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Home Publications Blogs Beat the Press The Media Again Turn to Surprised Economists as Experts on Job Report

The Media Again Turn to Surprised Economists as Experts on Job Report

Saturday, 06 April 2013 07:52

It was easy to see that the economy was not growing rapidly long before Friday's jobs reports. The economy grew at just a 0.4 percent annual rate in the fourth quarter. While this weakness was largely attributable to unusual factors, even averaging in the prior quarter the economy only grew at a 1.7 percent rate in the second half of 2012.

It's not clear what someone would have had to have been smoking to expect a marked upturn from this pace. Did they think the ending of the payroll tax cut would spur growth? Did the fact that new orders for capital goods (excluding aircraft) in February of 2013 were virtually unchanged from February of 2012 lead them to expect an investment boom? Perhaps the fact that job growth over the  5 months from October to February averaged just 40,000 less than in the same months a year ago was the basis for predictions of acceleration?

Yes, housing construction is up. That's good news. Residential construction is 2 percent of GDP. Get out your calculator and figure out how much impact this has.

In short, any serious look at the data would have told people that the economy was weak before the March numbers were released yesterday, nonetheless the Post tells us:

"The economy added a paltry 88,000 jobs last month, less than half the number expected. The healing housing market, resilient consumers and record highs on Wall Street had fueled hope that the recovery was finally taking off. That momentum was seen as essential to helping the economy overcome the drag of automatic government spending cuts known as the sequester over the next few months."

Later it told readers:

"Economists worry that Friday’s job data signals that the economy is in a weaker position than previously thought. Job growth during the first two months of the year was exceptionally strong."

Could we get names here? It would be good to have a list so that everyone could laugh at the people who held such wrongheaded views of the economy and know not to take them seriously in the future. (Btw, even with upward revisions yesterday, job growth for the first two months of 2013 averaged 208,000 a month. At this pace the economy would get back to full employment some time in 2019.)

At least the NYT was good enough to give us a name:

"'People were starting to believe the economy was really picking up steam, and desperately wanted this report to be better,' said Joshua Shapiro, chief economist at MFR Inc. 'But that didn’t happen.'"

There are a few other points in these pieces that deserve comment. The NYT commented on the type of jobs that are being created, noting that a disproportionate number are in restaurants and other low-paying sectors. This is largely a result of the weak job market. The economy always creates lots of bad jobs. The difference now is that in a good economy people don't take the bad jobs. Restaurants and other low-wage employers constantly have help-wanted signs up and some go out of business because they can't find workers at the wages being offered. However in a bad economy workers take these jobs because they have no alternative.

The NYT piece noted that temporary employment is approaching the peaks hit in 2000, quoting Diane Swonk, chief economist at Mesirow Financial,"temporary help is rapidly approaching a new record." While this may be disappointing from the standpoint of people who want to see workers with secure employment, it should not be surprising that employment in temporary help, like employment in other sectors surpasses its level from 13 years ago. 


Comments (7)Add Comment
written by Paul Baer, April 06, 2013 8:51
Wouldn't it be fun to have an "economists scorecard" where everyone's predictions were recorded and then evaluated?

I know there are formal surveys done of various economic reports - do you have any insight into who collects them and whether any of the data is public?
not really
written by bill, April 06, 2013 12:14
The NYT didn't really give a name. The person they quoted, Josh Shapiro, made a similar type statement. One that starts out "PEOPLE were starting to believe...."
I'm with you. This lack of real sourcing and anonymous attribution is really frustrating!
written by Troy, April 06, 2013 10:46


people still don't understand what happened 2000-2008

the above graph is jobs (blue) and per-capita real YOY consumer debt take-on + federal spending (red)

This shows how immense the stealth stimulus of the housing boom/bubble was 2003-2006.

This wasn't just Home Depot and mortgage broker jobs, it was ten thousand dollars per capita per year of hot money hitting the middle class.

When this flow went away in 2007-2008, so did the Bush Economy.

The 2009-now interventions have served to keep the rubber side down, but not actually reconfigure our economy into the nice growth mode we enjoyed in the 1990s.

And I don't think we can get there from here, since the 1990s featured cheap oil and the early benefits of our expanding trade deficits with China.

Now we've got expensive oil and colossal trade deficits with China, and a total systemic debt that has doubled from $20T in 2001 to $40T now.

Yet still we borrow.
written by The Steel General, April 07, 2013 3:23
Of course we borrow, cos there's no real alternative. And people wouldn't mind not borrowing, if it didn't come out of their own pockets, but out of the billion dollar profits of the rich.
Given a choice, people would rather opt for having a job at a non-profit making company, than to be unemployed in a country with profit making companies. Automation dictates that those jobs aren't gonna come back.

"Surprised Economist"
written by Richard, April 07, 2013 7:29
is pretty much a redundancy (except for a few exceptions such as the host). Unfortunately, it is the group of economists who can best be described as "often wrong but never in doubt" who receive the talking head time or are on the Rolex of lazy reporters.
written by Chris Engel, April 07, 2013 9:27
Dean's guess of +150K was on the low-side of the #NFPguesses on twitter.

In fact, it was even more bearish than Dean's prediction.

Payroll tax hike, sequester, diminished demand and a broken middle class thanks to corporatist policies -- these aren't conditions conducive to a healthy labor market.

written by crosspalms, April 07, 2013 12:57
I don't know why the Post would hold up Wall Street record highs as a sign of economic health. It's just money seeking more money, something that can't be done in bonds or real estate (the push into rental by big firms looks like trouble to me) these days. All that wealth that's gone to the top? It's not content to sit still, but it's not going to do anything useful.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.