Did the sequester or payroll-tax holiday expiration hurt job creation in March?

posted at 3:21 pm on April 5, 2013 by Ed Morrissey

We’re certainly hearing plenty of excuses about today’s jobs report coming from Obama administration apologists. Almost immediately, some — including former Obama adviser Austan Goolsbee — blame it on sequester cuts that have barely had time to take effect, and that mostly impact government operations. A quick check of BLS data (Table B-1, seasonally adjusted) after today’s update shows that the entire government sector lost only 7,000 jobs, after growing by 14,000 in February. In January, long before the sequester took place, the public sector lost 16,000 jobs, as well as losing 5,000 in December, 9,000 in November, and 57,000 in October. The loss in March in the public sector was mild, comparatively speaking, and certainly didn’t depress private-sector hiring.

Jim Pethokoukis pops another hole in this theory:

So what’s the problem? The payroll tax hike? The sequester? (As IHS Global Insight notes: “It is hard to blame the sequester for March’s disappointment. Federal employment did drop by 14,000, but most of that was in the US Postal Service, which isn’t affected by the sequester.”)

As Jim notes, another excuse that has been floated today is the expiration of the payroll-tax holiday.  Retail lost 24,000 jobs in March, which caused some analysts to point fingers at the loss of income — roughly $20 per week per worker — in the expiration of the FICA reduction.  But that reduction took place at the beginning of the year, not in March.  If that was the proximate cause, then we should have seen significant reductions in consumer expenditures in January and February, when this tax “hike” hit.  According to the Bureau of Economic Analysis, we actually saw consumer spending grow in both months after the PTH expiration, in both nominal and real terms, even with income declining:

Personal income increased $143.2 billion, or 1.1 percent, and disposable personal income (DPI) increased $127.8 billion, or 1.1 percent, in February, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $77.2 billion, or 0.7 percent. In January, personal income decreased $513.5 billion, or 3.7 percent, DPI decreased $498.3 billion, or 4.0 percent, and PCE increased $40.8 billion, or 0.4 percent, based on revised estimates.

Real disposable income increased 0.7 percent in February, in contrast to a decrease of 4.0 percent in January. Real PCE increased 0.3 percent in February, the same increase as in January. …

Real PCE — PCE adjusted to remove price changes — increased 0.3 percent in February, the same increase as in January. Purchases of durable goods increased 0.1 percent in February, compared with an increase of 0.4 percent in January. Purchases of nondurable goods increased 0.5 percent in February, the same increase as in January. Purchases of services increased 0.3 percent in February, compared with an increase of 0.2 percent in January.

I mean, it’s not difficult to find this out. The data is on line, which makes it a lot easier to avoid poor assumptions.  Apparently, some economic pundits would prefer to rely on conjecture rather than data.

So what happened in the retail sector?  Even though people may be spending more now, they’re not spending enough to cover the escalating costs of employment — and part of that, economist Mark Zandi suggests, is the pending implementation of ObamaCare and the mandates it imposes on employers:

Retail trade number, that is consistent with the… I don’t think the sequester is in here at all, I think it’s way too premature for the sequester having an impact, but the retail trade number would be consistent, not only with the payroll tax, but again I think healthcare reform might be having an impact. Remember the ADP number? It said for those companies with employees, with 50 to 499, that’s the group that would be affected by the healthcare reform, we’ve seen a rather sharp slowing in job creation. 43k in January, 20k in February and -5 in March.

If we want more hiring, we should be making it less expensive and simpler, rather than more expensive and complicated.  As we keep moving to the implementation date for ObamaCare, this will be a larger and larger drag on job creation.

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What would Goebbels claim?

Schadenfreude on April 5, 2013 at 3:23 PM

Obama’s America

But, new immigration bill would scroom you royally. Work harder. The world needs your labor’s efforts, to party on.

Schadenfreude on April 5, 2013 at 3:24 PM

Don’t let bayam derail the thread.

Is a mini-Axelturd.

Schadenfreude on April 5, 2013 at 3:24 PM

Come on…everyone knows it is because of 4 years of Republican obstructionism. Recovery summer is coming!

Youngs98 on April 5, 2013 at 3:25 PM

Obama insults you – this, by an otherwise Obama-azzkisser.

So the $20,000 Obama is kicking back to the Treasury is a pittance that will not be missed. (What’s the difference between $789,674 and $769,674? Will the kids not go to camp? Is Hawaii out of the question for next summer? ) But 5 percent for someone making $100,000 is a different story. That’s five grand, and it well could be camp or a vacation. It is not chump change.

Obama was once poor –- although young and poor is not the same as old and poor –- so I know he can appreciate what that 5 percent can mean. The president was apparently responding to the symbolism of him living like a pasha while asking others to sacrifice. I understand. But his taking a wee haircut on his salary is just a PR stunt from the White House that’s more insulting than it is empathetic.

