After All the Hype, Jobs Up an Anemic 39,000; Unemployment Rises to 9.8%
– Today the BLS reports that jobs gained a mere 39,000 and the unemployment rate shot up to 9.8%, the highest rate since April. Private payrolls gained a mere 50,000 compared to expectations of +160,000. Both jobs and the unemployment rate were worse than every single economist estimate which has me noting once again that economists as a group are sure one optimistic lot. Check out these Grim Job Details
courtesy of Bloomberg.
- Payrolls increased 39,000, less than the most pessimistic projection of economists surveyed by Bloomberg News, after a revised 172,000 increase the prior month, Labor Department figures showed today in Washington.
- The jobless rate rose to 9.8 percent, the highest since April, while hours worked and earnings stagnated.
- The unemployment rate was forecast to hold at 9.6 percent, according to the median prediction of 83 economists surveyed by Bloomberg. Estimates ranged from 9.4 percent to 9.7 percent.
- Overall payrolls were forecast to climb by 150,000, according to the survey median, with estimates ranging from 75,000 to 200,000.
- Manufacturing payrolls dropped by 13,000 in November, the most in three months. Economists had projected an increase of 5,000.
- The report also showed an increase in the number of long- term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 41.9 percent, the highest since August.
Seasonal Retail Hiring: Retailers remain cautious
– According to the BLS employment report – and combining October and November – retailers hired seasonal workers at above the pace of last year, but well below the pre-crisis levels. Typically retail companies start hiring for the holiday season in October, and really increase hiring in November. Here is a graph that shows the historical net retail jobs added for October, November and December by year (not seasonally adjusted). This really shows the collapse in retail hiring in 2008 and modest rebound in 2009. Retailers hired 433 thousand workers (NSA) net in October and November. This is above the 367 hired last year in October and November, but well below the pre-crisis average of close to 550 thousand for the same two months. Note: this is NSA (Not Seasonally Adjusted), retailers employed 28 thousand fewer workers in November than October seasonally adjusted.
Western or Chinese medicine for the yuan?
– BOTH the Americans and the Chinese want to narrow China’s current-account surplus, which swelled to more than $100 billion (over 7% of China’s GDP) in the third quarter. But the two sides disagree about the means and the timetable for achieving this goal. In a speech last month (link
in Chinese), Zhou Xiaochuan, the thoughtful governor of China’s central bank, proposed a metaphor that sums up these differences. He compared the rival approaches to China’s exchange rate to Western and Chinese medicine. Western medicine, he said, is derived from theory and clinical trials. It prescribes a single, aggressive treatment (read: a revaluation of the yuan) which is expected to take effect quickly. The Chinese, however, prefer to rely on a variety of herbs and therapies (ie, higher wages, a stronger services sector, freer pricing of energy and natural resources), applied in varying combinations and dosages. This "Chinese medicine" relies on trial-and-error and is expected to work only gradually. It’s a useful metaphor, which I’d like to extend a little further, because, of course, many Chinese people use both traditional and Western medicine quite freely.
Cargo preferences cost $140 million that could have helped the hungry
– Cargo preferences are the regulations that require a large part of U.S. food aid to be shipped in U.S. ships. The regulations are more cumbersome and expensive than you might think, leaving even some U.S. businesses out of luck, simply because they use other countries’ ships for parts of a cargo’s journey. The losers from these policies are the world’s hungry. We think of a food aid as a way to demonstrate American generosity to the world, but the governments of countries that receive the food aid instead see a tragically mixed message, a sort of gesture toward generosity combined with greed at the expense of some of the poorest people in the world. Cornell professor Chris Barrett in today’s Washington Post
Eurozone Adjustment Asymmetry – Adjustment to resolve asymmetries should be symmetric. Both sides should adjust. But sometimes it isn’t symmetric. One side may choose to adjust; but the other side is forced to adjust. Like under the Gold Standard. So if the Eurozone does break apart to resolve the asymmetry: I think it will not be through Germany choosing to leave; I think it will be through Ireland, Greece, wherever, being forced to leave. Suppose people are different, so some people borrow from other people. And suppose this continues, and debt eventually gets too high, and needs to stop rising, or even come down. The creditors should spend more, and the debtors should spend less, so that total spending should stay the same. The adjustment should be symmetric. In a barter economy, it might even happen like that. The creditors would decide that additional loans to the debtors would be unsafe, so decide to stop lending. If they don’t lend, they have to spend their income themselves. But in a monetary economy, it doesn’t happen like that.