The economy gained 171,000 jobs in October, according to the Bureau of Labor Statistics. The previous two months’ job gains were also revised upward, with the BLS now estimating that an additional 50,000 jobs were created in August and 34,000 in September. With the revisions, we finally have more jobs than in early 2009, when the economy was in full collapse and President Obama took office.
Job growth is important, but what might be even more exciting news is that the unemployment rate went from 7.8 percent to 7.9 percent. Wait—isn’t unemployment the number we want to go down immediately?
For this month’s jobs report, don’t pay attention to the top-line number. Yes, unemployment increased to 7.9 percent, but that’s because the economy is creating more jobs, and more people are looking for work. Not only did the economy create 171,000 new jobs—beating expectations by a significant amount—but labor-force participation is up, and the Bureau of Labor Statistics added 50,000 more jobs to the total for August (bringing it up to 192,000) and 34,000 to the total for September (bringing it up to 148,000).
Electoral historian and Fox News commentator Michael Barone, having long since made the trek from mainstream liberal to standard-issue conservative, is now endeavoring to pull the whole of American history along with him. In today’s Financial Times, he argues that Franklin Roosevelt never really won majority support for his key New Deal programs. Those programs now stand on the chopping block should Mitt Romney be elected president next Tuesday, Barone writes, and they lack popular support even if Barack Obama should prevail.
David Walker announced his endorsement of Mitt Romney this week. The name might not ring a bell, but Walker was head of the Peter G. Peterson Foundation, the number one funder of deficit-hawkery in the United States. Walker, a former Comptroller General, has described himself and his crusade as bipartisan, and it is actually helpful that he has come out of the closet as a Republican.
One part of the dreaded fiscal cliff actually presents an opportunity that could be good politics and good economics. The temporary two-point cut in the payroll tax expires January 1 (along with the Bush tax cuts). The $1.2 billion sequester also kicks in.
Deficit hawks of both parties have been saying that it’s irresponsible to extend the payroll tax cut, while defenders of Social Security such as the AARP are opposed to an extension for fear of diverting revenue from the Social Security trust funds and adding ammo to the crusade for cutting back the system’s benefits.
As we close in on Election Day, the questions about what Mitt Romney would do if elected grow even larger. Rarely before in American history has a candidate for president campaigned on such a blank slate.
Yet, paradoxically, not a day goes by that we don’t hear Romney, or some other exponent of the GOP, claim that businesses aren’t creating more jobs because they’re uncertain about the future. And the source of that uncertainty, they say, is President Obama — especially his Affordable Care Act (Obamacare) and the Dodd-Frank Act, and uncertainties surrounding Obama’s plan to raise taxes on the wealthy.
In fact, Romney has created far more uncertainty. He offers a virtual question mark of an economy
The most bizarre thing about the deficit and the campaign is the fact that the risk of a fiscal cliff—which everyone agrees will crash the economy—is being used to justify a slightly smaller fiscal cliff. There are several players here, so the arguments are worth sorting out. Herewith, some Cliffs Notes:
Regardless of what happens on Election Day, at the beginning of next year more than $600 billion in tax increases and spending cuts automatically go into effect. That’s equivalent to about 5 percent of the entire U.S. economy—more than the projected growth of the whole gross domestic product next year.
The problem is, if we fall off this fiscal cliff, we plunge into recession. That’s because the cliff withdraws too much demand from the economy too quickly, at a time when unemployment is still likely to be high.
The Congressional Budget Office projects real economic growth will drop at an annual rate of 2.9 percent in the first half of 2013, and unemployment will rise to 9.1 percent by the end of next year.
Imagine a college whose orchestra was missing a bassoon player, or whose football team was down a running back. It would go without saying that this school could admit an applicant who plays the bassoon over a candidate who plays the French horn, even if that French horn player had slightly higher grades, or that its admissions officers could give preference to a high school’s star running back over its equally talented defensive lineman. The entire university community benefits from a full orchestra or a football team with a complete offensive lineup, and college admissions officers routinely take similar considerations into account when they think about how to build an incoming freshman class. Nine years ago, in its landmark Grutter v. Bollinger decision, the Supreme Court recognized that race is just like an orchestra. Contrary to the common view that affirmative action is a zero-sum game—in which each seat given to a minority must be taken from a white student—Grutter recognized that a university’s entire student body, white students included, benefit from a more diverse campus in ways that simply cannot be replicated in a homogenous community. As the Court explained, “‘classroom discussion is livelier, more spirited, and simply more enlightening and interesting’ when the students have ‘the greatest possible variety of backgrounds.’”
Last week, I launched a series simultaneously attacking and hijacking the quadrennial question: Are you better off than you were four years ago? For the first one, I reported on how women are doing economically compared to four years ago. But one of my sentences confused readers—apparently because I myself was confused. For my correction, let me simply quote what Heidi Hartmann of IWPR, one of the labor economists I cited, wrote me:
I do have a little trouble with this sentence though because I’m not sure what you were trying to get at. If I said something like this I was not very accurate:
For my part, the most incredible exchange of the first presidential debate came in the first 20 minutes, when President Obama hit Mitt Romney on his tax plan—which would implement across-the-board cuts to marginal rates—and the Republican nominee responded by denying its existence. Romney insisted that his plan would not cut upper-income taxes (it calls for a 20 percent reduction) and, in fact, would end breaks for upper-income taxpayers (he has yet to give any detail on this score).
The unemployment rate’s drop to 7.8 percent, reported last week, marked the first time since 2009 that the rate was below 8 percent. It’s fitting that this occurred shortly after someone who predicted the rate couldn’t get below 8 percent changed his mind.
Until a year ago, president of the Minneapolis Federal Reserve Narayana Kocherlakota had argued that there may be a new normal unemployment rate of 8.7 percent, and that adjusting the rate at which banks borrow money would do little to help. Now he argues that the Fed should commit to keeping rates low until unemployment is declines—a position in line with those hawkish about our unemployment crisis.
The White House is breathing easier this morning. The Bureau of Labor Statistics reports the unemployment rate dropped to 7.8 percent—the first time it’s been under 8 percent in 43 months.
In political terms, headlines are everything—and most major media are leading with the drop in the unemployment rate.
Look more closely, though, and the picture is murkier. According to the separate payroll survey undertaken by the BLS, just 114,000 new jobs were added in September. At least 125,000 are needed per month just to keep up with population growth. Yet August’s job number was revised upward to 142,000, and July’s to 181,000.