partisans are troubled by the tremors at the edge of middle-class life.

"I'm a pretty staunch Bush Republican and I have a great job at I.B.M.," said Todd Canny, who was sharing ice cream with his three children and wife in a new mall. "But we're paying a lot more for health care co-pays and premiums, which is through my wife's job as a teacher. And trying to save for college for these three little ones has gotten a lot harder."

anne, I agree however there is an even greater transfer taking place. First workers lost paid retiree health care. Then the workers lost their defined benefit pensions. Now, in spite of record eanings, the suits argue they can no longer afford these benefits. They neglect to tell people the these benefits were paid for by their employees in the form of reduced wages. So no, in their 50s, the workers no longer have any way to make up what they thought they had saved.

Then along comes Bush/Linder with their let's tax consumption not income. Now that the boomers will have little income and increase their spending. anyone that postponed consumption for that retirement trip or motor home or vacation will now be taxed. Additionally, prescription drugs and visits to the doctor will be taxed at least 23%.

The final transfer comes along with that idiot Greenspan. Yes, the same jackass that was head of the commission that fixed social security now comes along and says we have to reduce benefits.

At this point in history I do not see how republicans can have any standing in the polls at all. They have lied, stolen, and broken every social covenant made with the people of this country.

Who the hell is Greenspan kidding work longer? My job went to India two years ago and guess what? Surprise. No one is hiring 55 year old unemployed men.

Raising interest rates reduces business investment and hiring. Raising interest rates makes a currency more attractive. Why is Greenspan raising interest rates now?
He may have given up on Bush getting elected. There will be a delay in the economy shrinking enough to officially become yet a bigger recession, enough to put it on Kerry's watch. He raised rates dramatically before Gore's election but the lag time didn't start the recession until after Bush's inauguration. Now he is making sure not to make that mistake again.
He may be trying to keep the dollar from collapsing immediately so that the collapse and inflation take place on Kerry's watch instead of Bush's. This may work. God knows why the dollar hasn't collapsed already. It's only down a third to the Euro in the last two years, it's down even less to the Yen, and it has a long way to go till our exports match our imports. It isn't down a bit to the Renminbi.

Anne- & me -- good points I worry to.

But go back to my point. Why is no one getting the message about greenspan and the republicans stealing the midle class retirement funds out to the public.

When I try to expain that the Bush deficits are exactly what they want and is part of their long run strategy to destroy SS people look at me as if I am off my rocker.

How do we get that message across without sounding like kooks?

Imagine Alan Greenspan invoking the fear of a budget surplus that would devour San Francisco. A structural deficit was created with the tax cuts, as though know one knew there was a baby boom generation nearing retirement age. A generation that had been promised Social Security and Medicare benefits for what the generation contributed. Fiscal policy was not made thoughtlessly. The fiscal stimulus could have been stronger with programs such as Federal revenue sharing with the States. We chose to selectively cut taxes, and cut them to the future.

spencer -- I really don't know.

I do know that after United airlines dumps their pension plans that Delta, US Air and the rest will quickly fall in line. And once accomplished in the airlne industry the others will join in.

I fail to understand what the current government is thinking. Surely 10 years from now there will be a lot of people waking up and saying what has happened to me. It will be ugly.

me

Understood.

"Why is no one getting the message about greenspan and the republicans stealing the midle class retirement funds out to the public?"

Good question. We have been spending too much time arguing Vietnam. The recent Greenspan pronouncements about cutting future social benefits should be a great leadin to discuss the use of the SS trust fund to fund the Bush tax cuts for the wealthy.

The bottom line:

"Bush has been using SS taxes for the baby boomer retirement to fund his tax cuts for the wealthy."

There is no reason the Democrats cannot repeat that one line in thousands of interviews and editorial letters across the country.

"Why is no one getting the message about greenspan and the republicans stealing the midle class retirement funds out to the public?"

The Dems believe that rebuttal is what the game is about. The Repubs understand that rebuttal is the loser strategy. They have set up a media echo chamber (right wing talk radio & cable news) that sets the political agenda: it points out the holes, and that is where the mainstream media digs. See SBVFT. The Dems, the liberals, all responsible adults need to think strategically about how to force the national news agenda in a way that suits our political goals. A chunk of these strategies MUST be devoted to character assassination, it is simply required in this political environment. The squeamishness the Dems have about going on the attack is simply furthering the interests of the political machine that is going to have hungry seniors banging pots in the street in another ten or 15 years.

Anne and me,

I'm worried too. How is it that there was some sort of bump up in the purchases of airliners, which is touted as "good" economic news, yet the current employees and new hires of airlines are seeing their pensions undermined in the name of saving the companies?

I admit to being extremely unknowledgeable about economics,but I can see what is happening to the generation of my children's age (early 20s) and to the generation that is now in its mid-30s.

anne asks about the plug factor and I wonder if she had a chance to peruse Kurt Richebächers article:
http://www.prudentbear.com/archive_comm_article.asp?category=Guest+Commentary&content_idx=35358

But then spencer(!) pans all this stat talk and asks us to look around ( like Blake on Newton ). And look smart, especially on camera. And stay on message for God's sake. Sounds like a Bush tutorial, no?
Too desperate for me at any rate. Camille's remarks ( A chunk of these strategies MUST be devoted to character assassination, it is simply required in this political environment.) are driven by fear.
Relax.
Bush is on his way out because people aren't that stupid, that blind, and this time, not that well-heeled. They cannot afford the luxury of repeating that mistake from 4 years ago.

