Hey, who’s up for another Stagnant Spring?
posted at 1:21 pm on April 20, 2012 by Ed Morrissey
On Sunday, Secretary Treasury Tim Geithner hemmed and hawed a bit when asked by NBC’s David Gregory whether the US would have a third straight spring of disappointing economic growth. Today, the New York Times tries to reset expectations — and make a few excuses, too:
Some of the same spoilers that interrupted the recovery in 2010 and 2011 have emerged again, raising fears that the winter’s economic strength might dissipate in the spring.
In recent weeks, European bond yields have started climbing. In the United States and elsewhere, high oil prices have sapped spending power. American employers remain skittish about hiring new workers, and new claims for unemployment insurance have risen. And stocks have declined.
There is a “light recovery blowing in a spring wind” with “dark clouds on the horizon,” Christine Lagarde, managing director of the International Monetary Fund, said Thursday, at the start of meetings here that will focus on Europe’s troubles and global growth. Ms. Lagarde implored world leaders not to become complacent.
Forecasters have said that the trends point to a moderation of economic growth in the United States, but they still expect the recovery to continue this year. The slowdown in part reflects an unusually warm winter, which pulled forward economic activity, making January and February seem artificially good and perhaps making recent weeks look worse than they truly were.
Still, the breadth of the recent weakening of activity shows that the economy remains fragile, as is typical in the years following a financial crisis.
At the same time, the Department of Labor reported today that the disappointing jobs numbers in March was no anomaly. Job growth slowed in a number of states:
Fewer U.S. states reported job gains last month, reflecting a slower pace of hiring nationwide.
The Labor Department says that 29 states reported job gains in March, while 20 states lost jobs. That’s worse than February, when 42 states added jobs.
Well, not to be too snarky about this, but what’s new, exactly, about these issues? Europe’s debt crisis has been unfolding for years. High oil and energy prices have been a perennial problem, not just in the US but around the world. These are not acute issues, but chronic problems that Obama has had three years to address.
So far, he and his economic team still seem unprepared to offer real solutions. As another Stagnant Spring approached, what has been this administration’s focus? Hint: it hasn’t been to disentangle the US from the EU debt crisis or ramp up petroleum production and refining in the US. The big push since the end of last summer has been the Buffett Rule, which would solve none of these issues, create no jobs, and only address less than one-half of one percent of the deficit and our own debt crisis.
Obama really needs Wall Street to bail him out, but these days, Wall Street has become a lot more skeptical of Obama — and of the data his administration produces on economics. Elizabeth MacDonald reports at Fox Business that economists have begun to suspect something fishy in the initial weekly jobless claims reports from the Department of Labor:
The Department of Labor has revised higher the number of people who filed for unemployment benefits for the first time in 58 out of the last 59 weeks.
The same has held true since the beginning of the year. There have been 14 weeks of jobless data this year, and there have been 14 revisions. And all 14 were revisions that made the claims picture higher than what the government originally reported. …
This is a very odd trend indeed; economists note it is not unusual for weekly jobless claims to be revised, as the government’s methodology for its initial estimate might not adequately take into account factors like seasonal adjustments or under-counting by states. But why are jobless claims now virtually always revised in the same direction — higher?
Wall Street is beginning to be more skeptical. Economists have already warned that jobless claims data should be viewed over time to pick up on trends.
Nomura Global Economics has taken a look at the issue, too, and warns Wall Street to bet that the revised numbers will be skewed higher. It notes that the undistorted trend likely lies closer to 370,000 to 380,000.
So the White House isn’t just losing credibility on their policies — they’re losing credibility on their statistics as well. Don’t expect that to encourage investment this spring.