Home / Employment (page 13)


The Always Cheerful ROSENBERG: ‘Over 40% Of Job Growth In January And February Was Weather-Related’


“Gluskin Sheff + Associates’ chief economist and strategist David Rosenberg doubled down on his bearish call for the U.S. economy in an interview with CNBC today.

He even asserted that “over 40 percent of the job growth in January and February was weather-related.”

That would mean that more than 193,802 of the 484,504 jobs added over this time period were simply due to nice weather.

“What happens in January and February is you get a bell curve on the data because half the country is normally snowed under,” Rosenberg explained. He estimated that the household sector had saved $30 billion in lower utility bills, and that this created unusual strength in the household sector.

Without such a mild winter, he suggests, the data would have continued to illustrate what has been a deeply dismal recovery.

With all the stimulus being provided by the federal government and the Federal Reserve, “of course you’re going to have some growth,” Rosenberg admits. Even so, “this goes down as the weakest economic recovery ever, despite the government stimulus—and that tells you something.”

HIs assertion that “we’re basically reliving what happened last [year]” proved the icing on the cake to his bearish call.

Even so, Rosenberg thinks there might be some bright spots for investors in the stock market. “Corporate balance sheets we know are in great shape,” he said, but “you’re really not buying GDP when you’re buying the stock market.” He pointed out that the high yield market is “still a pretty good place to put your money” given its return over Treasuries.”

Comments »

Jobless Numbers Suggest the Economy is Growing Faster Than We Think


Economists are scratching their heads over the recent failure of a textbook economic law: In order for the unemployment rate to be where it is today, our economy should be growing faster than it is.   

FORTUNE — Lately the improving jobs picture has stumped many Wall Street economists, who say the labor market seems to be doing better than what the pace of economic growth would suggest.

Goldman Sachs (GS) and a few other Wall Street firms forecast annualized GDP growth of less than 2% this quarter. And yet, the unemployment rate in January dropped to 8.3% – the lowest level in three years. The decline goes against Okun’s Law, which economists have historically relied on to forecast what the job market might look like given how quickly (or slowly) the economy is growing. As a rule of thumb, Okun holds that year-on-year economic growth of 2 percentage points above the trend — widely considered 2.5% — is needed to lower unemployment by one point. And vice versa.

Since the Great Recession, the unemployment rate has defied the law.

James Pethokoukis of the American Enterprise Institute, a Washington DC-based think tank, has laid out three instances: In 2009, the unemployment rate edged to 10% following a 3.5% drop in GDP. But under Okun, unemployment should have risen higher to 10.4%.

At the end of 2010, the unemployment rate fell to 9.4% from 9.9% the previous year. But given that the 3% rise in GDP was barely above trend, the jobless rate should have stayed flat. And in 2011, when GDP rose a point below trend to 1.7%, Okun would have predicted that unemployment would rise to 9.9%. However, it actually fell to 8.5% from 9.4%.

All this has made many wonder if the economy is doing better than what the data currently shows or if unemployment seems artificially low.

It could be that today’s GDP statistics are wrong. The economy might actually be growing much faster than we think, which wouldn’t be too surprising since it’s not unusual for growth statistics to get revised years later as economic data comes in. In a research note to clients on Monday, JP Morgan (JPM) economist James Glassman pointed to the 2008-2009 recession in which GDP was significantly revised downward last year.

“At the time employment trends were much weaker than the impression left by the real GDP trends,” he noted. “That was three years after the fact. With the economy now recovering, there is a high probability that preliminary estimates of national output eventually will be revised up.”

Certainly that could happen, but that still doesn’t capture the whole jobless picture.

The unemployment rate is also influenced by the labor participation rate – that is, the percentage of working-age persons who are employed as well as unemployed and searching for work. While labor participation has been stabilizing recently, it has declined considerably over the years. AsFortune pointed out last week, the drop might have less to do with discouraged workers giving up their job hunt (as economists widely believe), but also the flux of aging baby boomers retiring and leaving the labor pool altogether…..”

Read more

Comments »

Are We Entering a New Era of Job Destruction ?

Author Todd Harrison argues a new ear is upon us…..

“The change in thinking we’re going to undergo is shifting from a mindset of “we don’t have enough jobs for our citizens” to “we don’t have enough citizens for the amount of work we want to do.”

Sound crazy? Consider this: Since the end of the year 2000, according to a household survey, the number of U.S. workers age 45 or older has increased from 49.2 million to 63.1 million, an increase of 13.9 million.

Meanwhile, the number of U.S. workers age 25 to 44 has fallen from 67.9 million to 61.1 million, a decrease of 6.8 million.

This phenomenon has been driven by a few factors. The “pig moving through the python” progression of the baby boomers, who on average turned 45 in the year 2000 and began moving from the 25-to-44 bucket to the 45+ bucket. The 2008 recession is delaying retirement for older people and delaying careers for millennials. And generally lower birth rates starting in the late 1960s are leading to fewer bodies replacing the baby boomers in the twenties and thirties age buckets….”

