April 2012 Jobs Report: a jobs situation which is an abysmal failure of monumental proportions.

‘Mr. Obama argues that the economy is recovering slowly from a deep recession, and Congress should do more to spur growth. On Friday, he noted that the report continued more than two years' worth of job growth, while acknowledging the lingering weakness.

"After the worst economic crisis since the Great Depression, our businesses have now created more than 4.2 million new jobs over the last 25 months—more than one million jobs in the last six months alone," he told students at a suburban Virginia high school. "But there's still a lot of folks out of work, which means that we've got to do more."

He said he would urge Congress to "take some actions on common-sense ideas that can accelerate even more job growth." He didn't say what he would propose. Most of the ideas he has put forth in the past have gone nowhere, including more infrastructure spending and aid to states to keep public employees such as teachers employed.’ - Jobs Engine Sputters Again in April, WSJ, 05/05/2012 (1)

　

Robert Higgs of the Independent Institute has been pointing out that one should by-pass the “unemployment number” and focus on “total employed”. Total employed has not changed since the official end of the recession [06/2009]. Hence if one argues “..have now created more than 4.2 million new jobs over the last 25 months…” then somewhere in the vicinity of 4.2 million jobs have been destroyed. In the famous words of Billy Preston: nothing from nothing equals nothing.

Then we see the wonderful political phenomena of do something appear: ‘He said he would urge Congress to "take some actions on common-sense ideas that can accelerate even more job growth." ‘ That is, politicos need to show the voting public they are “doing something”.

Hence we have nothing to show for doing something [stimulus, cash-for-clunkers, extended unemployment benefits, etc., etc.] therefore we need to do something about the something. -Or- “Government is the only enterprise on earth, that when it fails, it merely does the same thing over again, just bigger”. - Don Luskin

Then we have “how you feel about it today” economics:

“The job market was soft in April, given the tepid payroll job gain and the decline in labor force participation. But it isn't as soft as the data suggest, as it reflects payback from the very warm winter, which juiced up job gains earlier in the year,” said Mark Zandi, the chief economist for forecaster Moody's Analytics. “Underlying job growth, abstracting from the temporary effects of the weather, is over 175,000 per month. This isn't boom times, but it is solid enough to bring down unemployment further.”

“The decline in unemployment also reflects the expiration of the emergency unemployment-insurance program in an increasing number of states. Older workers losing unemployment insurance are leaving the workforce, contributing to the decline in labor force participation, and younger workers that were slow to take a job now have no choice,” Zandi said. “I expect the job market to reaccelerate later this summer and fall.” - The Sun News, Myrtle Beach, SC, 05/05/2012 (2)

　

　

Beyond Zandi being Zandi, think for a moment what he is alluding to when he states: “The decline in unemployment also reflects the expiration of the emergency unemployment-insurance program in an increasing number of states. Older workers losing unemployment insurance are leaving the workforce…”. That means that these older workers that were collecting unemployment benefits were only doing so to bridge to retirement with no intention of looking for/find a job in many, many cases. That is, he is confirming what many believe i.e. extremely extended unemployment benefits are a disincentive. However he is also raising the phenomena of “strategically unemployed” (akin to strategic default). That some of the unemployed remained strategically unemployed to gain maximum benefits before they qualified for yet another program e.g. social security.

If one takes job creation, plots it on a graph, and takes the twenty year historical trend, projects the trend forward from the end of the recession until today, we are 4.1 million jobs below trend. That is, one would need to create 4.1 million jobs today, right now, instantly to return to the twenty year job creation trend line! Then one would need to continue the job growth to continue on the trend line. Stated alternatively, the lack of job creation has created a very deep hole from which to climb out.

One finds oneself 4.1 million jobs below trend, finds an army of discouraged workers approaching 4 million, finds still millions counted as unemployed actively seeking jobs, extended unemployment benefits causing disincentives as well as shenanigans and the same number are employed today as the number employed at the end of the recession [06/2009] .....all of which exists despite the political maneuvers of "doing something" over and over again. In other words, the political mantra of “the economy recovering slowly” is political speak for a jobs situation which is an abysmal failure of monumental proportions.

Notes:

(1)http://online.wsj.com/article/SB10001424052702304743704577383713904032818.html

　

(2)
http://www.myrtlebeachonline.com/2012/05/04/2810374/april-jobs-report-suggests-slowing.html