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September Jobs Report Reveals A Resilient, But Not Strong, Economy

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The penultimate jobs report before November’s Presidential and Congressional elections seems to reveal an economy that is resilient but not exactly growing at the kind of strong pace that we’d like to see:

Total nonfarm payroll employment increased by 156,000 in September, and the unemployment rate was little changed at 5.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment gains occurred in professional and business services and in health care.

The unemployment rate, at 5.0 percent, and the number of unemployed persons, at 7.9 million, changed little in September. Both measures have shown little movement, on net, since August of last year. (See table A-1.)

Among the major worker groups, the unemployment rate for Hispanics increased to 6.4 percent in September, while the rates for adult men (4.7 percent), adult women (4.4 percent), teenagers
(15.8 percent), Whites (4.4 percent), Blacks (8.3 percent), and Asians (3.9 percent) showed little or no change. (See tables A-1, A-2, and A-3.)

The number of persons unemployed less than 5 weeks increased by 284,000 to 2.6 million in September. The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 2.0 million and accounted for 24.9 percent of the unemployed. (See table A-12.)

In September, both the labor force participation rate, at 62.9 percent, and the employment-population ratio, at 59.8 percent, changed little. (See table A-1.)

(…)

Total nonfarm payroll employment rose by 156,000 in September. Thus far this year, job growth has averaged 178,000 per month, compared with an average of 229,000 per month in 2015. In September, employment gains occurred in professional and business services and in health care. (See table B-1.)

Professional and business services employment rose by 67,000 in September and has risen by 582,000 over the year. Over the month, job gains occurred in management and technical consulting services (+16,000), and employment continued to trend up in administrative and support services (+35,000).

Health care added 33,000 jobs in September. Ambulatory health care services added 24,000 jobs over the month, and employment rose by 7,000 in hospitals. Over the past 12 months, health care has added 445,000 jobs.

Employment in food services and drinking places continued to trend up in September (+30,000) and has increased by 300,000 over the year.

Retail trade employment continued to trend up over the month (+22,000). Within the industry, job gains occurred in clothing and clothing accessories stores (+14,000) and in gasoline stations (+8,000). Over the year, employment in retail trade has risen by 317,000.

Mining employment was unchanged in September after declining by 220,000 from a peak in September 2014.

Employment in other major industries, including construction, manufacturing, wholesale trade, transportation and warehousing, information, financial activities, and government, changed little over the month.

The Bureau of Labor Statistics also reported that job growth for July was revised downward from +275,000 to +252,000 while the figures for August were revised upward from +151,000 to +167,000 for a net downward revision over those two months of -7,000 jobs. With these revisions and including the reported figures from August, job growth over the past three months has averaged +192,000 jobs per month, which is lower than it has been over the past three months. Since the start of the year, the BLS has reported that the economy created a total of 1,452,000 jobs have been created since the start of the year, which averages out to 177,900 new jobs created per month since the start of the year, this is lower than the average monthly jobs creation numbers as of last month and suggests that we’ve entered a a period of even slower jobs growth than we’ve become used to. Digging deeper into the report, there were no significant changes in the long-term employment rate or the labor force participation rate. The top-line unemployment report did increase from 4.9% to 5 .0 %, which appears to be due to a combination of both the fact that more people are looking for work and more people became unemployed during the past month. Once again, there were small upticks in the average hourly wages and hours worked numbers, but they were not significant changes and these numbers remain mired where they’ve been seemingly since the start of the year.

The New York Times characterizes the report as a sign of a ‘resilient’ economy:

As an election season marked by fears about jobs and wages enters the final stretch, the American economy looks more resilient than some campaign rhetoric might suggest.

Employers added 156,000 jobs last month, the Labor Department said Friday, enough to accommodate new entrants into the labor force and draw back workers who dropped out after the Great Recession.

The unemployment rate, which has been stuck at 4.9 percent since the spring, ticked up slightly to 5 percent.

The unemployment rate, which has been stuck at 4.9 percent since the spring, ticked up slightly to 5 percent.

For all the anxiety at home as well as turmoil abroad, like the “Brexit” vote in Britain, the American job machine continues to hum along.

Average hourly earnings moved higher by 0.2 percentage point last month, bringing the wage gain over the last 12 months to 2.6 percent.

While Friday’s figures aren’t likely to change expectations that the Federal Reserve will raise interest rates late this year, there was little in the report to suggest job gains might trigger inflation.

“There are still plenty of unemployed people out there, enough for employers to continue to hire at a substantial pace,” said Michael Gapen, chief United States economist at Barclays.

“The expansion will end before you run out of labor,” added Mr. Gapen, who estimates the unemployment rate could drop to 4 percent by the end of 2017. Indeed, the participation rate inched up to 62.9 percent, which explains the rise in the overall jobless rate to 5 percent.

Moreover, the labor force itself jumped by nearly half a million, a bright spot in an otherwise steady-as-she-goes picture of the economy.

