May Economic/Jobs News Will Not Be Good
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The economic reports are starting to come out for May and while there are those economists and Beltway Village Idiots Pundits who are making “gee, everything is just fine” predictions, the verifiable numbers easily refute this attitude.
First up is the monthly report from payroll processor ADP on the private sector jobs creation for May (via Reuters):
The ADP report showed private employers added a scant 38,000 jobs last month, falling from a downwardly revised 177,000 in April and well short of expectations for 175,000. It was the lowest level since September 2010.
The report boded poorly for the key U.S. non-farm payrolls report at the end of the week. Credit Suisse lowered its estimate for Friday’s employment number to 120,000 from its previous forecast of 185,000 and its private payroll estimate to 135,000 from 200,000.
ADP’s number has been weaker than the government’s private payrolls figure for 12 of the last 14 months, making Friday’s government numbers likely to come in above ADP’s report, Credit Suisse said.
There is a reason that ADP’s number has been different from the government’s numbers (I will not say ADP’s number is weaker though), since the government numbers cover all of the economy and not just the private sector.
CNN had this from Monday where they had polled economists and the prediction was:
CNNMoney’s survey of economists forecasts that the U.S. economy created 178,000 jobs in May, down from 244,000 jobs a month earlier. The unemployment rate is expected to tick down to 8.9% from 9%.
Weekly claims on jobless benefits, a real-time indicator of the labor market, have remained stubbornly above 400,000 for seven weeks.
I am going to go out on a limb and make a prediction that the BLS report from the government on Friday will be not much different than the ADP number. Those ‘stubborn’ Initial Unemployment Claims numbers combined with the slashing of public sector positions across the country will assure this. I hope that I am wrong but unlike the economists who are always “surprised,” I’m not trying to force reality into a failed computer model.
Today’s (Wednesday June 1) LA Times had this article on California Republicans using Costa Mesa’s slashing of jobs as a model for destroying public sector pensions and collective bargaining. Now where have we heard of Costa Mesa recently? Oh yeah, the suicide of a worker there after he’d received his layoff notice. The LA Times also had this on consumer confidence in May:
The nonprofit Conference Board said its consumer confidence index fell to 60.8 in May — the lowest reading in six months — from a revised 66 in April. Economists polled by MarketWatch had forecast an increase to 67.5.
The decline in the Conference Board index conflicts with another survey that showed an increase in consumer confidence in May because of a drop in gasoline prices.
Economists say the Conference Board index is more closely linked to the health of the U.S. labor market than the Thomson Reuters/University of Michigan survey, which might explain the difference.
Still, most economists were surprised by the decline.
Gee, economists are surprised, whoever could have anticipated etc etc etc. And yes, a survey that is linked to the health of the labor market just might reflect the reality of 14M un and 25M to 30M un and underemployed.
Another economic slowdown indicator is the Manufacturing Index from the Institute of Supply Management (via Reuters):
The pace of growth in the manufacturing sector tumbled in May, slackening more than expected to its slowest since September 2009, according to an industry report released on Wednesday.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 in May from 60.4 the month before. The reading missed economists’ expectations for 57.7.
But ya know, we really shouldn’t worry. After all, CNN/Fortune Magazine had this from Bill Marriott proclaiming that the answer to all the economic woes is more tourism! Yeah, that’s the ticket – more minimum wage jobs is just the thing to get the economic ship righted.
Reuters this morning reported that “150 economists back Republicans in debt fight.” Of course, they didn’t identify the hundreds and thousands of economists that think the Republicans are nuckin’ futz on this.
In a case of “do as I say and not what I do” we have the current governor of the state in which I reside deciding that maybe the federal stimulus funds are not all bad after all (Miami Herald via McClatchy):
Florida Gov. Rick Scott campaigned against President Obama’s “failed stimulus” program — yet the freshman politician kept nearly $370 million of the federal cash in the Florida budget he signed last week.
Scott’s decision to keep the stimulus money stands out in a year when the governor touted record budget vetoes of up to $615 million. He emphasized the vetoes of “wasteful” spending at a Thursday event that featured a campaign-style “Promises Made, Promises Kept” banner.
But as he ran for office last summer, Scott said he “would fight all the stimulus money.” He also told reporters “I would have figured out how to balance the budget without it.”
I’m going to close this with a nugget I found in the farewell column from one of the columnists at the Lexington Herald-Leader, Larry Dale Keeling. While Keeling is talking about politicians in Kentucky, it is applicable in a lot of other locales as well:
Over the past three-plus decades, I’ve watched far too many state legislators waste far too much time obsessing over the Five G’s — guns, God, gays, gynecology and G-strings — while spending far too little time focusing on the Five E’s that could actually solve some of Kentucky’s problems and move the state forward — education, economic development (of an intelligent variety), equitable taxation, environmental protection and, perhaps most important, ethics at all levels of government.
Legislators who pander on the Five G’s may get re-elected. Legislators who lead — seriously lead — on the Five E’s may get their names in the history books. Unfortunately, too many Kentucky lawmakers opt for the instant gratification. I suspect they always will.
And because I can:
Cross posted from Just A Small Town Country Boy