Brad DeLong's Semi-Daily Journal (2004)

Crudele is either being dishonest, or he has failed to pick up the phone and call a BLS economist, who would gladly have pointed out to him, as one did to me many months ago, that the birth/death figures are not seasonally adjusted, while the final payroll figures are. Either way, he's failing in his journalistic duties. Insert New York Post joke here.

Before anyone start using the birth-death model to argue that Voodoo economics is working they better look at how it impacted employment growth from Feb to May when private payrolls increased 973,000. Over these 4 months the birth/death model added 800,000 of these 973,000 jobs.

Now do the Bush defenders really want to make that adjustment to the great Bush job growth record?

Its still a mystery to me why so many apparently smart people both to read Kaus, let alone take his rants seriously.

Its still a mystery to me why so many apparently smart people bother to read Kaus, let alone take his rants seriously. Was he good in the day? Or does he get disproportionate respect for being an early adopter of the blog thing?

Kaus is kinda like a male Maureen Dowd: a lot of surface wit and flash, but nothing underneath.

And any defender of this Administration who has a problem with the net birth/death adjustment had better wake up and smell the coffee, because according to the BLS, 1.35M new jobs (net) have been created since the last birth/death adjustment benchmarking in March 2003. 1.2M of them are attributable to the birth/death adjustment; without the adjustment, the establishment survey would show a gain of only 0.15M jobs - 153,000, actually - since March of 2003.

If they want to run on *those* numbers, they can be my guest.

Danf: Kaus is A) paid and B) highlighted regularly on a medium-sized media site, so he naturally rates more curiosity seekers and trainwreck-watchers than the typical blog.

A male Maureen Dowd is exactly what Kaus want's to be, but unfortunately his rightful spot on the NYT editorial page was stolen from him by Paul Krugman. Such an injustice.

What follows is my rant on my little hobby horse. And a repeat post from one below. My apologies, but I want to know what people think of this.

********
Here is an item that is the first hard evidence, that I know of, that any kind that cash disbursements to middle and lower income classes are signficant factors in driving the above and below trend bumps in employment changes. Apparently these folks have a model for retail sales that includes things like child tax credit checks.

I know very little about this kind of forecasting, but it reinforces my idea that we will see good employment numbers mostly when the Bush admin is forced to, or the law says, you give some cash to regular folks. So I think with no more rebates coming, and the income tax refunds spent, we will see more numbers like June and July. Let's see what happens the next few months.

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=568&e=14&u=/nm/20040810/bs_nm/economy_retail_redbook_dc_1

Chain Store Sales Growth Slows
Tue Aug 10, 9:00 AM ET
NEW YORK (Reuters) - The absence of child tax credit checks hurt the pace of U.S. chain store sales growth in the first week of August, a report said on Tuesday.

pop quiz: who's a bigger hack, kaus or easterbrook?

Kaus just doesn't understand economics. Period. That's all there is to it.

If he'd just admit it, it wouldn't be so bad. But instead, he fakes his way through, in order to reach predetermined conclusions, which is what makes him a worthless hack.

http://www.nytimes.com/2004/08/11/business/worldbusiness/11CND-OIL.html?hp

Global Oil Demand Expected to Exceed Forecasts, Report Says
By JAD MOUAWAD

PARIS — Global oil demand is expected to be higher in 2004 and 2005 than initially forecast, increasing pressure on oil producers to boost their output at a time when rising oil prices may hurt a recovering world economy, according to a report by the Paris-based International Energy Agency.

Supply disruptions in Iraq, uncertainty over the fate of Russia's top producer Yukos, and rising demand in China have pushed oil prices to record highs recently. Still, the report published by the agency today tries to dampen concerns that oil is in short supply by pointing to rising production in Saudi Arabia and Russia.

'The market is tight, production and infrastructure capacity is less than desired and uncertainties continue to weight on the market,' the report said. 'But does this justify $45 oil? Current oil prices are a concern and are causing economic damage.'

It's funny that these numbers have been coming out monthly for decades and we've always interpreted them in a straight-forward way. Now we discover that you actually need a secret decoder ring to understand what they REALLY mean.

It's funny that these numbers have been coming out monthly for decades and we've always interpreted them in a straight-forward way. Now we discover that you actually need a secret decoder ring to understand what they REALLY mean.

Is there a calculation of people who have dropped out of the labor pool because they have stopped looking for work, etc.?

If it exists, how does that look, especially given that job growth is basically flat, but unemployment went down slightly last month?

That would be an interesting number to publicize along with new employment and jobless numbers.

