Photograph by Andrew Harrer/Bloomberg

House Speaker John Boehner, a Republican from Ohio, talks prior to an interview at the Capitol in Washington, D.C., on May 7, 2013.

“We’ve had four years of slow and anemic job growth — and frankly, it’s unacceptable,” House Speaker John Boehner said today.

The Ohio Republican attempted to turn the latest unemployment rate against the White House — 7.5 percent reported for April representing the lowest rate in four years — as something short of what President Barack Obama promised with his economic stimulus.
“Slow growth cannot be the new normal,” he said today at his weekly news conference in the Capitol — as Obama traveled to Texas to tout the potential for economic growth.

“We can’t cut our way to prosperity — we need real economic growth,” Boehner said, suggesting that “real tax reform” will contribute to that. House Ways and Means Chairman Dave Camp is promising a tax bill this year — though Republicans and Democrats are divided over whether that should result on added tax revenue or come out “revenue neutral.”

Obama is traveling to Texas to promote technology-based education, training and jobs as he seeks support in Congress for economic initiatives he proposed earlier this year.

Stops today around Austin, including at Manor New Tech High School and at an Applied Materials Inc. factory, as well as
meetings with students, workers and entrepreneurs, are intended to give Obama a platform to promote proposals from his State of the Union speech in February. Those include raising the minimum hourly wage to $9 and promoting spending on education, manufacturing-innovation centers, worker training and research.

   Bloomberg’s Margaret Talev, reporting from Texas today, contributed.

Original post is Boehner: Slow Growth Can’t be ‘New Normal’ by Political Capital.

Photograph by Joe Raedle/Getty Images

People looking for work stand in line during a job fair at the Miami Dolphins Sun Life stadium on May 2, 2013 in Florida.

The Federal Reserve will hold its benchmark interest rate near zero, where it has been since December 2008, until early 2016 even as the jobless rate falls.

That’s the conclusion of economists at Goldman Sachs Group Inc. in New York. While their interest rate forecast isn’t new, they now project the unemployment rate will fall faster than they previously thought, reaching 6 percent by the time central bankers begin to raise borrowing costs.

That may seem at odds with policy makers’ announcements that 6.5 percent unemployment will trigger action. The so-called threshold will prove mutable, according to Goldman Sach’s Jan Hatzius and David Mericle.

Hatzius, Goldman’s chief economist, and Mericle say the unemployment rate will be a less meaningful gauge of the labor market’s progress because part of the decline results from disaffected workers leaving the labor force. If a person isn’t actively looking for work, the government doesn’t consider them unemployed.

Building on work by Fed economists Christopher Erceg and Andrew Levin described in a previous post on Political Capital, Hatzius and Mericle project the so-called labor force participation rate will be slow to recover due, in part, to the severity of the last recession. In fact, they predict it will stay roughly where it is now, a three-decade low, through this year and next.

That means the jobless rate may reach the Fed’s trigger faster because it will take smaller gains in employment to push it down. The Goldman economists predict central bankers will acknowledge the conundrum, leaving them with three options.

Members of the Federal Open Market Committee, who determine when the central bank will act, will put less emphasis on the 6.5 percent threshold, turning it into a necessary but not sufficient condition for action, Hatzius and Mericle said in a May 3 report. Alternatively, they may lower the rate at which they say they’ll act, or broaden the labor-market measures they’ll consider to include such things as the share of the population working.

“As we approach 6.5 percent, a reduction in the threshold or maybe even a new measure may well be necessary,” said Hatzius and Mericle.

Original post is Fed Holding Benchmark Rate Near Zero Until 2016: Analysts by Political Capital.

Photograph by Patrick Fallon/Bloomberg

An employee demonstrates how to prepare a room for guests at a hotel in Los Angeles, California.

The more time government statisticians have to crunch the numbers, the stronger the job market looks — that is assuming you’re not looking to earn in the six figures.

On March 8, the Labor Department said employers added 236,000 workers to payrolls the month before. As of today, the gain for February is 332,000, almost 100,000 more than first estimated. Excluding the mid-2010 surge in hiring of temporary workers to conduct the Census, the February employment jump is now the biggest since November 2005.

