Jobs Report Better Than Expected: Hiring Picked Up in July
Amid a widespread fear that the July jobs report would be yet another tidbit of bad news, there is finally a (brief…small) bit of good news: the July jobs report is better than anyone expected:
The job market strengthened in July, a welcome piece of good news that sharply contrasted other recent readings pointing toward an economic slowdown.
Employers added 117,000 jobs last month, well above the 46,000 jobs added in June, and easily topping the 75,000 gain predicted by economists surveyed by CNNMoney.Weak job reports for both May and June were revised higher, adding a combined 56,000 jobs for the year.
Businesses were busy hiring, adding 154,000 workers in the month, topping forecasts of 100,000 new jobs. But those gains were tempered by a loss of 37,000 government jobs, mostly from state and local governments, where budget shortfalls led to layoffs in July, especially in Minnesota where the government was briefly shut down.
The unemployment rate ticked down to 9.1%. The Labor Department said the improvement was mostly due to people leaving the labor force.
Still, 13.9 million Americans remain unemployed, 44% of which have been out of work for six months or longer.
After a shockingly weak jobs number from June and a spate of other negative economic readings that followed, many economists had been bracing for the worst from Friday’s report.
Could this perhaps serve as a partial break on the stockmarket slide yesterday — a slide widely attributed to growing fears about the worldwide economic outlook, including in the United States? Reuters reports:
World stocks pared losses on Friday and Wall Street looked set for a bounce after a U.S. report showed the U.S. economy creating more jobs than expected in July.
The U.S. Labor Department said payrolls increased 117,000 and the unemployment rate dipped to 9.1 percent from 9.2 percent in June. The latter, however, was mostly the result of people leaving the labour force.
A Reuters survey ahead of the report showed expectations for a rise of 85,000 with the unemployment rate at 9.2 percent.
MSCI’s all-country world stock index was down 0.9 percent after earlier losses of closer to 1.2 percent. The FTSEurofirst 300 of leading European companies even moved into positive territory have earlier sharp losses.
The dollar was down 0.2 percent against a basket of major currencies . Yields on U.S. Treasuries rose.
But make no mistake: the global outlook is not happy. Time Magazine’s Michael Schuman begins his piece this way:
It’s like déjà vu all over again. Or is it?
That’s the question everyone on Wall Street will be asking as they enter their somber offices this morning. Thursday’s bloodletting on U.S. stock markets followed time zones around the globe as investors engaged in a panic-driven global selloff. Tokyo and Seoul were both down 3.7%, and Hong Kong 4.3%. European markets didn’t fare any better in early trading.
The global market hysteria might seem like a flashback to the horrifying days of September 2008, when Lehman Brothers collapsed, a financial crisis gripped the world and we landed in the Great Recession. Does the turmoil today mean we’re heading for a similar global crash?
Before we look at where we might be going, let’s take a glance at where we’ve come from. Why are markets tanking? In my opinion, the only thing surprising about the selloff is that some people seem to be surprised by it. The ascent of stock prices earlier this year, especially in the U.S., was detached from the reality of the world economy.
Investors seemed to be simply ignoring the constant drumbeat of bad news. Growth in the U.S. has been weaker than expected, unemployment remains stubbornly high and the housing crisis is far from over. The euro zone debt debacle is intensifying, with giants Italy and Spain increasingly under pressure. Inflation has forced emerging markets like China and India to slow down their overheating economies. Oil and food prices, while no longer rising rapidly, are still at elevated levels, eating into consumption spending around the world. The optimism at the beginning of the year about the strength of the recovery was way overblown. We are still suffering from the fallout from the Great Recession. Investors were in denial about the obvious risks. Not anymore. Stock markets are supposed to be forward indicators; today investors are just playing catch up.
After some more analysis he concludes:
American policymakers ignored the signs of crisis ahead of the Lehman flame-out; now Europe’s leaders have picked up the torch and have buried their heads in the sand just as deeply. The euro debt crisis has never been a liquidity crisis, though it has always been treated that way. The euro zone chieftains have routinely been slow to act, and when they do, the result is underwhelming.
Now I don’t want to add to the panic driving global markets downward. The recent selloff could be no more than a correction, a gravity-induced return to reality. Markets in Asia recovered from their early lows by the end of the day. But at the same time, the global stock selloff is a result of the inability of the West’s political leaders to tackle their serious economic problems. I’d like to hope that the recent turmoil is not the start of a renewed crisis, but a warning for politicians in Berlin, Brussels and Washington, that it’s finally time to get their collective acts together. Otherwise we can’t dismiss the possibility that the next ticking time bomb could well explode, and another Great Recession could loom somewhere on the horizon.
(Have a good weekend..)
28 Responses to “Jobs Report Better Than Expected: Hiring Picked Up in July”
“Could this perhaps serve as a partial break on the stockmarket slide yesterday — a slide widely attributed to growing fears about the worldwide economic outlook, including in the United States?”