Schadenfreude on April 5, 2013 at 3:26 PM

It’s Bush’s fault, rubes.

Schadenfreude on April 5, 2013 at 3:27 PM

Obama’s America is a 3rd world thuggish latrine, full of rats, who enjoy the slush they live in.

Schadenfreude on April 5, 2013 at 3:27 PM

It is whatever the Dog Eating Dunderhead SAYS it is, you hayseeds.

If the Mutt Muncher tells everyone that too many guns and not enough gay marriage is causing the economy to crater then those are the reasons, so don’t be bringing actual economics into the debate.

Bishop on April 5, 2013 at 3:27 PM

Another piece of the puzzle from ZeroHedge.com

http://www.zerohedge.com/news/2013-04-05/97-february-consumer-credit-student-and-car-loans

97% Of February Consumer Credit Is Student And Car Loans
.
The releveraging deleveraging continues. While US consumers barely dare to touch their credit cards, as they did in February when just $533 million in revolving consumer credit was added, they continue to take advantage of Federal largesse to take out student and car loans for the maximum amount possible, and as expected in February of the $18.1 billion in total credit taken out, a whopping 97% was non-revolving, or mostly student and GM loans (recall that now one can “finance” a car using their shotgun as collateral). To show just how dramatic the shift toward Uncle Sam as bank of only recourse for the US consumer has become, consider that in the past 12 months, of the $158.8 billion in total consumer credit issued, just $6 billion is credit card based. The remainder: debt that will never be repaid because those who take it out use it to finance such things as their education in vocational school (and iPads, tattoos, lap dances, semiautomatic guns and booze of course), as well as various GM cars that amortise by about 100% the second they are driven off the car lot.

Spot the student and car loan components of total credit:

You will have to click on the link to see the charts.

PolAgnostic on April 5, 2013 at 3:28 PM

Well you can bet it won’t be bho’s fault, it never is! Everyone in the US is to blame but him!
L

letget on April 5, 2013 at 3:30 PM

It’s the sequester. No, I don’t have any specifics to offer, but it’s obviously the sequester which the Republicans tricked Obama into proposing and signing into law.

forest on April 5, 2013 at 3:31 PM

So wait, I can’t keep this straight. According to Obama admin, the economy is continuing to grow, OR the economy is bad and it’s (sequester) republican’s fault. I’ll have to tune into NBC to find out for sure.

Jackalope on April 5, 2013 at 3:31 PM

Obama’s America

But, new immigration bill would scroom you royally. Work harder. The world needs your labor’s efforts, to party on.

Because we all are not yet equally sharing in misery. We need a flood of quickly legalized alien invaders and a continually wide open and under enforced border to aid in collapsing our economy, so to bring misery upon all of citizens, except for the political and financial elites who rule.

hawkeye54 on April 5, 2013 at 3:31 PM

Obama’s America is a 3rd world thuggish latrine, full of rats, who enjoy the slush they live in.

That already describes quite a bit of the downtown Los Angeles area where I work, and probably far too many cities across the country. Obamanomics will be successful if it achieves that nationwide.

hawkeye54 on April 5, 2013 at 3:34 PM

So wait, I can’t keep this straight. According to Obama admin, the economy is continuing to grow, OR the economy is bad and it’s (sequester) republican’s fault. I’ll have to tune into NBC to find out for sure.

Jackalope on April 5, 2013 at 3:31 PM

It’s both :) there’s a subtle dialectics at works that only people with Nobel Prize in Economics, like, say, dear old Kruggie can grasp :)…ordinary hoi polloi don’t have the background to comprehend such complexity…

jimver on April 5, 2013 at 3:40 PM

‘At work’ that is

jimver on April 5, 2013 at 3:41 PM

It’s both :) there’s a subtle dialectics at works that only people with Nobel Prize in Economics, like, say, dear old Kruggie can grasp :)…ordinary hoi polloi don’t have the background to comprehend such complexity…

jimver on April 5, 2013 at 3:40 PM

If only we had a Ministry of Truth to explain it all for us.

Lily on April 5, 2013 at 3:46 PM

One thing this administration and it’s apologists never run short of is EXCUSES.

It CAN’T be their policies!

Instead of screening gun owners, perhaps we should send everyone in government to have their heads candled.

GarandFan on April 5, 2013 at 3:48 PM

I blame Mitt’s binders full of women.

And puppies. Definitely puppies.

Polish Rifle on April 5, 2013 at 3:49 PM

its Obamacare and we all know it, followed by taxes and regulations

Have a buddy working on the Keystone pipeline.

1 1/2 hours of safety training every morning
4 lb hard hats with side protection (neck hurts after about 4 hours of wearing it)
stop work two hours before dusk for environmental reasons

And this is in Texas btw

DanMan on April 5, 2013 at 3:57 PM

…F O R W A R D…!