Changes to the job count for March are heading in the same direction. The 88,000 increase for the month announced on April 5 — which raised concern that federal government budget reductions, or sequestration, were cutting the legs out from under the labor market and sent shivers through financial markets — today was revised to 138,000. These figures will be updated again with the May employment report released on June 7.

On net, revisions added a combined 114,000 to the March and February jobs tally today. Should they continue in the same direction, the 165,000 increase in payrolls for April reported this morning could easily top 200,000 when all is said and done.

“The upward revisions are probably the single-biggest piece of news,” said Gary Burtless, a labor economist at the Washington-based Brookings Institution. “In terms of payroll employment, the winter was very strong.”

The Labor Department surveys about 145,000 employers representing approximately 557,000 single worksites to calculate the payroll count. Not all respond on a timely basis, prompting revisions over subsequent months as more information becomes available.

Which industries were among those too busy interviewing potential candidates to respond to Labor’s queries then and there? Hotels and restaurants took the top spot, adding an 60,000 additional workers than the government estimated for February and March initially.

Others were less busy firing than previously thought. Retailers cut 4,000 employees from behind their counters in March instead of the 24,000 first estimated.

There is some downside to the positive readings, though. Julia Coronado, chief economist for North America at BNP Paribas in New York, said the revisions are concentrated in areas that benefit from tourism and exports.

“The good news is that we are growing off of global strength as U.S. households deleverage their balance sheets,” Coronado wrote in a research note. The bad news, she said, is that these jobs tend to be of “generally lower quality.”

Original post is Job Market Better-Looking in Rear-View Mirror by Political Capital.

Photograph by Daniel Acker/Bloomberg

The Federal Reserve Bank of New York headquarters

Since December, Fed policy makers have said they will hold their benchmark interest rate near zero until the unemployment rate falls to 6.5 percent. Research by a couple of their colleagues implies they should wait until it’s even lower.

The central bank adopted the so-called Evans Rule at the end of last year, pegging any change in its interest-rate target to specific employment and inflation triggers rather than to a particular point in time. Charles Evans, president of the central bank’s Chicago branch, was the first to give voice to the plan.

The only problem has been that while the jobless rate is steadily declining, it’s been dropping for the wrong reason. People have been leaving the labor force in droves, which means they aren’t officially counted as unemployed. Still, an army of idle former workers puts downward pressure on wages, which is certainly not a sign of a vigorous job market.

Now comes a study by Fed Board economists Christopher J. Erceg and Andrew T. Levin, published by the Boston Fed on April 9, that seems to capture exactly what’s been happening.

Their first conclusion is that the drop in the so-called participation rate, or the share of the working-age population in the labor force, is due to frustration over the lack of demand for workers caused by the recession rather than a structural change in the economy, such as the ageing of the baby-boomer generation. This is important because that means that the decline can be addressed by spurring economic growth.

The pair, currently on leave from the central bank and working in the IMF’s research department, then finds that severe recessions cause the participation to break with past patterns. Instead of climbing as an improving economy gives more people the confidence to rejoin the workforce, the rate continues to decline, accounting for more of the gap in employment and leading to less inflation.

That’s exactly what’s been happening — the participation rate fell to a three-decade low of 63.3 percent in March, even as the jobless rate dropped to a more than four-year low of 7.6 percent. The consumer-price index rose just 1.5 percent over the past 12 months, compared with an average 2.4 percent gain over the past two decades.

Then they come to the conclusion that is sure to send a chill through the central bank and also rile its detractors who argue policy makers have already gone too far.

In order to boost participation and wages, the Fed would need to keep stimulating the economy until the jobless rate falls below its long-run potential for an extended period. In other words, run the economy so hot and have employers so clamoring for help that they bid up wages enough to get the disenfranchised to come back into the workforce.

Let’s say the Fed’s long-run employment forecast is about 5.6 percent — in the middle of its 5.2 percent to 6 percent range of estimates. This paper seems to suggest policy makers will need to take joblessness down to something like 5 percent for a long period to get people back into the labor force. This is an extreme oversimplification of the researchers findings, but still provocative.

Original post is Fed’s Employment Trigger Too High? by Political Capital.

Photograph by Tom Pennington/Getty Images

Texas Gov. Rick Perry visits with fans prior to the start of the NASCAR Sprint Cup Series NRA 500 on April 13, 2013 in Fort Worth, Texas.

