While this week’s big buzz is over another of President Obama’s preemptive caves in dealing with Republicans in Congress by offering to cut the growth of the Social Security benefit by adopting Chained CPI which tends to lower cost of living adjustments (yet another GOP proposal the White House has made its own), the real story remains lackluster employment.
I think we might expect a revision of historic proportions to the surprisingly bad March jobs report in the next two months, but we will just have to wait and see. My working assumption at this point is that the March jobs number will move from 88,000 jobs created to somewhere around 150,000, but maybe not. White House scare mongering about the sequester has seemingly played its part in scaring companies waiting for some kind of growth. It could be a one month blip in the accelerated growth we saw in January and February or it could be the start of a plateau or even a downward trend. Like I say, wait and see.
For the present, I’ll work off my assumption of 150,000 and use that. Even that is pretty poor growth, because March also saw 1,316,000 new entrants into the labor force as well as 3,176,000 people re-entering the job market (link). That’s 4,492,000 new workers fighting over what I’m assuming here are just 150,000 jobs, which is a paltry 3% of the new job creation needed just to keep up with growth in the labor force.
Brad Delong noted today that the labor force participation rate has dropped to about 63.3% and we haven’t seen levels this low since 1978. Apparently, the “trickle-down” era is over:
(Source: BLS Historical Data. Can you spot the period when the stay-at-home mom disappeared?)
So why is Washington still talking about the deficit? As Demos asks, Economy is Still Limping. So Why Are We Cutting Spending?
One more question. Why are they listening to corporate interests instead? Hasn’t Washington done enough? Corporate after tax profits (blue) vs total corporate tax receipts (red):
Plainly, elected officials are more comfortable with the rent-seekers of finance than with working Americans who live off their paychecks — and who put them in office.