Thursday, July 7, 2011

"Good News" but Not that Good.

Author's Note: Please take a few minutes and Join the Firedoglake Membership Program today. FDL provides the tools that help me and others extend our reach with our rants so we need to support FDL when we can.

In this post I wrote Tuesday, I predicted that the ADP Jobs report for June would come in at around 50K private sector jobs versus the economists prediction of 100K. Well the report is out (via Reuters) and I was way wrong while the economists were also under:

Payrolls processor ADP said on Thursday private sector employment increased 157,000 after a modest 36,000 gain in May, and beating economists' expectations for a 68,000 rise.
The original report in May (as I quoted and linked to Reuters in this post) was actually at 38K jobs so 36K is a downward revision. For what it's worth, I do like when I am wrong on these points, especially when I'm wrong and the numbers come in far better than I thought.

Now 157K jobs sounds like something to cheer about and I guess in a way it is but we shouldn't get all giddy with excitement quite yet. After all, the economy needs to add 100K to 150K jobs each month just to absorb new folks coming into the work force each month so 157K jobs does not dent the long term un and underemployment numbers by much. Tomorrow's numbers from the BLS for June will include public sector as well as private sector and it is likely the public sector jobs lost will push the 157K number down significantly. And I'll say right now that July will be worse. How can I say that? Many states start their fiscal years on July 1 and the budget axes will be showing the results as Politico discusses here:
New budgets from 24 states will impose severe cuts, according to the Center on Budget and Policy Priorities.

To make ends meet, Arizona will drop Medicaid coverage for 130,000 childless adults. Michigan will slice public school funding by $470 per student. New York will reduce education aid by $1.3 billion. Wisconsin plans to chop into the Earned Income Tax Credit, which hurts household budgets of the working poor.

And Minnesota? Its government shut down after state lawmakers failed to pass a budget.

Those cuts can reverberate through the private sector, since contracts with vendors and payments to businesses also get slashed.
According to this article from Reuters on the Initial Unemployment Claims report for last week, the Minnesota shutdown is already hitting the numbers:
Initial claims for state unemployment benefits dropped 14,000 to a seasonally adjusted 418,000, the Labor Department said.

Economists polled by Reuters had forecast claims dropping to 420,000 from a previously reported 428,000. The prior week's figure was revised up to 432,000.


A Labor Department official said given Monday's Independence Day holiday, California and Virginia had provided partial estimates. In addition, the department had to make estimates for four states and territories.

The data also included about 2,500 claims from state employees in Minnesota following the shutdown on Thursday of the state government.
Now, I wonder who is processing those unemployment claims in Minnesota since the state has shut down all but the most essential government services? My guess is that next week's report will show an upward revision for this week. Unfortunately, there are way too many people who seem to think that public sector jobs can't be classified as "real" for any reason.

Another example of how all of us wind up grasping at the least little thing to claim a positive spin is this report from consulting firm Challenger, Gray, & Christmas (via MSNBC) proclaiming that the "pace of layoffs is at its lowest since 2000":
Planned job cuts rose 11.6 percent to 41,432 in June, but the overall pace of downsizing fell to its lowest level in 11 years, according to a monthly survey by Challenger, Gray & Christmas.

The mid-year total of 245,806 layoffs is the lowest since the turn of the century, according to the report, which noted that since a lull in April, companies have been looking to increase the pace of job cuts in May and June.


The government sector is the most active in trimming staff, the Challenger report noted. The public sectors accounted for 77,591 of the total cuts, although the year-on-year figures show a slowing of the pace of layoffs. Almost 100,000 government jobs were lost in the first half of 2010.

The aerospace and defense industry, which is heavily exposed to government spending, has seen a considerable spike in downsizing this year. In the first half of 2011, the sector saw a 241 percent increase in job cuts over the previous year, from 6,121 to 20,851, according to the report.
I dunno but the numbers provided sure aren't leaving me with any confidence in the headline and spin Challenger, Gray is providing here. It all just means that folks are still quite justified in being pessimistic.

And because I can:

No comments:

Post a Comment