“It was solid, not spectacular,” said Diane Swonk, a veteran independent economist in Chicago. “The good news is that participation went up, even though the unemployment rate did too. Regaining that ground is very important.”

Those two contrasting realities — healthy hiring and falling unemployment on the one hand, millions of economically sidelined Americans on the other — sustain the narrative of the two main presidential candidates, Hillary Clinton and Donald J. Trump.

Both candidates’ critiques of the economy contain kernels of truth. Friday’s report, while generally strong, contained fodder for both.

The jump in participation, along with healthy gains in higher-paying professional services fields, bolsters Mrs. Clinton’s case that the economy is growing steadily and creating decent-paying jobs. The drop in manufacturing jobs by 13,000 will underscore fears among blue-collar voters that their livelihoods are imperiled, a main factor in Mr. Trump’s appeal.

Although Wall Street watches every jobs report, this one will garner less attention because the Federal Reserve isn’t expected to raise rates until December at the earliest. The Fed will meet in November, but it is not expected to raise rates so close to the election.

Moreover, holding off until December to decide on whether to tighten monetary policy would also give policy makers both the October and November jobs report to consider before their December meeting.

Despite steadily rising payrolls over the last several years, month-to-month wage gains have been very uneven this year. A big jump in January was followed by almost no increase in February. Similarly, a healthy performance in July seemed to peter out in August.

Before Friday’s report, wages were up 2.4 percent over the last year. That is slightly better than the 2.3 percent annual increase in 2015, but it is still less that many recession-ravaged workers would hope to see at this point in the recovery.

Still, there are plenty of signs the tighter labor market is finally paying off and producing raises, particularly at the bottom and the top of the pay scale. It may also indicate that minimum wage increases in many states are beginning to filter through the broader economy.

As the Times indicates, a report such as this does seem to indicate that it’s unlikely that the Federal Reserve will raise interest rates before its December meeting, and even then the decision will depend largely on the state of the economy at that point, which could be impacted significantly by both the jobs reports for October and November and the preliminary Gross Domestic Policy numbers that will be reported in October and November. As I’ve noted before, though, the Fed has hinted quite strongly over its past several meetings that it was more likely than not to raise rates slightly as it did last December. Allegedly this is due to signs of increased inflationary pressures on the economy, although those pressures have not been all that evident in the economic data that has been released publicly. Additionally, the board is unlikely to raise rates in its November meeting, which will take place just six days prior to the Presidential election and only days before the release of the Jobs Report for October As we saw last year, it’s likely that we’ll see about the same marginal increase that we saw last December. What impact that increase will have on the economy is, of course, something that we’ll have to wait to see as we head into 2017.

In addition to Federal Reserve policy, these numbers are likely to have an impact on the Presidential race, although it isn’t clear what that impact will be given the fact that there things about this report that both candidates can point to that help their respective economic messages. For Hillary Clinton, continued job growth is likely to be seen as a sign of the strength of the her economy and evidence in favor of her argument that we need to continue the policies of the Obama Administration to keep the economy growing. For Donald Trump and the Republicans, the fact that these numbers are good but not great is likely to be cited as an argument in favor of the proposition that we have been experiencing one of the weakest economic recoveries since the end of World War II and that only a change in tax and fiscal policy will reignite the economic engine and bring us closer to the kind of numbers that we really need to fully put the Great Recession behind us. Which argument the voter buy will depend largely on how individual voters feel and how they feel the economy is impacting them personally. That interpretation by the voters will go a long way toward to deciding how this election turns out a month from now

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. Andrew says:

    Cutting taxes and more spending seem to always to the trick! Also limiting the public sector and jobs associated with it, another way to grow the economy!

    Make it so.

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  2. al-Alameda says:

    … the fact that these numbers are good but not great is likely to be cited as an argument in favor of the proposition that we have been experiencing one of the weakest economic recoveries since the end of World War II and that only a change in tax and fiscal policy will reignite the economic engine and bring us closer to the kind of numbers that we really need to fully put the Great Recession behind us.

    Not that it matters but … Republicans have offered up only more tax cuts for top income tax brackets as the path to increased rates of economic growth, all the while complaining that deficits and national debt are a drag on growth rates. Currently there is no traction for the Republican prescription because most economists estimate that proposed Republican tax cuts would both increase the deficit and the national debt.

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  3. Jen says:

    Disclaimer: I am not an economist.

    In the past, we’ve seen big growth spurts followed by bubble bursts. Is there any logic or argument behind the argument that slower, sustained growth is potentially more stable than an economy that surges and busts? Again, from a layperson’s perspective, what I recall about the booms in my memory is in the ’80s, it was housing/lending (S&L crisis and burst), in the late ’90s is that it was fueled by the tech bubble, which burst, and then the housing bubble that pretty much led to an international banking collapse.

    What exactly would be a good, solid increase *without* a potential for a bust? Manufacturing expansion?

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  4. Andrew says:

    @Jen:

    The glass with always be half empty in regards to those that are consistently and constantly critical of government. There really is nothing that will assuage this type of mind set.
    I am not saying it is a wrong way to think, for the record.

