Today’s awful job figures crossed the wires just as I was mulling a post on how the Fed’s policy of pumping money into the bond market””a.k.a. quantitative easing””was showing signs of working. Over the past couple of weeks, a number of indicators have suggested that the economy is picking up a bit: purchases of cars and trucks have jumped significantly, retailers posted solid sales over Thanksgiving, and consumer confidence has rebounded. Even the bombed-out housing market””a direct beneficiary of Fed policy, which is largely aimed at keeping down mortgage rates””has shown signs of life: the number of home sales jumped last month. The U.S. economics team at Goldman Sachs, which has been one of the most pessimistic on Wall Street, just upgraded its forecast for G.D.P. growth in 2011 from 2.0 per cent to 2.7 per cent. That’s still not a great figure””after a recession, economies often expand at a rate of four or five per cent for a couple of years””but the upgrade was a signal that worries of a “double dip” recession were receding.
Then came this morning’s shocker: the economy created just 39,000 jobs in November, compared to 172,000 in October, and the unemployment rate jumped from 9.6 per cent to 9.8 per cent. Health care and temporary help services were the only sectors reporting significant new hiring. Most other sectors reported flat payrolls or reductions. The sectors cutting jobs included retailing and finance, which had appeared to be doing relatively well. What is going on? In ascending order of frightfulness, here are four possibilities….
The jobs are out there waiting for Democrats to go away.
The last four years of Democrat congressional control have seen — short list — a 5 Trillion dollar explosion of national debt, what amounts to a seizure of health care, phenomenal quantities of new regulation and fees for small business, attempts to control energy markets, a plan to abolish secret ballots for union representation, plans to increase corporate taxes substantially, and a bundle of proposed new EPA regulations, including how much ‘dust’ a farm can produce.
In my business there’s no way I’ll hire somebody until we’re no longer in the crosshairs of a bunch of militant ideologues who’ve never had to make payroll or even run so much as a lemonade stand.
Time has a story on this as well. Apparently since the November and December numbers get skewed so much by temporary hires for the holidays, the Labor Department underreports these months. Conversely, January and February get overreported since the temps are let go. There were supposedly 300,000 retail hires last month.
RE: “In my business there’s no way I’ll hire somebody . . . ”
Well, that’s just because you’re a Greedy Capitalist Millionaire sitting on your pile of gold — let us raise taxes on you, since you never hire anyone anyway!
I don’t know what you sell, Bart, but if people demanded your products you wouldn’t expand your business? Or are you making an ideological point?
I’m not a businessman, but I used to think that if consumers demanded a product, businessmen would make such products, and expand to satisfy demand. What you seem to be saying is that even if there were a demand, you’d not sell because there are Democrats in the White House. I’ve not heard of such a business plan before, but I do find it intriguing.
However, Keynes did say that it is confidence that gets businesses to buy and produce. You may simply be illustrating your lack of confidence in the Democrats.
Of course, I share your lack of confidence, but probably for different reasons. I think that the democrats put too much trust in bankers to stimulate demand, and – if businesses think like you do – then they should do less to help the rich, and do more to help consumers.
Raising taxes mainly makes sense if we want to eliminate the deficit. Both parties seem to be inclined to reduce taxes, without an idea about how to pay for it. And they seemed to agree that financing two wars without raising taxes would be best.
If a business is taxed on profits rather than investing in employees, then a slight increase on profits/ savings encourages businesses to spend on internal improvements. I don’t know my tax code, but I believe that they are taxed not on operating budget, but on profit. Investing money back into the company (and thus spending), is not taxed, or taxed less. My point is that taxes that encourage spending are justifiable; those that encourage saving keep the economy stuck.
Perhaps in the long term businesses will reinvigorate. This does mean, of course, years of waiting, and people living in poverty, struggling to find work that can feed a family. But in the long run, we’re all dead.