MEDIA CAN'T BLAME DISMAL JOBS REPORT ON THE SEQUESTER
There is no way around it. The media is scrambling to blame Friday’s abysmal March jobs numbers on the sequester’s trimming of the rate of growth in federal budgets that have yet to fully commence. Friday’s abysmal March jobs numbers on the sequester’s trimming of the rate of growth in federal budgets that have yet to fully commence.
Economists had expected the economy to add around 200k jobs last month. The Labor Department reported this morning, however, that the economy added only 88k jobs. Democrat operatives in the media are quickly spinning the bad economic news as the fault of the sequester, i.e. automatic government spending cuts. A closer look at the data show the cuts had almost no impact on the job market.
Professional services, the sector of the economy most impacted by government contracts, increased hiring by 51k last month, in line with previous growth. A pullback in government spending would likely have seen this sector shed jobs. Except for a modest decline in the US Postal Service, government employment was little changed from last month.
The sequester cuts may still ultimately have an impact. If so, then the March jobs report is even worse than it seems, since any impact of the cuts hasn't made its way to the job market yet. Still, its hard to see how cuts of around $40-80 billion would have anything more than a marginal impact on a $15 trillion economy.
After the Labor Department announced that a mass exodus of 663,000 workers left the U.S. workforce last month and that job creation fell 112,000 jobs short of projections, Obama’s top economic adviser Alan B. Krueger, took to the White House blog to blame the sequester:
It is important to bear in mind that the March household and payroll surveys are the first monthly surveys to look at employment since the beginning of sequestration. While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the Nation’s future competitiveness. The Congressional Budget Office has estimated that the sequester will reduce employment by 750,000 full-time equivalent jobs by the end of the year.
Now is not the time for Washington to impose more self-inflicted wounds on the economy. The administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to put more Americans back to work like rebuilding our roads and bridges and promoting American manufacturing.
Kathy Bostjancic, Director of Macroeconomic Analysis for The Conference Board business research group, says the major flaw in Obama's argument is that the sequester has not fully kicked in yet.
“What is even more troubling about the most recent slowdown is that it takes place even before the sequester cuts materially hit the economy," Bostjancic stated in a press release. "This reinforces our view that the estimated 3.5 percent real GDP growth in Q1 is not likely to be sustained. Instead, we see the overall economy, led by the consumer, downshifting significantly in the second quarter, struggling to get close to 1 percent real growth.”
The need to curb Washington’s spending will have an effect on jobs, says Bostjancich, but they will likely be centered around “further contraction in government sector jobs.”
Indeed, the unemployment rate for government workers is less than half (3.6%) the national unemployment rate. Since July, the government has added 618,000 government workers to its payrolls, employing 20,633,000 individuals.
While Friday’s reporting shows a 7.6% unemployment rate, the real rate—including the millions who have given up hope and quit looking for work, are in part-time positions and needing full-time work, etc.—is closer to 15%, says billionaire former Obama supporter Mort Zuckerman. Worse, says Zuckerman, “Multiple job-holders are up by 340,000 to 7.26 million. In essence then, all of the ‘new’ positions are going to people who already are working, mostly part-time.”
To be sure, the need to slam the brakes on Washington’s reckless spending will likely shed jobs, and possibly the 100,000 to 300,000 economists project. But the 90,000,000 Americans who no longer work as of last month have myriad other factors to blame than a cut the equivalent of 0.5% of the national debt that has yet to go into effect.
The media is always quick to defend the Obama Administration on its terrible economic record. The excuses, however, are running out.