At last! A piece of good news on the unemployment front:
Posted by DeLong at February 07, 2003 07:25 AM | TrackbackWSJ.com - Unemployment Rate Declines Amid Sharp Rise in Payrolls: WASHINGTON -- The unemployment rate unexpectedly fell last month as payrolls jumped by the biggest amount in two years, suggesting that the ailing labor market may finally be stabilizing.
The unemployment rate fell to 5.7% in January from 6% the previous month, the Labor Department said Friday. Nonfarm payrolls increased by 143,000 jobs -- the largest rise since November 2000. That partly reversed December's 156,000 revised drop, which had first been estimated as a decline of 101,000 jobs.
Economists had expected the unemployment rate to hold steady. Amid sluggish economic growth and worries about a war with Iraq, employers have cut more than two million jobs over the last two years.
January's surge in new jobs was concentrated in stores, restaurants and bars, which added 101,000 new positions. Economists had predicted retail hiring would pick up because holiday employment was well below normal. That meant that fewer seasonal workers were laid off in January.
Construction firms added 21,000 jobs, and the services-producing industry added 143,000 jobs.
But manufacturers continued to trim payrolls, shedding 16,000 jobs after cutting 80,000 in December.
The employment report also validated the Federal Reserve's view that inflation risks remain tame. Average hourly earnings were unchanged at $14.98 after a 0.3% increase in December. Wage growth slowed to 2.7% from a year earlier, down from 3% growth in December...
Brad - Given seasonal adjustments, I am not sure why you are cheering. Fewer workers were hired for the December holiday rush so there were fewer jobs lost in January. There seems little reason to think employers are creating a meaningful number of new jobs. Perhaps I am missing something and the economy is about to show a growth spurt, but I really am missing evidence.
Wish I could be more optimistic, but I really am worried. Also, there has been a massive loss of investment wealth over 3 years and bond holders can look forward to lower incomes for some time. The budget seems nutty, and geared to shift massive benefits to the wealthy. Why so little mention of the proposed change in IRA accounts? Think of the long term cost. Yes, I wish I could be optimistic.
Posted by: anne on February 7, 2003 10:02 AMRelatedly but surely not to be cheered, Paul Krugman has another essential column on the cost of the Administration tax cut plans -
"That $674 billion tax cut you've heard about literally isn't the half of it. Even according to its own lowball estimates, the administration wants $1.5 trillion in tax cuts over the next decade — more than it pushed through in 2001. Another $575 billion or so will be needed to fix the alternative minimum tax — something officials have said they'll do, but haven't put in the budget."
Remember when Alan Greenspan was worried about the surplus that was about to eat Cleveland?
Posted by: anne on February 7, 2003 10:55 AMFebruary 7, 2003
Adam Entous - Reuters
WASHINGTON - President Bush's advisers presented Congress on Friday with an upbeat assessment of U.S. economic prospects, predicting faster growth would help offset nearly half the cost of sweeping tax cuts over the next five years while reducing record deficits.
"The economy is not growing fast enough," Bush said at a ceremonial swearing-in for Treasury Secretary John Snow. "We believe the best way to deal with our deficits is to encourage economic growth and to encourage spending discipline in Washington, D.C."
Seeking to bolster support for the [tax cut] package in Congress, White House economic adviser Glenn Hubbard estimated that the Treasury would recoup 40 percent of the cost over the next five years through increased economic growth....
Good grief.
Posted by: anne on February 7, 2003 11:11 AMYes, Anne, if you take away seasonal adjustment, all measures of the unemployment rate have worsened between december 02 and january 03.
Bureau of Labor Statistics : Table A-12
Now, of course, seasonal adjustment is there for a reason. But you don't get out of a recession thanks to statistical adjusments. In other words, seasonal variation can add momentum to a recession. We just have to hope that seasonal effects on unemployment will be on our side very soon.
Posted by: Jean-Philippe Stijns on February 7, 2003 12:46 PMThe Bureau of Labor Statistics announced significant changes to the Current Population Survey which is the souce of the household data used to calculate the unemployment rate. As the BLS noted in the official release, the 5.7% rate in January is not comparable to the 6% rate in December. In the release,BLS did not insert a number in the column for monthly changes on the table on page 2. So, maybe the rate fell and maybe not -- stay tuned for next month. However, virtually no news source read past page one of the release to get to this item.
Posted by: David on February 7, 2003 04:39 PM"We believe the best way to deal with our deficits is to encourage economic growth and to encourage spending discipline in Washington, D.C."
Is that why his own proposals involve domestic spending increases?
Posted by: Ken on February 8, 2003 01:06 PM