Home > Economics > Called It, Again

Called It, Again

October 6th, 2012
In March, upon seeing February's numbers, I wrote:
The bad news for Obama is that, for the next 4-6 months, unemployment will not be so hot–it may drop a point or two over the next 4-6 months (numbers might show a drop in June or July more than other months), but may not really start to change again until just before the election–which is the good news for Obama. The rate should start dropping regularly come September, when we see the numbers for August. Based on nothing but a guess, I would say that the unemployment rate will probably be between 7.6% and 7.8% come November. The last three months, all good gainers, will show up in the unemployment rate in the three months leading up to election day.
Then here's what happened: Uechrt So far: wow. I really did call it, didn't I? It dropped a few in the 4-6 months following February's numbers, the started dropping regularly when the numbers for August came out, and fell into the range of 7.6 ~ 7.8%. I'm willing to bet that the figure will be 7.6 or 7.7 % in next month's report. Question: will this put a damper on Romney's fueled charge post-debate? It certainly subtracts from the ammunition he could have fired if the rate hadn't dropped 0.3%…
I wrote the above last night but fell asleep before finishing up… and awoke to a series of reports I could hardly believe: job truthers. Really. A lot of people on the right are now crying foul, forwarding the conspiracy theory that Obama faked the jobs report, in “Chicago style,” whatever that's supposed to mean. As it happens, truth beats out truthers:
Betsey Stevenson, the former chief economist in the Labor Department, wrote this morning, “Anyone who thinks that political folks can manipulate the unemployment data are completely ignorant about how BLS works and how data are compiled.” Alan Krueger, the chairman of the White House Council of Economic Advisers and one of the nation’s preeminent labor economists, told Bloomberg today, “No serious person would question the integrity of the Bureau of Labor Statistics. These numbers are put together by career employees. They use the same process every month. So I think comments like that are irresponsible.”
So: the polls show your guy behind? They're faked! It's a liberal conspiracy which includes Rasmussen and Fox News! The unemployment rate drops? Fake! A socialist conspiracy from the Bureau of Labor Statistics! Frankly, I'm surprised they didn't call Hurricane Isaac, which hampered the GOP convention in Tampa, a liberal conspiracy. It'd be just as realistic a call. Blame it on Al Gore.

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  1. Troy
    October 6th, 2012 at 15:24 | #1

    the plutocrats are throwing the kitchen sink at Obama (“Chicago Style” is conservative movement dogwhistle for illegitimate gangsterism and Obama’s “Community Organizer” roots I suppose) but I still stand behind what I wrote in March. (Hell, I wrote the same damn rant yesterday here, LOL.)

    The 7.8% number is mostly BS, really.

    http://research.stlouisfed.org/fred2/graph/?g=btV

    shows a consistent ~100,000/mo flow of new jobs.

    There were 131.7M jobs in Sept ’11 and 133.5M jobs for Sept ’12

    Unfortunately, there were 137.7M jobs in Sept ’07!

    And, what’s worse, the age 20-64 population has grown from 181M in 2007 to 187M today, so we needed 4.5M jobs over and above the 2007 peak.

    Instead we lost 8.5M jobs 2008-2009 and have only regained 4.3M of them back. This puts us almost 9M jobs in the hole still.

    And this is with Japan-style ZIRP and over a trillion in deficit spending (!) per year.

    The economy is fundamentally f—ed.

    The “headline” unemployment number doesn’t really tell the true story, since it counts p/t work just as good as full-time, and it excludes many people from the denominator.

    The U6 rate is marginally better:

    http://research.stlouisfed.org/fred2/graph/?g=btZ

    and you can see it in red, there.

    Wages haven’t gone up much apparently:

    “The National Law Project says 58 percent of all jobs created during the recovery have been low wage positions. They say that 60 percent of the jobs lost during the great recession were mid-wage jobs that paid between $14 and $21 dollars an hour.

    “But nearly 60 percent of the jobs being created are low-wage jobs that pay a lot less than what people made before the economic downturn.

    “We consider it a success most of the time if somebody lands at 75 to 80 percent of what they were making before,” said Scott Anglemyer of job placement center Kansas Works.”

    http://fox4kc.com/2012/08/31/report-jobs-are-up-but-wages-are-down/

  2. Tim Kane
    October 7th, 2012 at 01:22 | #2

    Congratulations on that great call.