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  5. Jc says:

    @Jen: Chart the fed funds rate from 1970 and real GDP by year for the same period on top of each other. You can see the correlation of rates to growth, boom/busts…Only the Internet Age of the 90’s do you see sustained strong growth without any correlation to interest rate cuts. Now we are at 1.25-2.75 growth rate range with rates at zero since 2009. I would think you will see the same pattern for the near future barring some type of spectacular achievement/new technology etc…or dare I say it, change in government spending towards investment in growth (instead of wars, tax giveaways, bailouts…also could use an overhaul on our entire healthcare system and educational system)

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  6. gVOR08 says:

    For Hillary Clinton, continued job growth is likely to be seen as a sign of the strength of the her economy and evidence in favor of her argument that we need to continue the policies of the Obama Administration to keep the economy growing. For Donald Trump and the Republicans, the fact that these numbers are good but not great is likely to be cited as an argument in favor of the proposition that we have been experiencing one of the weakest economic recoveries since the end of World War II and that only a change in tax and fiscal policy will reignite the economic engine…

    So Dems will profit if voters believe the truth and GOPs will profit if voters buy their lies. As always.

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  7. Jc says:
  8. C. Clavin says:

    You cannot have 1/3rd of the economy stagnant and expect any significant growth in the overall economy.
    Republucans have sabotaged the economy.

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  9. michael reynolds says:

    Words like, “Strong” and “Robust” and even “Resilient” are all comparative. They are describing relative states not absolute ones.

    So, who or what are we comparing ourselves to? To other nations similar to ours? Go ahead and point out the large, developed economies that are significantly stronger than ours.

    Otherwise our point of reference is imaginary. We’re contrasting what we have, with what we can imagine having and, surprise, that is guaranteed to yield discontent. If we had 10% growth we could still imagine how much better it’d be if it was 20%.

    In fact I suspect the point of comparison for most people is a rose-tinted version of history. We’re comparing today to. . . what? To the 1950’s? The 90’s? What era? And why would anyone imagine that the decades following the greatest war in human history, which was in turn followed immediately by the Cold War, should be the point of comparison? We had a really, really good few decades while we were rebuilding Europe and the Soviets and Maoists ensured we’d have very little economic competition.

    Well, guess what? It’s been 70 years since WW2, and we’re coming up on three decades since the end of the Cold War. So China is a thing now. A free Europe is a thing now. We have infinitely more competition than we had in the years 1945 to 1990ish.

    We’ve added about 3 billion people competing for jobs, and yet, despite a huge recession, despite cuts to government, we are actually adding jobs. It’s frankly amazing. The dollar is strong, the stock exchange is strong, and property values are already heading too far north. We should be celebrating our incredible survival.

    Instead it’s the usual churlish, grudging crapola from a Libertarian who supports the least tested economic theories in the world. Obama has done very damned well by this country. He’s been a good president. We are far better off today than we were 8 years ago, no question about it.

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  10. JKB says:

    Well, these reports fall in the lies, damn lies and statistics realm. First it is a comparison over very recent history, which may show trend, but doesn’t show the whole. I looked at a 2006 report and we see while labor force participation has decreased about 4%, that actually translates into nearly doubling of actual bodies not working (1.1 million vs 2 million) due to population growth.

    We have the “new normal”. Economic growth used to be 3% annually and now it is 1.5%. That isn’t going to get us out of the hole nor permit the meeting of the debt obligations. What we need is a change, not a continuation of the recent past. We need to push back the economic growth strangling regulations of the EPA, Obamacare, etc. Of course, some of the most effective push back would happen at the local level so as to encourage business formation, which means new jobs, which means more employment and increases in productivity. The latter being what produces economic growth.

    Recently, I listened to this podcast with economist John Cochrane. He has a good idea to reform the tax code by separating debate on its structure from the rates that would then be filled in that structure. And removing subsidies to a specific overt subsidy code instead of hiding it in the tax code. And those subsidies would go out as a check instead of hidden in the “privacy” of a tax return. That way the subsidy to the upper middle class DC resident for their million dollar home could be evaluated right alongside the subsidy to the poor DC resident’s “welfare” check. Then the tax payers/voters could have an open discussion of what “welfare” they want to fund.