KOOLAID2 on April 5, 2013 at 3:57 PM

OT, but all topics are now related – it’s Obama’s America

Illegal Alien Invaders = Peripatetic Global Citizens

Islamic Terrorists = Nice people who follow their Prophet with all their heart

Conservatives = Domestic terrorists

Libertarians = Domestic terrorists who like to do dope

Capitalists = Greedy people who got rich by enslaving good people

Schadenfreude on April 5, 2013 at 4:01 PM

Well, I don’t know… maybe it was the sequester… lets see what teh NY Times has to say.

http://economix.blogs.nytimes.com/2013/04/05/sequestration-and-the-jobs-report/?src=busln

At least according to the preliminary data, sequestration does not seem to be particularly at fault.

Sorry, the NY Times does not agree with the President on blaming the sequester for the current jobs numbers.

Didn’t see that one coming, did you?

gekkobear on April 5, 2013 at 4:06 PM

We’re certainly hearing plenty of excuses about today’s jobs report coming from Obama administration apologists the Democrat Media O’bama Kneepads and from bayam.

Corrected.

Del Dolemonte on April 5, 2013 at 4:07 PM

If only we had a Ministry of Truth to explain it all for us.

Lily on April 5, 2013 at 3:46 PM

Say that again.

jimver on April 5, 2013 at 4:08 PM

Don’t let bayam derail the thread.

Schadenfreude on April 5, 2013 at 3:24 PM

bayam ran off the rails back in the Captain’s Quarters days, and never got back on the tracks.

Del Dolemonte on April 5, 2013 at 4:09 PM

Just wait till the ‘minimum wage’ hike.

Sir Napsalot on April 5, 2013 at 4:13 PM

Oh yes I bet the young male black subgroup can’t wait for another 1.50 an hour – for the 10% of them that will still be employed.

Zomcon JEM on April 5, 2013 at 4:19 PM

Sequester or payroll tax holiday?

What about behind Door #3? Crappy economy.

bw222 on April 5, 2013 at 4:24 PM

I heard the sequester was causing global warming.

TarheelBen on April 5, 2013 at 4:26 PM

Obamacare did not particularly affect March more than February or January although I am sure it is having a very real negative effect on hiring. January had rather mild weather while March was quite cold and snowy compared to normal. I do not know how much of the numbers were due to that fact but I have to believe it had an impact.

KW64 on April 5, 2013 at 4:45 PM

Price of ENERGY.

end of story no need to look further. This great recessions started with high energy prices and it continues everytime energy goes above a certain price point (around $3.5/gal) It takes several weeks/months for the price spike to filter down to the underlying economy but it happens pretty much every time energy spikes. Fed saw price of gas hit an all time high, hiring slowed down in march. Shocked.

Yes obamacare, tax hikes less spending all play a part but the major impact is the price of energy. Lower energy to $2.5/gal and the economy takes off. Lower it further and you have boom times.

unseen on April 5, 2013 at 4:48 PM

unseen on April 5, 2013 at 4:48 PM

agreed, notice the price of energy is not used in the rate of inflation calculation but the increased consumer spending for energy is included as proof that the economy shows a recovery?

DanMan on April 5, 2013 at 4:55 PM

agreed, notice the price of energy is not used in the rate of inflation calculation but the increased consumer spending for energy is included as proof that the economy shows a recovery?

DanMan on April 5, 2013 at 4:55 PM

Not just energy but food also.

chemman on April 5, 2013 at 5:14 PM

agreed, notice the price of energy is not used in the rate of inflation calculation but the increased consumer spending for energy is included as proof that the economy shows a recovery?

DanMan on April 5, 2013 at 4:55 PM

yeap funny how that works huh

Not just energy but food also.

chemman on April 5, 2013 at 5:14 PM

well its the price of energy that increases the price of food. that’s why I say its the price of energy underlying the entire economy and holding it back. You lower the price of energy, food prices comes down, housing prices come down, car prices come down, consumer products comes down people have more purchasing power they buy more stuff, employ more people, wages stay up as the unemployment rate goes down.

the recession never went away because the elites believe defaltion is a dirty word. but capitalism DEMANDS deflation when ther eis a bust so that resources can be reallocated

unseen on April 5, 2013 at 5:42 PM

I just got a nice note from King Banaian about this post. Man,I hope he gets back to blogging on a regular basis.

Ed Morrissey on April 5, 2013 at 6:00 PM

Illegal Alien Invaders = Peripatetic Global Citizens

Schadenfreude on April 5, 2013 at 4:01 PM

:) by far my favourite :)

jimver on April 5, 2013 at 6:05 PM

I just got a nice note from King Banaian about this post. Man,I hope he gets back to blogging on a regular basis.

Ed Morrissey on April 5, 2013 at 6:00 PM

I hope so too – he does economics like nobody’s business.

Steve Eggleston on April 5, 2013 at 7:39 PM

It isn’t the sequester that’s pushing the economy down, it’s the destroyer in the White House.

VorDaj on April 5, 2013 at 9:06 PM