"Kaus just doesn't understand economics. Period. That's all there is to it."

Well, there's more to it. His screw ups on the meaning of polls are as bad as is humanly possible. He doesn't do numbers of any kind, as best I can make out -- he really has to be seated at a separate table from them.

The Labor Department does publish estimates of discouraged workers. In Jan. 2001, there were 301,000. At the end of the recession, there were 328,000. Now there are 504,000.
These are folk who tell the BLS that they would like a job but aren't looking right now because they don't think any job is available for them. More than 1 million more aren't looking for reasons other than discouragement... probably stuff like: I can't get a ride to work or I'm disabled or I can't find someone to watch my kids....

What does everyone make of this arguument? It's from yesterday's NYT letters section. Seems bogus to me, but what do I know?
-----------------------------------------------
To the Editor:

The seeming contradiction between low job gain in the establishment job survey and declining unemployment rate in the household survey is connected to the increasing aging of the population.

Most voluntary retirements and many involuntary retirements among the upper age groups result in withdrawal from the labor force. Others in these groups, because of fundamental changes in the economy, continue work as independents (not included in the establishment survey). Most of the upper age groups don't go into unemployment.

A result is that the number of employed measured in the establishment survey goes up slowly (despite the increase in population), while the unemployment rate from the household survey goes down, and the number of independent workers, as well as the totals in the household survey, go up faster.

Peter Gutmann
New York, Aug. 7, 2004
The writer is a professor of economics at Baruch College, CUNY.

What does everyone make of this arguument? It's from yesterday's NYT letters section. Seems bogus to me, but what do I know?
-----------------------------------------------
To the Editor:

The seeming contradiction between low job gain in the establishment job survey and declining unemployment rate in the household survey is connected to the increasing aging of the population.

Most voluntary retirements and many involuntary retirements among the upper age groups result in withdrawal from the labor force. Others in these groups, because of fundamental changes in the economy, continue work as independents (not included in the establishment survey). Most of the upper age groups don't go into unemployment.

A result is that the number of employed measured in the establishment survey goes up slowly (despite the increase in population), while the unemployment rate from the household survey goes down, and the number of independent workers, as well as the totals in the household survey, go up faster.

Peter Gutmann
New York, Aug. 7, 2004
The writer is a professor of economics at Baruch College, CUNY.

John Crudele? JOHN FREAKING CRUDELE?

I haven't heard that name since he was spreading "Vince Foster was murdered" rumors back in the Clinton days.

Do a Google search of "John Crudele" and "Vince Foster" and you'll see what I mean.

Brad,

Let us assume that I know nothing whatever about you--a proposition is close enough for jazz.

I still know this: that you do not have time to read Mickey Kaus.

One other thing to remember about Kaus -- he claims to be supporting Kerry. His pathetic spinning of the job numbers is proof, if proof was needed, that this is just a pure pose to free him to snipe at Kerry without the implication that he's hitching his wagon to Bush. The only remaining mystery is why there are people out there (many of whom are New Republic readers) who need to believe that Kaus is some kind of liberal.

That is pathetic. Voters don't care about the number. Voters only care that cousin Joe and Aunt Jane can get good jobs. Voters know the jobs are not there. We don't need statistics to tell us so. Having this moron try to make the employment situation is better than we know it is insults our intelligence. People like that make all economists look bad.

Straws in the wind, from Alan Abelson's column in that well-known "left-wing, comsymp, liberal smear machine" known as Barron's ("Rallying the Troops," Aug. 2, 2004, pp. 7-8):

"Investors, when they aren't basking in their natural state of euphoria, tend to be an edgy lot. What makes them more than a little antsy these days is a nagging doubt as to whether the recovery is the genuine article. No secret, we suspect it isn't. And skepticism, whether unarticulated like that of investors or outright like our own, wasn't exactly allayed Friday by
the preliminary reading on second-quarter GDP, which slowed sharply to a 3% annual rate from 4.5% in this year's opening three months. It also
contrasted with expectations among the cogniscenti of 3.7% to 4%.....

"Not only is the economy in a braking mode, but the increase in the GDP deflator, one of Mr. Greenspan's many favorite measures of inflation (having many measures enables him to choose, at any given time, the most convenient one, i.e., the one registering the least increase) was a brisk 3.2%. A slowing economy and accelerating inflation used to be called stagflation. Which is the economic equivalent of running harder and harder in place and enjoying it less and less.