    John Cochrane: But I think you need to discuss the–I think you can come to agreement, Left and Right, on the structure of the tax code, if you are not simultaneously arguing about the progressivity of the tax code. And, the subsidy code. So, for example, we should get rid of the–and let me take a sacred cow, the mortgage interest deduction. The mortgage interest deduction is equivalent to taxing middle class, hard-working people and sending checks to people in Palo Alto who just refinanced million dollar homes. It subsidizes high-income people who pay high tax rates, and therefore can take a big deduction. It subsidizes people who have big houses. And people borrow money for big houses. If you said, ‘We’re going to do this on budget as a subsidy,’ the peasants with pitchforks would be out in the streets. And properly so. So–but how do you get rid of this? Well, let’s change the discussion. We’ll have the tax code and raise revenue; and we’ll have the subsidy code. Sure. As we’ll sit down with Bernie and fill in the rates later? We’ll sit down with all the interests and say, ‘Fine. We’re not going to rule out the mortgage interest deduction. We’re just going to do it as a subsidy. On budget.’ You want to propose that we send checks to people who want to borrow a lot of money for their house? Fine. We’ll talk about that. It’s just, it’s going to be on budget; and it’s going to be a check. Non-profits–we should get rid of that–I hate to say this, in this Institution. I might get fired. The charitable interest, the charitable deduction is a similar–we should get rid of that. And of course if we get rid of the corporate tax there would be no such thing as non-profit versus profit, so this whole business would go away.

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  11. Ben Wolf says:

    @Jen: Keynes taught us busts are fear-driven and the government’s job is to reduce fear by taking responsibility for full-employment. Private sector booms always end in a slump; public sector expansions can hold indefinitely.

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  12. Gustopher says:

    With productivity gains not being reflected in wages, isn’t this about the best we can hope for? A weak, consistent growth, with decreased labor participation — those who don’t have to work won’t if they feel they wouldn’t be paid enough.

    For instance, child care is expensive. Not working may be a better option for a lot of people if there is already one income.

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  13. al-Alameda says:

    @Ben Wolf:

    Keynes taught us busts are fear-driven and the government’s job is to reduce fear by taking responsibility for full-employment. Private sector booms always end in a slump; public sector expansions can hold indefinitely.

    Keynes was usually the smartest person in the room.

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  14. dxq says:

    With productivity gains not being reflected in wages, isn’t this about the best we can hope for? A weak, consistent growth, with decreased labor participation

    Read the report. There was increased labor participation.

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  15. Steve Verdon says:

    Economic growth is down because productivity is down which is likely due to a decline in innovation. And that decline in innovation is something that economists do not have a good handle on because economists don’t do innovation.

    When you look at the standard neoclassical approach to production it looks like this,

    Y = A*f(K,L)

    Y is output.
    f(.) is the production function, a theoretical construct really.
    K and L are capital (plant and equipment) and labor, respectively.
    A…what is A? A is often called total factor productivity and is kind of a fudge factor.

    If one were to take the above without “A” and then with a given level of starting capital and labor and put it into a standard growth model you get growth over time, but not sufficient relative to what we actually see in the data. So along comes “A” which is used to “scale up” output so that it matches reality. This is where economists have a black box on innovation.

    In other words, innovation is one of the most significant drivers of economic growth…and economists basically punted on it….well those who adhere to the neoclassical paradigm.

    And innovation is not just inventing new goods like the smartphone. It is also things like new organizational structures, new processes, new systems, etc. Innovation leading to greater productivity means you make just as much as you were making, maybe more, but with less inputs. Schumpeter called this process creative destruction. The creation of new products, processes, organizations, systems, etc. inevitably destroys the already existing structures, systems, processes, etc. This is why 2% of the population works in agriculture whereas in 1900 around 40% of the population worked in agriculture. Innovation destroyed all of those agriculture jobs. And yet we produce far more agricultural goods than were produced in 1900.

    However, I contend that politicians are not friends of innovation. Consider the following thought experiment:

    You are a politician and in your district (state) you have Big Company X and they employ thousands of workers in your district. Big Company X faces a existential threat from Small Startup Y which is NOT in your district but has come up with an innovative process that threatens Big Company X. What do you do? Do you stand by and risk Big Company X going out of business, the thousands of people losing their jobs. Or do you introduce legislation/regulations that will squash Small Startup Y. After all, they aren’t in your district. And the politician for that district probably won’t care either because hey….they are just a small startup, can’t get to interested in a small firm.

    Now consider something like Dodd-Frank which is thousands of pages which basically instruct the regulatory agencies under Dodd-Frank to go write tens of thousands of pages of new regulations, which are not done yet, and lots of people with innovative ideas might be playing a “wait and see” game.

    And innovation cannot be imposed from the top down. Neither President Hillary nor President Donald will be able to put policies in place that will result in more innovation. Innovation is often done by trial and error and government does not do trial and error, typically. What government tends to do is pick something and push it…and push it…and push it. And if it doesn’t work well it is because of lack of funding. Spending $10 billion wasn’t sufficient, we need $20 billion more. Maybe $50 billion, then it will work. Government can stick with a bad idea whereas a private firm would have abandoned long before.

    The market process is a trial and error process–i.e. a process for innovation. The profits and losses are what separates what works and what does not.

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  16. Steve Verdon says:

    @JKB:

    I listened to that podcast as well. Cochrane argues that the current debate is like a bad marriage. The Democrats and the Republicans basically arguing over higher vs. lower taxes, who pays how much, etc. And nobody sits them down and points out that you don’t have to have income taxes. You could have a consumption tax.

    For example, a consumption tax with an exemption, a wide base, and low marginal rates would likely be far better for the promoting economic growth than the horrible income tax we currently have.