Markets just opened, three minutes into opening, Dow is up 150+. Could this be a reversal of yesterday downturn? We’ll see.
9:55 EST:
Well, it didn’t last long…
Too bad job creation wasn’t pushed as hard as deficit reduction, but we know how that worked out eh? Now that the GOTP has had their center stage, their tantrum, and their way (with Obama’s help) we’ll just have to see what’s going to happen next, but given the performances so far, expectations should be realistic (i.e. low).
A glimmer of hope.
JS
I’m not sure what you think the government can do to drive job creation. The stimulus program may have created or saved jobs (economists unsurprisingly disagree about the degree to which it did) but, even under very optimistic assumptions on impact, the cost per job created or saved was extremely high.
So I’m simply curious what you think the government should do here? I have no interest in debating it because I don’t think the government can do much but I’m interested in hearing your opinion. Is it simply more stimulus (creating or saving jobs at say $250,000 per job year) or is there something else?
Regulate, Steve. Regulate industries that are trying to ship our jobs overseas. Regulate CEO salaries that could fund 20 lesser employees. Regulate companies trying to discourage union formation, so that workers will have more protection from job losses. At the very least we’d create more jobs for regulators.
Can’t government spend some money on some things it would have spent money on anyway? What’s the infrastrucutre backlog again, trillions?
Since cutting spending in recessions is moronic, and infrastructure is actually pretty important for productivity growth and efficiency, could there be some programs that can kill two birds with one stone?
Or should we just abolish the EPA and all those other communist enclaves and let the Galtians frack the US into a utopia?
Also, where are the jobs bills? The GOP has mostly been busy going after women’s rights and blocking appointments.
Unfortunately, it is impossible to put an investment in infrastructure into the economy quickly because environmental lawsuits obstruct all major infrastructure projects for what my industry source estimates to be 5-7 years.
Abs,
Infrastructure spending is a good idea imo when it comes to maintenance. New expensive infrastructure however is what politicians prefer. New airports in the middle of nowhere, new roads in rural areas and things like HSR pull a lot of dollars out of important maintenance work.
Said differently, the infrastructure maintenance backlog is imo caused more by misallocation of infrastructure funds than lack of the same.
Well, even in early 2009 it was understood (at least by those of us who are awake) that stimulus spending on infrastructure was no short-term gratification for kiddies but was true capital improvement for the long term (such as adding new transmission lines or rebuilding to upgrade existing lines to 750 KV in a newer, lower-electromagnetic-mission configuration, to save the cost of acquiring new rights-of-way and free the money for more upgrading or other projects — this was an example I provided).
Unfortunately, the stimulus was misspent, not only on pet projects for legislators but misspent such as in the “Beame Shuffle” New York City fashion, taking money for capital improvement, i.e., new construction or remodeling, and misusing it simply to pay for ongoing money-losing operations. This is in fact what so many of the states did with stimulus funds (which are running out currently). They didn’t reform their budgets, but just used new-building money for on-going operations, just like New York City did. No reform, just short-term mismanagement. And any new jobs that were created were mainly government jobs, at very high cost (much more than the jobs paid). That doesn’t even take into consideration the taking credit for temporary Census jobs, etc.
Aside from the real problems (enviro-abuse, NIMBYism) that we have seen with infrastructure projects, there was the problem of infrastructure and similar “new stuff” money just being misspent on on-going operations.
In addition to electrical power transmission facilities, here’s another good example I provided back in late 2008-early 2009, an obvious place where stimulus funds should have been spent to improve things long-term in this country — or to correct, in this case, problems.
http://www.bts.gov/programs/geographic_information_services/maps/structurally_deficient_bridges_on_the_national_highway_system/entire_us/html/entire_us.html
http://www.bts.gov/programs/geographic_information_services/maps/structurally_deficient_bridges_on_the_national_highway_system/
As I also wrote then, we could have built some all-new Interstate segments or completed or upgraded some existing roads. (Down to earth and practical: Finish Interstate 710 in Los Angeles metro! What about the long-needed Southern Crossing in the Bay Area? More “discretionary” but useful for the future: Extend I-17 north from Flagstaff into Utah to connect with the Interstate network close to Salt Lake.)
And I’ll add one more note: Consider what Congress has done with the FICA surpluses from the past, put into trust funds. It has raided those funds, replacing them with debt that has to be added to the budget, already started because deficits already have begun. It’s why I say we can’t create rainy-day funds during good times to be tapped for extra spending in bad times; it’s not possible to trust politicians with reserve funds. (They’re bad enough in how they treat general revenues, or single fund pools.)
Steve in Chicago wrote:
Ban farm machinery.
Seize all farms over 160 acres in the humid East and coastal Northwest, over 2500 acres in the arid West, and redistribute it in parcels of those respective sizes to willing occupiers and farmers.
The first would produce more jobs right away and the second would create a class of new “family farmers” and voters who would appreciate the federal government’s efforts, no doubt.