Texas Gov. Rick Perry has  picked Chicago as his latest job-recruitment target, running print and Internet advertisements through a weekly business newspaper urging Illinois companies to move to the second-most populous state.

In February, radio ads launched by Perry asked California business owners to consider relocating to Texas, citing lower taxes and a more favorable regulatory environment. Those ads prompted California Gov. Jerry Brown to mock the campaign as a “burp, barely a fart.”

“This is part of the governor’s ongoing efforts to reach out to companies whose policies make it difficult to live and do business,” spokeswoman Lucy Nashed said in an e-mailed statement.

Texas has no income tax, compared with a 5 percent levy in Illinois, and union membership is much lower, Nashed said.

A call to Illinois Gov. Pat Quinn’s press aide, Brooke Anderson, was not immediately returned.

Texas had a 6.4 percent unemployment rate as of February, compared with a 9.5 percent rate in Illinois. Illinois has the lowest rating among the U.S. states by Moody’s Investors Service and Standard & Poor’s and both companies have it on negative outlook, meaning the grade could be cut further.

TexasOne, a public private partnership, is paying for the $38,450 of advertising in Crain’s Chicago Business, according to Perry’s statement.

Original post is Texas to Chicago: Send Us Your Overtaxed, Underemployed Masses by Political Capital.

Photograph by Mike Ehrmann/Getty Images

The 2013 Masters Tournament at Augusta National Golf Club in Georgia.

The Masters, golf’s first major tournament of the year that is currently under way in Georgia, helps usher in spring.

Also emerging at the start of the spring season is tepid economic data. And figures today showed the economy is barely getting so much as a golf clap from the American consumer.

A preliminary April measure of consumer sentiment slumped to the lowest level in nine months, according to data today from Thomson Reuters/University of Michigan. A Commerce Department report showed retail sales last month fell by the most since June.

The consumer spending numbers removed some of the luster from what had been shaping up as very bright first quarter for the economy. Economists at Barclays Plc and JPMorgan Chase & Co. lowered their first-quarter gross domestic product tracking estimates to 3 percent. They forecast second-quarter growth at half that pace as spending cools amid higher payroll taxes.

It all circles back to the labor market. The Michigan sentiment survey showed Americans are now more inclined to see stagnant after-tax incomes as permanent, rather than temporary as in past economic cycles. Not a very good recipe for a sustained acceleration in consumer spending.

Some 32 percent expect the unemployment rate, currently at 7.6 percent, to head higher in the coming year compared with 24 percent who see it falling.

Perhaps more surprising given that the stock market is trading close to record highs, 22 percent of all consumers in the latest survey expect their financial situation to improve in the year ahead, just above the all-time low of 20 percent who said so in 2011.

Original post is Economy: Trouble Mustering Golf Clap by Political Capital.

Photograph by Eddie Seal/Bloomberg

Job seekers wait for the opening of an employment fair sponsored by Job News in partnership with USOilWorker.com and The Texas Veterans Commission at the Norris Conference Center in San Antonio, Texas, on March 19, 2013.

That’s the U.S. labor force participation rate for March, the lowest since May 1979, according to the Labor Department.

The rate represents the proportion of the population that’s in the civilian labor force, which includes those who are employed and those looking for work. The labor force declined by 496,000 last month, pushing down the unemployment rate to a four-year low of 7.6 percent from 7.7 percent.

Nonfarm payroll employment grew by 88,000 in March, the smallest gain in nine months, Bloomberg’s Alex Kowalski reported.

Original post is Bloomberg by the Numbers: 63.3% by Political Capital.

Photograph by Michael Dwyer/AP Photo

A job seeker speaks with a State Department employee about job opportunities with the federal government during a job fair in Boston.

The jobless rate in the U.S. fell to a four-year low of 7.6 percent in March for the wrong reasons.

Instead of an increase in the number of those finding work, 290,000 people dropped from the ranks of the unemployed. The decrease accounted for almost 60 percent of the 496,000 plunge in the size of the labor force.

It’s important to remember, however, that to be counted as unemployed, a person has to say they are actively looking for work. You may therefore be tempted to blame the decrease in joblessness on the exodus of Americans so discouraged by miserable prospects that they give up the search for a job. At least in March, that wasn’t the case.