    After all, according to national income accounting identities (note that word, identities, these absolutely must hold) savings equals investment (somewhat simplified, but go look at the wikipedia entry on accounting identities). So, under an income tax you penalize earning income. What is one way to earn income? Investing. So the income tax discourages investing. More investment today means more stuff tomorrow. In other words, income taxes are making it so we have less income today and tomorrow.

    Further consider this thought experiment. You have a 30% corporate tax rate, you have a 40% income tax rate. Now on an investment that pays 10% what is your after tax interest rate…the interest rate you care about when deciding to invest or not invest? A meager 4.2%. You’ll have alot less investment at 4.2% than at 10%.

    So a consumption tax would likely help with economic growth.

    But this is never, ever talked about by either side. They sit there screaming at each other, more taxes on the rich, less taxes on the rich! When both the historical record and economic theory tell us this is just a horrible idea no matter who screams the loudest and wins.

    I’ll state my belief on economic policy: We don’t have bad economic policy by accident, we have it on purpose.

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  17. Steve Verdon says:

    @michael reynolds:

    You can’t compare the 1950s to now.

    The problem is that GDP is not comparable over too long a period of time. Did they have smartphones in the 1950s? The internet? The same degree of computing power? What about air conditioning?

    Also, what about the make up of households. Alot of our data is at the household level, but are there more or less single parent households than before? What about households where the parents are immigrants? More of less of them? Does that skew things in a given direction?

    Anyone making a comparison in terms of statistical aggregate data over decades is being rather intellectually dishonest. Yet people do it all the time without stopping to consider these things.

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  18. Tyrell says:

    Another tepid, mediocre, lackluster report. Jobs – okay if you want a job driving a school bus or making popcorn at the theater.
    Looks like KMart is in trouble. Retail giants may be heading the way of the mammoths: Macys, Sears, Target. I wonder what will happen to Craftsman tools division.

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  19. dxq says:

    kmart and sears are largely owned by a Randroid idiot named Eddie Lampert. He bought them in 2005 with the brilliant idea of making all their divisions compete against each other for operating funding, because competition==free market==success. This genius management has taken the stock from a high of around 150 around the time he bought it, to $11/share.

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  20. Steve Verdon says:

    @Jen:

    Among economists there was this belief, prior to 2008, that the business cycle if not vanquished had been brought largely to heel. It was called the Great Moderation. See here.

    This belief was shattered in 2007/2008 with the Financial Crisis and the Great Recession. And there was lots of stuff going on behind the scenes that lead up to that point. Part of it was the “owner ship society” which really got rolling under Bill Clinton. The idea was to promote home ownership as a path to economic wealth. So for example, the push for lower down payments for houses. This actually leads to more risk than less. Here is a thought experiment:

    Suppose you put $20,000 down to buy a $100,000 house. Now if the price goes down to $90,000 you still have equity in your house, you won’t sell or walk away. But if you only put down say $5,000 then when the price drops to $90,000 you are now underwater. You are paying off a $100,000 loan on a house worth only $90,000 and you have no equity…no skin in the game. Now given that in most states home mortgage loans are non-recourse loans, you can walk away and move into an apartment and all that would happen is your credit score would take a hit. They could not come after your wages, they could not come after you car, etc. They might send you mail asking to be paid, but you can just chuck that in the trash. They will take the house, but hey you didn’t want it at that point anyways so who cares.

    So the move to lower down payments to get more people into homes was a bad move. Another bad move was removing the capital gains tax for housing. This was likely one of the triggers to what would become the housing bubble. That and keeping interest rates very low. Well below what is known as the Taylor Rule.

    Also, there was likely tremendous hubris on the part of financial firms and also at Fannie and Freddie. That via their models they could manage the risk. And there was likely even some deliberate bad modeling see this harsh review of Nate Silver’s book by Cathy O’Neil, here is a snippet,

    Silver confuses cause and effect. We didn’t have a financial crisis because of a bad model or a few bad models. We had bad models because of a corrupt and criminally fraudulent financial system.

    That’s an important distinction, because we could fix a few bad models with a few good mathematicians, but we can’t fix the entire system so easily. There’s no math band-aid that will cure these boo-boos.

    I can’t emphasize this too strongly: this is not just wrong, it’s maliciously wrong. If people believe in the math band-aid, then we won’t fix the problems in the system that so desperately need fixing.

    We also had a lazy regulatory process, most likely fueled by regulatory capture. Take a guess where little Timmy Geithner is working these days. Yep, a private equity firm Warburg Pincus.

    There was also a problem with previous bailouts. Continental Illinois and Long Term Capital Management. This could have also lead to excessive risk taking if creditors felt there was a good chance they’d get bailed out as were those previous firms.

    As for the S&L crisis…ahhh yes, the last rattling death gasp of unit banking. One of the key government policies that lead to the huge number of bank failures in the Great Depression.

