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Home Publications Blogs Beat the Press Washington Post Calls Jobs Report Better than Incompetent Economists Had Expected

Washington Post Calls Jobs Report Better than Incompetent Economists Had Expected

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Saturday, 08 October 2011 08:37

The headline of the front page article in the Washington Post told readers that the September jobs report from the Labor Department "offers a respite." It added that the report, "was merely mediocre, not the horrible result that some economists had feared."

In fact, this was a very bad jobs report. The report showed that the economy created just 103,000 jobs in September, 45,000 of which were Verizon workers who were returning from being on strike in August and were therefore not counted in that month's job numbers. With modest upward revisions to the prior two months' data, the Labor Department reports the economy creating an average of 99,000 jobs a month, just slightly above the 90,000 jobs per month needed to keep pace with the growth of the labor force. At this pace, it would take many decades to return to full employment.

This should have been reported as a really bad jobs report. However, in recent weeks the Washington Post had reported the views of several economists who were highlighting the risks of a double-dip recession.

These economists obviously had a poor understanding of the economy. Every post-war recession has been caused by a sharp downturn in housing and car sales. With both sectors of the economy already badly depressed it was highly unlikely that either sector could turn sharply lower. Absent a big decline in these sectors, it is difficult to envision a scenario in which the economy would go into a recession, the one exception being a collapse of the euro zone caused by a disorderly default of Greece or one of the other debt-burdened governments.

The most likely scenario is simply the one that we are seeing, a prolonged period of weak growth in which almost none of the lost jobs are regained. However, because the Post had made a point of highlighting the views of ill-informed economists predicting a double-dip, it is now putting a positive light on the very dismal job and growth situation that the country is experiencing, since it is better than a second recession. This is comparable to the situation at the start of the downturn when it and other media outlets and politicians invented the possibility of a Second Great Depression to make us happy about the disastrous situation that the country was actually facing.

The Post has a long history of relying on poorly informed economists. During the run-up of the housing bubble the views of economists warning of the risks of the bubble were almost completely excluded from the Post's news and editorial pages. Its main authority on the housing market was David Lereah, the chief economist of the National Association of Realtors and the author of the 2005 bestseller Why the Real Estate Boom Will Not Bust and How You Can Profit from It.

Comments (3)Add Comment
At this rate, Achilles will never catch the tortoise...
written by diesel, October 08, 2011 11:42
According to Dean, " the economy creating an average of 99,000 jobs a month, just slightly above the 90,000 jobs per month needed to keep pace with the growth of the labor force. At this pace, it would take many decades to return to full employment."

This sounds suspiciously like credit card statements. Your outstanding balance is $16,734.82. Minimum payment is $57.
What about the 40,000 workers cut by Government?
written by Paul, October 08, 2011 2:20
If government had hired 40,000 workers instead of cutting them, the jobs report would have been reasonably good. But most economists have encouraged government to cut spending because they claim the federal deficit is "unsustainable".

Actually, the federal deficit could double and still be easily financed with long term interest rates at 2%, or zero if the Fed buys the bonds. But respectable economists never advocate increasing the deficit.
Jobs Report Reflects Pareto Optimal Outcome
written by izzatzo, October 08, 2011 2:39
...it is now putting a positive light on the very dismal job and growth situation that the country is experiencing, since it is better than a second recession.


Any economist knows the definition of a Pareto Outcome means at least one person is made better off with the addition of a job without making any other persons any worse off for lack of a job as long as those other persons understand they're not as worse off as they think they are in the first place.

For example they could be dead instead of just unemployed.

Stupid liberals.

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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.

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