This just in: AUSTERITY DOESN’T WORK!
It doesn’t work here, it doesn’t work in Europe, it doesn’t work for state and local governments. I’m tempted to ask how many data points we need to recognize this crucial economic truth, but I’m afraid data points don’t have much to do with it.
Another weak jobs report for April, with only 115,000 jobs added – 130,000 in the private sector – and a tick down in unemployment, from 8.2 percent to 8.1 percent.
After last month’s disappointing report, I was careful to point out that "one month does not a trend make," and there are some technical reasons – mostly seasonal adjustments that haven’t caught up with unusually warm weather – to consider as well.
Well, two months doesn’t quite a trend make either, but it’s getting closer. Average out some of the monthly noise, and payrolls are up 176,000 per month over the past three months, compared to 218,000 over the prior three months. So, somewhat of a deceleration on a more reliable quarterly basis. But remember, the 200k trend was just okay – typically coming out of such a deep trough as was the Great Recession, you’d like to see much bigger monthly numbers than that.
Key points for now with more to come later:
• State and local governments continue to shed jobs. They would be my first target for stimulus in a sane world. Last month, local education jobs were down 11,000 and they’re down about 100,000 over the last year. Next time your friendly politician is jawboning about a) the benefits of austerity and spending cuts, and b) the importance of education, please point out the hypocrisy.
• A few bright spots worth noting: upward revisions of 53,000 to payrolls March and April and manufacturing keeps on trucking, up 15,000 last month and about 230,000 over the past year.
• The labor force contracted by 342,000 last month – that’s a volatile monthly number so I wouldn’t make a big deal about it, but the low growth in the labor force of late and the low participation rates we’ve been posting are also indicative of weak demand.
• Wage growth remains weak, with paychecks for most workers falling behind inflation.
That’s the punchline, I’m afraid. Weak labor demand is upon the land, and no one in power seems willing to do anything about it.
You can email me at email@example.com. I look forward to your feedback.
Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities. From 2009 to 2011, he was the Chief Economist and Economic Adviser to Vice President Joe Biden, executive director of the White House Task Force on the Middle Class, and a member of President Obama’s economic team.
Also by Jared Bernstein
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• How to Build a Fairer Economy
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• It's (Almost) Time to Raise the Minimum Wage
• Reasons to Like Obama's Budget
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• Obama's Corporate Tax Plan Calls GOP Bluff
• Gas Price Pandering WAY Up
• The Case for Full Employment
• Stress Tests You Haven't Read About
• Ryan Budget: The Triumph of 'You're On Your Own' Economics
• The D.C. Tax Dodge: Buy Now, Pay Later - or Never
• GOP Doubles Down on 'Social Darwinism'
• The Job Trend is Our Friend
• Why We Need a 'Buffett Rule'
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• Straight Talk on Social Security