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  21. Andrew says:

    @Tyrell:

    Craftsman was sold to the Chinese when Eddie Lampert took over Sears Holdings Inc. years ago.
    No more lifetime guarantees on anything. Except the non-power hand tools. Kenmore was also sold off to other companies, and is built mainly by LG, Frigidaire, and Whirlpool. And made very badly. Cost cutting measure to give more money to Lampert and others. Mowers and other lawn care items are also made very cheaply.

    Sears is dead because business practices like those of the hedge fund owner, just wanted a name and the property that the brand name had. Closing stores and selling the properties. Such as the Sears store in King of Prussia, PA. One of the largest malls in the country. It was renovated, reopened and then sold to Dick’s Sporting goods for a profit. After already dividing the store space in half, and selling that part to Dick’s at an earlier date.

    All the while while cutting pay and commissions for the workers. While Lampert and whomever else was funneling the money to the top.

    But, if we want to blame the government for allowing businesses such as Lampert’s to do this, then we need to reel in business practices.
    Complaining about these problems is much easier and also so is pointing fingers at the governments for LETTING businesses do this.

    (Oh, and Lambert was selling off properties so fast that share holders filed an injunction against him last year. And recent news shows he gave another couple hundred billion for it to remain afloat. None of which he will have to worry about losing. (While real estate prices fluctuate.))

    Retail is going the way of the dodo, anyway. It should not be saved. There is almost no need. Showrooms, and internet ordering are what is ahead. No more store inventory.
    If we are all so against McJobs. Retail is the same thing. Shitty pay, shitty owners who ONLY care about profits. (Waltons come to mind.)
    There are exceptions to the rule. Companies that pay workers 15$ a month and yet, O M G! the businesses are still making a profit!

    Edit: what @dxq: said.

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  22. Steve Verdon says:

    @dxq:

    Yes he is an idiot. One of the things the New Institutionalist school of thought has shown us that sometimes it is (paradoxically) efficient to be less efficient. Firms form to avoid transaction costs associated with markets. Imposing those transactions costs on firms is probably not a good idea.

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  23. dxq says:

    BTW, there is no real craftsman tool division per se, that’s a name stamped onto products made by subcontractors like Apex, Stanley, etc. Same as Husky and Kobalt.

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  24. dxq says:

    And recent news shows he gave another couple hundred billion for it to remain afloat.

    uh….are you sure about that? ;-P

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  25. C. Clavin says:

    @JKB:

    What we need is a change, not a continuation of the recent past. We need to push back the economic growth strangling regulations of the EPA, Obamacare, etc.

    We need change alright…but certainly not the right-wing failed economics you prescribe.
    Every recession has seen a growth in Government to help lead the way out. We have been, on net, shrinking Government.
    http://www.businessinsider.com/public-sector-jobs-under-various-presidents-2014-10
    Look at those Republican Presidents grow the government!!!
    Public Sector employees are a smaller percentage of total workers than at anytime since 1960.
    We have 200,000 fewer teachers than before the Bush Contraction, and 1,000,000 more students. So on net how many teachers are we short? What would the economy look like with that many more workers? Enriching those who are already wealthy does not increase demand. A market economy requires demand. The mythical job creators you fantasize about won’t create jobs because there is no demand. The middle class drives demand. Teachers, firemen, cops.
    You just cannot keep 1/3rd of the economy (federal state and local governments) stagnant and expect any kind of real substantial growth.
    Republicans, like you, have gotten the exact economy you want…so what the fvck are you complaining about?

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  26. dxq says:

    We need to push back the economic growth strangling regulations of the EPA,

    you need to get a tiny bit of education and realize some greedy liars have trained you to say stupid shit for their, and not your, economic benefit.

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  27. MarkedMan says:

    @JKB: our population is significantly older than at that time. Labor force participation should be down. And – general question for anyone – how is labor force participation adjusted for the huge number of women that entered the job market post ’70s?

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  28. Andrew says:

    @dxq:

    Semantics, it seems.

    http://fortune.com/2016/08/25/sears-loan-lampert/

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  29. Ben Wolf says:

    After all, according to national income accounting identities (note that word, identities, these absolutely must hold) savings equals investment (somewhat simplified, but go look at the wikipedia entry on accounting identities).

    Saving is enabled by investment, not investment by saving. We have $19 trillion in national savings currently; if that isn’t enough we’ll need a good explanation why.

    So, under an income tax you penalize earning income.

    1) Income taxes are at historically low levels and have been falling over thirty years. During that period investment as a share of GDP has continuously fallen as well. Note that no economist left in academia defends this supply-side argument any more other than a few austrian-school holdouts.

    What is one way to earn income? Investing.

    Investment income is by definition unearned.

    So the income tax discourages investing.

    the income of the wealthy is almost 80% unearned capital gains paying a much lower tax rate than income subject to income taxes.

    You have a 30% corporate tax rate, you have a 40% income tax rate.