Comments »

New Jobs Creation Bill May Get Rid of Shareholder Protection

“U.S. legislation that would roll back securities disclosure and governance rules in the name ofjob creation is being attacked by consumer advocates and former regulators as an evisceration of investor protections in place since the 1930s.

The package of bills awaiting Senate action after receiving broad bipartisan support in a House vote last week would destroy safeguards dating as far back as the laws that created the Securities and Exchange Commission, according to Lynn E. Turner, a former SEC chief accountant.

“It won’t create jobs, but it will simplify fraud,” Turner said in an interview last week. “This would be better known as the bucket-shop and penny-stock fraud reauthorization act of 2012,” he said, referring to practices banned under securities law.

The Republican-led House, in a show of election-year comity, voted 390-23 to approve measures that would among other things undo a ban on closely held firms soliciting investments, increase the number of investors such firms can have and exempt newly public companies with less than $1 billion in revenue from some reporting requirements of the Dodd-Frank and Sarbanes-Oxley laws. President Barack Obama has backed the legislation as a way to help spur job creation, and Senate Democrats have said they will move quickly on their own version.

“What we’re trying to do is to regain the confidence of the people that sent us here,” House Majority Leader Eric Cantor, a Virginia Republican, said after the March 8 vote….”

Read more

Comments »

Europe’s Scariest Chart Just Got Scarier

via Zero Hedge

The last time we plotted European youth unemployment in what was dubbed “Europe’s scariest chart” we were surprised to discover that when it comes to “Arab Spring inspiring” youth unemployment, Spain was actually worse off than even (now officially broke) Greece, whose young adult unemployment at the time was only just better compared to that… of the United States. Luckily, following the latest economic (yes, we laughed too) update from Greece, it is safe to say that things are back to normal, as Greek youth unemployment is officially the second one in Europe after Spain to surpass 50%. In other words, Europe’s scariest chart just got even scarier.

Read the rest (and see the scary chart) here.

Comments »

Harvard’s Rogoff: Unemployment Rate Will Still Take Years to Recover

“The labor market is improving but will need years before it returns to pre-crisis levels, says Harvard professor and former IMF chief economist Ken Rogoff.

“I think it’s a long road ahead,” he told CNBC. “It can take many years for it to hit bottom and it has. And it takes many years for it to come back up,” Rogoff tells CNBC.

“We’re not going to get a boom suddenly to getting 400,000, 500,000 jobs for several months which for a little while people were hoping.”


Comments »

Welfare Drug-testing Yields 2% Positive Results

Published: August 24, 2011
Updated: August 25, 2011 – 4:48 PM


Since the state began testing welfare applicants for drugs in July, about 2 percent have tested positive, preliminary data shows.

Ninety-six percent proved to be drug free — leaving the state on the hook to reimburse the cost of their tests.

The initiative may save the state a few dollars anyway, bearing out one of Gov. Rick Scott’s arguments for implementing it. But the low test fail-rate undercuts another of his arguments: that people on welfare are more likely to use drugs.

At Scott’s urging, the Legislature implemented the new requirement earlier this year that applicants for temporary cash assistance pass a drug test before collecting any benefits.

The law, which took effect July 1, requires applicants to pay for their own drug tests. Those who test drug-free are reimbursed by the state, and those who fail cannot receive benefits for a year.

Having begun the drug testing in mid-July, the state Department of Children and Families is still tabulating the results. But at least 1,000 welfare applicants took the drug tests through mid-August, according to the department, which expects at least 1,500 applicants to take the tests monthly.

So far, they say, about 2 percent of applicants are failing the test; another 2 percent are not completing the application process, for reasons unspecified.

Cost of the tests averages about $30. Assuming that 1,000 to 1,500 applicants take the test every month, the state will owe about $28,800-$43,200 monthly in reimbursements to those who test drug-free.

That compares with roughly $32,200-$48,200 the state may save on one month’s worth of rejected applicants.

The savings assume that 20 to 30 people — 2 percent of 1,000 to 1,500 tested — fail the drug test every month. On average, a welfare recipient costs the state $134 in monthly benefits, which the rejected applicants won’t get, saving the state $2,680-$3,350 per month.

But since one failed test disqualifies an applicant for a full year’s worth of benefits, the state could save $32,200-$48,200 annually on the applicants rejected in a single month.

Net savings to the state — $3,400 to $8,200 annually on one month’s worth of rejected applicants. Over 12 months, the money saved on all rejected applicants would add up to $40,800-$98,400 for the cash assistance program that state analysts have predicted will cost $178 million this fiscal year.

Actual savings will vary, however, since not all of the applicants denied benefits might have actually collected them for the full year. Under certain circumstances, applicants who failed their drug test can reapply for benefits after six months.

The as-yet uncalculated cost of staff hours and other resources that DCF has had to spend on implementing the program may wipe out most or all of the apparent savings, said Derek Newton, spokesman for the American Civil Liberties Union of Florida. The program will grow costlier yet, he said, if it draws a legal challenge.

Read the rest here.

Comments »