The number of workers saying they were too disheartened to search for work but would take a job if one were available was 803,000, down from 885,000 in February and 865,000 a year earlier (the figures are not adjusted for seasonal variations, making a comparison with the same month a year earlier more telling). So, if anything, this number is trending down.

Today’s report also showed the remaining drop in the number of people in the labor force in March came from a 206,000 decrease in those who said they were employed the prior month.

Are aging baby boomers hanging it up?

The share of the population 65 years old and older with a job — or saying they were looking for one — was 18.8 percent last month, the same as in February. Here, the so-called participation rate is actually trending up. It was at 18.6 percent in March 2012, and 17.8 percent two years ago.

So who dropped out last month?

Based on a breakdown by age, the bulk of these — about 90 percent — were 20 to 24 year-olds, according to Omair Sharif, an economist at RBS Securities Inc. in Stamford, Connecticut.

It’s not clear why there would be such a big decrease for this group, Sharif said. He ventured one extreme possibility. Blame the allure of Cancun, Punta Cana or Daytona Beach, as college students take spring break. But for his theory to hold, they would have had to tell the government they’d quit and weren’t looking for work, since those on vacation are still considered in the workforce, Sharif noted.

The Labor Department said just yesterday that the timing of Easter and spring break is so difficult to take into account that it may have played a role in last week’s surge in claims for state unemployment benefits.

Original post is Discouraged Workers, Retirees Not to Blame for Jobless Rate Drop by Political Capital.

Photograph by Eddie Seal/Bloomberg

A welder works inside a mud tank for a new oil and gas drilling rig at the Orion Drilling Co. manufacturing and fabrication facility in Corpus Christi, Texas.

God Bless Texas… and North Dakota, and Utah.

Texas led all the states in February with an 80,600 increase in net hiring, the biggest gain since the U.S. Labor Department started keeping records in 1982, figures released on March 29 showed. Employment in the energy-rich Lone Star State has increased by 3.7 percent in the 12 months through February, more than double the 1.7 percent gain in national payroll growth.

Only North Dakota and Utah have registered bigger percentage advances than Texas in job creation over the last year. Employment in North Dakota, home to the Bakken formation that’s the nucleus of the nation’s current energy boom, has climbed by 5.7 percent. The state also has the nation’s lowest unemployment rate at 3.3 percent, versus 7.7 percent for the entire U.S.

In Utah, payrolls were up 4.5 percent in the year ended in February. Trade, transportation, leisure and hospitality and professional and business services are industries showing increases in employment, according to the Beehive State’s Department of Workforce Services. Utah’s jobless rate was 5.2 percent in February.

While state and local employment data are derived independently from the Labor Department’s national statistics, the rates of job growth in 20 of the 50 states have exceeded that of the U.S. as a whole.

Taxes and regulatory policies may be shaping the progress some states are making.

George Mason University’s Mercatus Center on March 28 released its Freedom in the 50 States Index. The group’s measure of economic freedom, which scores fiscal and regulatory policy from tax burdens and government spending to labor regulation and tort systems across the country, showed North Dakota (#2), Utah (#8) and Texas (#14) in the Top 15.

Fourteen of the 20 states with more robust employment than the national payrolls data are ranked in the Mercatus Center’s Top 25 for economic freedom. Nineteen of the remaining 30 states are in the bottom half. New York (#50), California (#49) and New Jersey (#48) have the least economic freedom and their jobless rates are above the national average.

Original post is Texas: Even Employment Gains Bigger by Political Capital.

Photograph by Justin Sullivan/Getty Images

A “now hiring” sign is posted in the window of a Chase bank branch on Jan. 4, 2013 in San Rafael, California.

That’s how many months it’s been since the unemployment rate was lower than February’s 7.7 percent.

Last month’s jobless rate was the lowest since December 2008, when the unemployment rate was 7.3 percent and rising amid a deep recession. The jobless rate peaked at 10.0 percent in October 2009 before falling throughout 2011 and 2012.

“Employment rose 236,000 last month after a revised 119,000 gain in January that was smaller than first estimated,” Bloomberg’s Alex Kowalski reported.

“An improving jobs picture and soaring stock market are likely to ease pressure on President Barack Obama and congressional Republicans to resolve a budget standoff even as both sides are dug in for a long struggle,” Bloomberg’s Mike Dorning reported.

Original post is Bloomberg by the Numbers: 50 by Political Capital.