    No one in this country pays a 30% corporate tax rate or a 40% income tax rate. The top average effective tax rate is about 22%. For the wealthiest the effective rate is 17%

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  30. Steve Verdon says:

    @C. Clavin:

    Every recession has seen a growth in Government to help lead the way out. We have been, on net, shrinking Government.

    This logic is faulty in that the government’s ability depends on the full faith and credit of the American taxpayer. After a certain point government spending will cause a problem there….look at the PIIGS.

    At best what you could argue for is an expansion of government during a recession but then a reduction during the following expansion….which is the point you are apparently refuting.

    And again, the timing of this is not all that awesome. Have you looked at the lag between when NBER declares a recession and when that recession started?

    In other words your public sector jobs data could very well be spurious.

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  31. Steve Verdon says:

    @C. Clavin:

    Oh and public sector jobs is kind of a poor measure of regulation.

    Also, wonder what if any impact this had on the economy during Clinton’s tenure,

    https://en.wikipedia.org/wiki/National_Partnership_for_Reinventing_Government#Impact_of_the_National_Performance_Review

    According to military strategist Isaiah Wilson III, there were two phases to the National Performance Review, the second of which was commenced on January 3, 1995, by Vice President Al Gore.[13] The aim of Phase 2 was to “examine the basic mission of government…to find and eliminate things that don’t need to be done by the government.”

    And also this,

    http://www.imf.org/external/pubs/ft/fandd/2002/12/gupta.htm

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  32. Steve Verdon says:

    @Ben Wolf:

    Saving is enabled by investment, not investment by saving. We have $19 trillion in national savings currently; if that isn’t enough we’ll need a good explanation why.

    It is an identity, arguing about causation is rather pointless.

    1) Income taxes are at historically low levels and have been falling over thirty years. During that period investment as a share of GDP has continuously fallen as well. Note that no economist left in academia defends this supply-side argument any more other than a few austrian-school holdouts.

    Good job missing the point and staying stuck in the same old Bravo Sierra argument. Also, if investment is falling what were you saying about savings? This is not a supply side argument either and trying to equate Austrian economics with supply-side economics just highlights a stunning level of ignorance.

    Investment income is by definition unearned.

    Wrong, when you invest you are taking a risk, thus you are earning it by learning about and understanding that risk.

    the income of the wealthy is almost 80% unearned capital gains paying a much lower tax rate than income subject to income taxes.

    You really are stuck in that mode aren’t you. Maybe a psychiatrist or something. This is, if anything, all the more reason to have a consumption tax.

    No one in this country pays a 30% corporate tax rate or a 40% income tax rate. The top average effective tax rate is about 22%. For the wealthiest the effective rate is 17%

    And after the psychiatrist maybe a few classes in reading comprehension. I clearly wrote that it was a thought experiment. It was an illustrative example.

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  33. Steve Verdon says:

    @C. Clavin:

    So public service employment is down as a percentage of overall employment….so? What does that tell us about the level of regulation which was JKG’s point? Nothing.

    As I noted, currently about 2% of the U.S. workforce works in agriculture. In 1900 it was around 40%. How come there was no wide spread starvation?

    We see manufacturing employment trending down, not just in the U.S., but world wide and yet….more and more stuff is being made.

    The point is declining employment in public sector employees tells us absolutely nothing about the level of regulation.

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  34. stonetools says:

    For Donald Trump and the Republicans, the fact that these numbers are good but not great is likely to be cited as an argument in favor of the proposition that we have been experiencing one of the weakest economic recoveries since the end of World War II and that only a change in tax and fiscal policy will reignite the economic engine and bring us closer to the kind of numbers that we really need to fully put the Great Recession behind us.

    Trump and the Republicans , like the libertarians, are pushing the same policies-giant tax cuts for the rich-that didn’t work in 2001 and 2003.Of course, it didn’t work then and it ain’t gonna work now( sorry, Doug and Steve Verdon- big tax cuts for the rich aren’t the magic pixie dust you think they are).
    What would work is the same kind of fiscal stimulus that kick started this recovery (and yes, Doug , it did-your attempt to rewrite history notwithstanding). Hillary wants to begin her term with the same kind of big infrastructure program Obama did-and since the interest rates are at zero-this is precisely the time to prime the pump with a big infrastructure program. Let’s hope she gets to do it.

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  35. dxq says:

    @Andrew: check the zeros.

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  36. JKB says:

    @Steve Verdon: And innovation cannot be imposed from the top down. Neither President Hillary nor President Donald will be able to put policies in place that will result in more innovation. Innovation is often done by trial and error and government does not do trial and error, typically. What government tends to do is pick something and push it…and push it…and push it.

    Government also does not tolerate, much less promote, deviating from the ideas and customs of the majority well. And yet, all progress is the result of individuals deviating from the “safe”, the consensus, the majority.

    All mankind’s progress has been achieved as a result of the initiative of a small minority that began to deviate from the ideas and customs of the majority until their example finally moved the others to accept the innovation themselves. To give the majority the right to dictate to the minority what it is to think, to read, and to do is to put a stop to progress once and for all.