(Can you say Democratic “immigration reform,” for part two?)
Steve, no interest (nor the time) in debating it here either, I’m just tired of so much acquiescence to a downwardly mobile status quo (including the downward moral status quo) and would like to see a focus that included some vision and courage for a change. Specifically what that might entail is above my pay grade but I’ve been around long enough to recognize mediocre (and/or counterproductive) results, caving and BS. We have serious problems in this country going unaddressed due to the aforementioned lack of vision and courage – and of course the old problems relating to partisanship, corruption, and ignorance.
“environmental lawsuits obstruct all major infrastructure projects”
Quite the blanket statement there Logan. Would you care to give some actual proof of this alleged obstruction of “all” major projects?
JSpencer, if you don’t know what policies might deliver more jobs, how do you know that any would? Rather than a voice of productive analysis, you come across as the Minister of Grumbling.
“Unfortunately, it is impossible to put an investment in infrastructure into the economy quickly because environmental lawsuits obstruct all major infrastructure projects for what my industry source estimates to be 5-7 years.”
That is what happens when you let corporations and other motherfrackers deplete the trust of the citizens. Cry me a polluted river.
Dr. J, maybe you’d just rather I didn’t post?
I realize that cutting to the chase isn’t a popular strategy with everyone. Some like to get lost in the details, some go for the gestalt. You’re welcome to your opinion of course, but I’m comfortable with mine for one simple reason: Most of the positions I’ve taken on issues over the past couple decades have been “vindicated” by subsequent realities. Maybe that counts for at least a little bit eh?
No offense JS but that doesn’t answer the question.
If you don’t know whether any particular policy will work, why do you believe that something will? Is it a general sense that all economic issues are solvable or at least can be ameliorated by government action?
Well, here is vision, no courage really needed,
http://thedartmouth.com/2011/08/05/news/Reich
though it’s irresponsible to ignore the growing deficits and debt.
Then there is what some would call “vision and courage,” but isn’t.
http://www.huffingtonpost.com/rep-bernie-sanders/why-i-voted-no-on-the-def_b_919461.html
That is amusing because it’s the flip side of what I often note about our political class- they’ve eroded public trust to the point that even sensible government intervention is easily blocked by demagoguery. If liberals believe in sound governance then they’d do well to practice it when they have power, and if conservatives believe in free markets than they’d do well to fight for them instead of embracing corporatism when they hold political power.
Keeping corporations honest is probably a piece of the delay, but my impression is most infrastructure projects spend forever in planning because of environmental impact concerns–that is, ensuring the project won’t disturb sacred burial grounds or cast unwanted shadows on a park.
Ah, you figure that other curmudgeons have trouble finding evidence to confirm their worst suspicions?
If you say so, Minister.
Joe, is there additional information about what kinds of jobs are increasing, and how they (and what they pay) compare to jobs in existence prior to the start of the slump in late 2008?
“No offense JS but that doesn’t answer the question.
If you don’t know whether any particular policy will work, why do you believe that something will?”
No offense taken Steve. Your comment suggests you think that nothing will work, which sounds a bit fatalistic. As for whether govt leadership is the answer or not, I’d say that given the propensity for most people to keep plugging along with the status quo absent either leadership or revolutionary innovation, then govt indeed does have an important role, even if that amounts to (worst case scenario) advocating conservation and morale boosting from the bully pulpit. So you don’t think there is any possible policy that would be productive then?
“Regulate, Steve. Regulate industries that are trying to ship our jobs overseas. Regulate CEO salaries that could fund 20 lesser employees. Regulate companies trying to discourage union formation, so that workers will have more protection from job losses. At the very least we’d create more jobs for regulators.”
Sarcasm, I’m guessing? Sorry dude, but except for the CEO pay thing, these are actually pretty darn good suggestions, that I’ve seen work in places all over the world (if you were paying attention, you would see it too…). I mean, I know it’s just jibberish that setting up a tax system that encourages US workers instead of encourages outsourcing (as our system does now) might mean that companies keep their workers here, but heck, it’s just so nutty that it could work. Or, it’s totally exactly what most other countries with healthy economies do. One of the two.
How specifically does our tax system encourage outsourcing? And what’s wrong with regulating CEO salaries?
The best way to “regulate” companies to keep jobs here is to get rid of corporate taxation and create new tax brackets while removing loopholes and special deals. Then lower all of the overall rates. Our tax code is so broken that all of the above could be done without missing a beat. The problem is not that corporations should pay taxes OR pay more in taxes it is that investment profits should pay the same tax rate that work profits do. All income, and I do mean all income, should be treated equally AND all loopholes should go the way of the dodo.
Well, Dr. J, the tax code used to be a sort of CEO regulation, when tax rates went as high as 90%. It set a point, a stop gap, where it just wasn’t practical to pay more.
Of course, companies found ways around it, but it did work in its own way.
No offense Prof but it really never was. Effective tax rates on the wealthiest weren’t much higher in 1970 than they are today