It is no victory if the Dems have to adopt the ways and means of the Repugs to do it.

calmo wrote, "Bush is on his way out because people aren't that stupid, that blind, and this time, not that well-heeled."

Would that it were so. You really underestimate the stupidity of people. Well-heeled? Explain why voters in Alabama dramatically rejected a tax-increase plan that would have benefited many of them.

"It is no victory if the Dems have to adopt the ways and means of the Repugs to do it."

But it's basically a war. As Krugman has pointed out in the intro to his _The Great Unravelling_, the Republican Party is a "revolutionary power," and will stop at nothing in order to gain and hold onto control of the State. Nothing fearful or desparate in that analysis; rather, just evidence from the Republicans' own thuggish behavior. Or have you forgotten Clinton's impeachment, the entire Monica-gate process (with Starr abusing witnesses and attempting to construct a perjury trap for Clinton), Republicans redistricting mid-decade in Texas and Colorado, etc etc.

All's fair in love and war. Put another way, if you view political tactics as an iterated prisoner's dilemma, the Republicans have shown time and again that they will defect. It's time we stop cooperating.

I, for one, found Spencer's advice very good.

Well, I'm not going to extrapolate from that Alabama result and claim that therefore, we ARE (all of us) really that stupid.
Nope, I'm going to stupidly persist in the view that level-headed Americans ( some in Alabama too) living in 2000 were confident enough to elect and accept a candidate that did not appear to have the credentials for the job. Then, we were living in an economy that was the envy of the world. We thought we could handle the result. (This attitude was expressed in the media at the time with copious references to the experienced support and advisors at his side (poor fledgling).)
Things have changed.
That confidence is gone. Level-headed people know that they cannot afford to continue with Bush.
We need a little more faith in the average Joe not being as dumb as the sack of potatoes you make him out to be.
Camille's advice to adopt the strategies of the Repugs makes it that much harder to distinguish between the Dems and the Repugs. A distiction that does start to disappear with this, no?

calmo wrote, "Nope, I'm going to stupidly persist in the view that level-headed Americans ( some in Alabama too) living in 2000 were confident enough to elect and accept a candidate that did not appear to have the credentials for the job."

That's weird. Why would they vote for someone *opposing* the vice president of the administration nominally responsible for the apparently good situation they found themselves in?

"We need a little more faith in the average Joe not being as dumb as the sack of potatoes you make him out to be."

Well, it's not just average Joes. There are plenty of quite wealthy people who are just as, and possibly more, stupid.

"Camille's advice to adopt the strategies of the Repugs makes it that much harder to distinguish between the Dems and the Repugs. A distiction that does start to disappear with this, no?"

No, it doesn't. That's *tactics or strategy*, not policy.

Bush won't lose the state of Alabama, but his numbers here are rather sickly when compared to places like Indiana, Idaho, and Utah. And for a perfectly understandable reason: the war has decimated the state's already understaffed services (fire departments, police departments, etc.--the ones where Reservists tend to work ). This problem gets a fair amount of play in the local press--along with stories about family hardships and so on. It's also interesting to see a fair number of Kerry/Edwards bumper stickers driving around--not, it seems, an open incitement to vandalism. So while the state may be too clueless to vote against Bush, this shouldn't be read as a sign of heartfelt happiness with his tenure. The fundies are very quiet this time around.

Thanks for those comments alabama.
One last shot for Camille, liberal, spencer (must be another spencer around) : Perhaps the reason why only half the voters turn out is that they see no difference in the candidates.
Some center-piece of democracy we have, no?
The point is augmented by the fact that most foreign observers point out that the political spectrum here is much narrower compared to the rest of the international community. (Even at this site, Nader talk is not tolerated. The structure of this political struggle is formatted like a football game, no?)
But this time I sense more people are interested in the contest and have a greater stake in the outcome. (Do the polls show that --increased voter participation?) They are paying more attention now because their economic circumstances have deteriorated and the forecasts are grimmer.
The distinction you draw between policy and tactics/strategy is a moot point. I am trying to say: This is my recommended policy: don't act like a Repug and send the message to the voter that there is no difference between Dem and Repug. If I read you correctly, you're saying that's a strategy doomed to failure as the Repugs
will eat you/me for dinner.
You think the typical voter cares about policy issues? I think he's interested in it to the point of hoping it is well-managed and not going to screw him in the ear. I rarely hear the view that a person is voting for one side because they have, say, an education policy that is superior. No, what I hear is quite personal invective about the other candidate that they won't vote for even if hell does freeze over. And when I hear it directed at Kerry who has not even had a go at the office, I know I'm listening to one of the potatoes. Do I want to sound like that when I express my opinions about why a change would be good for America? Do I want to embrace the same tactics and strategies that have cultivated this person's opinions? The number of potatoes ( poor and rich) is greatly exaggerated. And the need to adopt Repug tactics/strategies to cultivate them is not required.