Hope and change, part 8.3 — more of the same old same old
Unemployment was reported just moments ago as increasing to 8.3%. My question for the ObamaBots, liberals, "progressives," Kool-Aid Drinkers, and other assorted unthinking Obama supporters (sorry for the redundancy) is simple: when are you going to admit that the almost-four-year-old economic policies of this Administration have failed -- and have failed miserably?
The pace of hiring in July probably failed to reduce the U.S. jobless rate, which has been stuck above 8 percent for more than three years, economists said before a report today.
Payrolls climbed by 100,000 workers following an 80,000 increase in June, according to the median forecast of 89 economists surveyed by Bloomberg News. The jobless rate was 8.2 percent for a third consecutive month, the figures may show.
Weakness in job creation will hold back consumer spending, the biggest part of the economy, as a global slowdown and impending U.S. tax changes weigh on businesses. Job cuts at companies from Morgan Stanley to Cisco Systems (CSCO) Inc. mean unemployment may remain elevated, one reason the Federal Reserve this week said it is prepared to take new steps if needed to boost growth.
“Payrolls are growing at a lackluster pace,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida. “The economy remains weak, and we still have quite a few headwinds. Progress on the unemployment rate will be key to further Fed action.”
The Labor Department’s report is due at 8:30 a.m. in Washington. Bloomberg survey estimates ranged from increases of 50,000 to 165,000.
Private employment, which excludes government jobs, climbed 110,000 after rising 84,000 in June, economists forecast the report will show.
Payroll gains slowed to an average 75,000 in the April to June period, the weakest in almost two years and down from 226,000 in the first quarter, Labor Department figures show.
The jobless rate, derived from a separate survey of households, has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948.
From The New York Times: Beware the Jobs Report of July:
The American economy almost certainly shed more than a million jobs last month, just as it does every July. But that’s not the “jobs number” that will get most of the attention when the Bureau of Labor Statistics speaks Friday morning.
No, the number we care about will be much smaller. Indeed, it is very likely to be modestly positive. And that is because of something called “seasonal adjustment.”
Every month, the Bureau of Labor Statistics estimates the number of jobs based on a survey of businesses. Then it adjusts the number to eliminate recurring fluctuations — such as from teachers going on summer break — so long-term trends are more visible.
In June, for example, the bureau estimated that the economy added 391,000 jobs. But the headline number, after seasonal adjustment, was just 80,000 jobs.
This is a good and important idea. But right now we have a problem: Some economists believe economic turbulence has disrupted the calibration of those adjustments, undermining the accuracy of the bureau’s estimates.
Federal Reserve officials have cited doubts about the accuracy of the monthly jobs number as one reason for their uncertainty about the health of the economy.
As my colleague Floyd Norris explained last month, one possible distortion that has arisen in recent years, thanks to the weakness of the economy, is that “seasonal adjustments make things look better than they are in the winter, when fewer workers are being let go than the government expects, and worse in the spring and summer, when the workers who were not let go cannot be rehired.”
The issue will loom particularly large on Friday, because the report for July is annually adjusted by a larger amount than for any other month save January, when holiday workers lose their jobs.
In the last 10 July jobs reports, dating back to 2002, the agency has added an average of 1.33 million jobs to its original estimate. Last year, for example, the agency estimated that payrolls declined by 1.3 million jobs in July, but it reported a seasonally adjusted increase of 96,000 jobs.
That places a huge premium on the accuracy of the adjustment: A 5 percent error in the adjustment would have shifted the reported total last July by two-thirds.
And even in the best of times, the bureau’s estimates are rarely that accurate.
The government has estimated an average change of 149,700 jobs in the last 10 July jobs reports, but it has since revised those estimates by an average of 92,900 jobs per year. In other words, the initial estimate is generally off by about 62 percent.
In three of those 10 years — 2002, 2003 and 2007 — the agency wasn’t even correct about whether the economy gained or lost jobs.
So take Friday’s report with a measure of caution.
And one more thing: The other headline number, the unemployment rate, is derived from a separate household survey. It’s also adjusted seasonally. And it has its own problems. But that’s a blog post for another month.