"Agreed that it isn't an exceptionally elegant word, and these days it rarely slips from the lips of economists, especially those of the Wall
Street genus, who prefer "robust" when they can't say "boom." In any case, stagflation and the condition it describes is bad for people and hence bad for stocks."

Abelson also cited an interesting thought from Stephanie Pomboy of the consulting firm MacroMavens:

"Stephanie views the [Microsoft dividend] as not so much the beginning of a trend but rousing confirmation of one. And what that trend consists of is that, as we observed about Microsoft, corporations can't think of what to do
with their increasing trove of cash other than to pay dividends, buy back their stock and contentedly watch it pile up.

"By her reckoning, undistributed corporate profits now weigh in at a cool $550 billion, handily more than double their total a scant few years ago. In the good old days, she notes, those overflowing coffers would be put to productive use via capital investment. However, the times they've been a-changin' and corporate attitudes along with them.

"For, like Microsoft, most companies appear far from eager to spend their ever-growing reservoirs of cash on capital projects. "This earnings
season," Stephanie remarks, "has been noteworthy, if only for its raft of share-buybacks and dividend announcements." She tallies 938 companies buying back stock during this stretch, compared with 808 in the last quarter, while 410 companies have declared dividends this earnings season, compared with 184 last.

"Stephanie takes this as persuasive evidence, along with the wave of privatizations (whether or not they are, as claimed, due to the costs of
complying with Sarbanes-Oxley), THAT CORPORATIONS ARE CHOOSING TO SHRINK RATHER THAN EXPAND (emphasis added). Which opens to considerable doubt expectations that what she calls the standard recovery package of capital expenditures and employment gains have merely been delayed in delivery.

"For that matter, she sighs, the very fact that companies have been "amassing cash even as the Fed has been taxing them for doing so" via negative real short rates was a tip-off about the lack of compelling investment opportunities. "Underwhelmed and uninspired," she relates, "companies are now opting to give the money back."

"That isn't a favorable harbinger for capital spending, nor for jobs, since "no single force shapes the employment outlook like capital spending."

So in other words, the very people one would normally consider Dubya's natural constituency - CEOs, CFOs, and the like - have so little faith in this bogus economic program that they're not even supporting it with new investment spending. Kinda makes you wonder what's going through Greg Mankiw's mind, doesn't it?

The BLS exclusion of sole proprietors, self-employed SOHO's, seasonal farm workers, and domestic workers is actually crafty politics.

1 in 10 SOHO's makes it. I would argue 1 in 20.
That leaves 19 out of 20 bankrupt, representing a huge net deficit to the US economy. (Bankrupt spent life savings to stay open for business until they are spending someone else's life savings who foolishly gave credit to them.)

Read your local newpaper's bankrupcy notices. Huge. Ditto farm and domestic workers, grossly underpaid far below a living wage. All of the above are a net load on the dole system, and so a net structural deficit in the US economy.

Increased numbers of sole proprietors, self-employed SOHO's, seasonal farm workers, and domestic workers are *not* good employment stats, just as increasing numbers of OK'ys moving to California fruit-picking jobs during the Dust Bowl was not "good", and increasing numbers of "self-employed" WWI vet's lining the streets with their pencil and apple stands was not "good", or 50% inner city unemployment stats.

US is a permanent two-class Depression economy, just like post-industrial England. We just don't have an Australia to off-ledger poor off to, so BLS just ignores them like everyone else does.
The City of Seattle is waging wars in rural areas trying to set up tent cities for the poor. Television has so warped and rotted our values that anyone wearing sub-par Old Navy is Saddam.

To paraphrase Will Smith in 'Men in Black', BLS makes the SOHO's and seasonal's (net) look good.
Just one of many little Bushco vanishing acts.
Rewriting Modern Reality into a Reaganesque. Wait 'til he saws Condi in half. Wow!

I at least sometimes laugh *with* Maureen Dowd on occasion. Same cannot be said for Kaus...

jml,

One thing to know about chain store results. They are usually reported as year-over-year changes. Thus a big rise last July makes a strong showing, in the July/July % change, unlikely. However, the implication that last July's conditions cut into this July's actual sales, which is how the piece you quote reads, is nonsense. There is pretty clearly a big difference between consumer demand in Q2 and early Q3 and in other recent quarters. To argue that prior good news is holding back sales is nutty, though. Tax rebate/refund checks boosted sales in prior quarters, but do not hurt sales now.

Your point, though, holds. In the absence of a suppliment to wages, consumer spending seems unlikely to growth very fast.

ä = alt + 0228. just a tip for ya, brad.