    Mises, Ludwig von (1927). Liberalism (p. 54).

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  37. Matt says:

    @Tyrell: Craftsman tools have been on a serious decline anyway. The warranty only covers the most basic of hand tools. The quality of the actual tools has been cut substantially since the good ol days. Anymore I end up just grabbing stuff from harbor freight for a fraction of the cost. If you’re a serious tool user you wouldn’t be looking at craftsman anyway..

    @dxq: Well that’s true for most items you buy. There are only so many manufacturing facilities.

    It’s only a bad thing when the “brand name” such as Craftsman asks for inferior products to be produced aka cheaper.

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  38. Ben Wolf says:

    @Steve Verdon:

    It is an identity, arguing about causation is rather pointless.

    That’s right, Steve. What happens in the real world is totally pointless.

    Good job missing the point and staying stuck in the same old Bravo Sierra argument.

    Doesn’t refute the statement, and your appeal to profanity is representative of your intellectual maturity.

    Also, if investment is falling what were you saying about savings?

    I stated the quantity of the current stock. Falling investment is unconnected to stocks.

    This is not a supply side argument either and trying to equate Austrian economics with supply-side economics just highlights a stunning level of ignorance.

    Yes, it is a supply-side argument. Taxes are and always have been the heart of supply-side theory since it became the grand experiment in the early 1980s. Furthermore the Austrian intellectuals themselves did not necessarily think in supply-side terms, but their crude Austrian descendents (like yourself) have only a superficial understand of the theory and consistently confuse the two.

    Wrong, when you invest you are taking a risk, thus you are earning it by learning about and understanding that risk.

    This is what is meant by the term “vulgarized” economics. Nowhere in the field are “learning” and “understanding” classified as means of earning an income. Income is earned by being paid to perform work, meaning paid employment. Of course, if we agree to totally redefine definitions to suit you at this particular moment, then I’m sure you’d be correct.

    You really are stuck in that mode aren’t you. Maybe a psychiatrist or something. This is, if anything, all the more reason to have a consumption tax.

    You’re sweet.

    And after the psychiatrist maybe a few classes in reading comprehension. I clearly wrote that it was a thought experiment. It was an illustrative example.

    Ah, yes: the old McCardle-esque “Yeah, I didn’t write it that way but what I really meant was. . .” defense.

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  39. Ben Wolf says:

    @JKB:

    All mankind’s progress has been achieved as a result of the initiative of a small minority that began to deviate from the ideas and customs of the majority until their example finally moved the others to accept the innovation themselves. To give the majority the right to dictate to the minority what it is to think, to read, and to do is to put a stop to progress once and for all.

    Mises was a fool. Human progress is the result of societies making investments for benefit of the whole and future generations. This notion of a handful of brave individuals changing the world against all odds is ahistorical in the extreme.

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  40. Ben Wolf says:

    After all, according to national income accounting identities (note that word, identities, these absolutely must hold) savings equals investment (somewhat simplified, but go look at the wikipedia entry on accounting identities). So, under an income tax you penalize earning income. What is one way to earn income? Investing. So the income tax discourages investing. More investment today means more stuff tomorrow. In other words, income taxes are making it so we have less income today and tomorrow.

    This is a causal argument. Monsieur Verdon is explicitly assuming that reduced income taxes will increase savings and thereby increase investment. But the causality he later argues is immaterial has been debated by economists for centuries. Prior to Keynes, both Wicksell and Schumpeter noticed that savings flows causally from investment because saving is a residual. It happens after all is said and done, not before, and therefore investment cannot be altered by changes to the income tax.

    From Chapter 6 of The General Theory:

    Income is created by the value in excess of user cost which the producer obtains for the output he has sold; but the whole of this output must obviously have been sold either to a consumer or to another entrepreneur; and each entrepreneur’s current investment is equal to the excess of the equipment which he has purchased from other entrepreneurs over his own user cost. Hence, in the aggregate the excess of income over consumption, which we call saving, cannot differ from the addition to capital equipment which we call investment. And similarly with net saving and net investment. Saving, in fact, is a mere residual. The decisions to consume and the decisions to invest between them determine incomes. Assuming that the decisions to invest become effective, they must in doing so either curtail consumption or expand income. Thus the act of investment in itself cannot help causing the residual or margin, which we call saving, to increase by a corresponding amount.

    Put simply, this means investment is funded by credit, not savings.

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  41. Matt says:

    @JKB:
    @Ben Wolf: Am I reading this wrong or is JKB now arguing in support of gay marriage, transgender rights and such?? You know the

    small minority that began to deviate from the ideas and customs of the majority until their example finally moved the others to accept the innovation themselves.

    So you’re done arguing against gay rights abortion transgender rights and all that now?

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  42. Ben Wolf says:

    @Matt:Shifting arguments so rapidly he ends up contradicting his original argument is JKB’s trademark. I’ve tried to caution him about it but, well, you can’t make ’em drink.

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  43. bill says:

    it’s sad when mediocrity is accepted as being good news.

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