    I’ve told a few people about this in advance of the numbers. I also posted yesterday your great prediction a couple of times at Krugman’s blog and under a couple of headings at TPM.

    I hope you don’t mind the references – but it seemed to create the perfect rebuttal to the job-truthers out there. So, I wonder if you’ll see any increase in traffic to your site.

    The big surprise to me was how little last month’s numbers moved, but that probably lent increased velocity to this months numbers: 4 points drop. O is wandering into Reagan reelection numbers here and that has Republicans pissed.

    Imagine how they must feel. All the filibusters, all the obstructionism, all the political capital they invested, all the seditious thoughts actions, and a wall of media and money, all dedicated at keeping the economy down in order to keep Obama from getting re-elected… and what happens? Right before the election the unemployment numbers get better anyway. It’s like Wiley E. Coyote setting a trap an it not working… and blowing up in their face. “This can’t be happening to me… I’ve spent too much time… to much effort… there is no God… oops.” that kind of thing.

    Troy is right, in substance, the real numbers are very far from what they ought to be. But we don’t so much have an economic problem as we have a political problem. The thought here, is that after the election the economy is going to surge forth on its own. Any businessmen sitting on the sidelines will make their moves (as if there are any businessmen on the sidelines). Household debt will continue to go down, allowing demand to grow and helping the economy. Some obstructionism will probably fall away too.

    So by 2016 another five or maybe ten million jobs will have been created by Obama… making the 2016 election out of reach for movement conservatives… and Hillary (at 69 years old) will win in a walk.

    At some point the businessmen funding the Republicans will see the writing on the wall, that they can’t get the return on their investment in funding movement conservativism and the movement will dissolve. By 2016, and there after, the demographics will be substantially different and the Republicans will either have re-tooled or disappeared.

    None of that narrative works, however, if Romney wins the election. The movement conservatives must know all this, so you can imagine their angst at the numbers. Reagan got re-elected with 7.2% unemployment (but he also had a democratic congress that wanted Americans to work).

  3. Troy
    October 7th, 2012 at 02:08 | #3

    But we don’t so much have an economic problem as we have a political problem

    I agree a bit with this but — our inability to act is 50% due to movement conservatives not wanting to “share the wealth” and 50% due to the fact that if we actually start living within our means things aren’t going to be so hot.

    And, frankly, I’m not sure how we can even make this transition. I say we should cut the defense budget 50%, to $400B/yr, but that is millions of jobs getting destroyed. Never going to happen.

    Will the middle class even vote for a return of the Clinton tax rates? They booted the 1992 Congress out for voting for them!

    What about our $300B+ trade deficit with China? Do we really want our stuff to cost a lot more due to tariffs?

    Do we have the political mojo to successfully take on the medical sector and its $5000 per capita rent tap on us? (The US pays $8000+ per capita, while Japan’s cost is $3000!)

    As for our $1.2T/yr fiscal deficit, 50% higher taxes on the top 10% could raise $300B. We should raise another $400B from higher corporate income tax, but that still leaves $500B to close the deficit. If we doubled the tax burden on the lower 90% we’d only get half that.

    And this doesn’t even count the exploding social security and medicare costs we’re going to see this decade and next as our 80M-strong baby boom enters retirement.

    So by 2016 another five or maybe ten million jobs will have been created by Obama

    That’s just it, though, Obama doesn’t have the power to create jobs. The 137M jobs Bush claimed credit for were actually created via the $14T consumer credit bubble:

    http://research.stlouisfed.org/fred2/series/CMDEBT

    The latter half of the Clinton job boom (1996-2000) saw 14M jobs created:

    http://research.stlouisfed.org/fred2/graph/?g=bvA

    that was great but those conditions don’t obtain today (gas is pushing $5 here today, not the ~$1.20 it was in the late 90s for one).

    The economy doesn’t have a “mental recession” — it is fundamentally misstructured.

    Too much paycheck money is being siphoned out of the working class — via high energy costs, high housing costs, high medical costs, high after-tax corporate profits, plus our $600B/yr trade deficit.

    And what scares the crap out of me is the Romney-Ryan conservatives do not seem to understand this at all. Ryan wants to make America a “tax haven” FFS.

  4. Troy
    October 7th, 2012 at 06:20 | #4

    btw, http://www.electoral-vote.com/evp2012/Pres/Maps/Oct06.html#News is interesting today. The Ohio thing is simply infuriating, I knew the generalities but not the specifics. Those m-fers are really audacious.

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