IS THE ECONOMY “OUT OF THE WOODS?”
On October 6, the Public Editor of the New York Times pointed to all the discrepancies and conflicts in the violence figures coming out of Iraq. He called for more nuanced reporting and increased public skepticism. He noted that the perception of progress there has been bolstered by the release of questionable statistics.
What’s true of reporting from Iraq is also true about the job figures that the government releases monthly gauging the health of the U.S. economy. Can they be trusted? And what about the reporting on them? This is an especially timely issue as Fox News gets ready to launch its own heavily-hyped new Business Channel.
For weeks, we have heard all these warnings about the financial crisis
sharpening and a possible recession. Reality intruded after a big subprime relief rally sent stocks soaring. Wall Street was qickly back in swamp, and it looked like the Federal Reserve Bank would have to cut interest rates again to further bail out the markets.
But then, on Friday, the Bush Labor Department announced a new jobs report and much of the coverage turned upbeat.
The report offered preliminary data claiming that the economy added l00,000 jobs in September. Suddenly, lower job figures from July and August were also magically revised upwards.
Wall Street went crazy. The S & P went up and the headlines went positive.
Here are two examples of the spin: The New York Times: “JOB GROWTH LOOKS ROSIER, EASING RECESSION FEARS.” The Wall Street Journal, “US ECONOMY DOWN, NOT OUT.”
The new numbers accounted for the turn around? Bear in mind, back in the 90s, in the Clinton years, 200,000 new jobs was what was expected on a monthly basis to assure economic growth. That was the gold standard. Now that number has been cut in half and is suddenly being treated as Great Leap Forward. How did the job numbers turn around? Or have they?
Reports the Journal, “much of the revision was caused by recalibrating seasonal fluctuations in government employment, including teaching.”
Mmmmm…”recalibrations of seasonal fluctuations! I ‘d love to let Stephen Colbert loose on that phrase. Look more closely, and you will see these recalibrations: deal with GOVERNMENT EMPLOYMENT, not jobs in the private sector. There were 71,000 jobs “recalibrated” in local education.
Yet establishment economists are saying these jobs are not what the economy really needs. The Journal quotes Nigel Gault, chief economist at Global Insight to the effect that “private sector jobs are the underlying driver of the economy.”
Yes they are, but these are not them. The biggest jump here is in government jobs. NBC News reported on yet more job cuts in Flint Michigan Saturday and that manufacturing jobs are at their lowest point since l950.
Presumably you would think the disappearance of these jobs would be upsetting to the wise men of Wall Street. In fact, they are but their concerns are being buried in stories that fuel the perception that the corner is being turned.
Example: way down in the 19th paragraph of the Journal article, The Vice Chairman of the Federal Reserve Bank Donald Kohn says he expected that the nations “economic performance would be better.” He says, “You should view these forecasts even more skeptically than usual.”