If you aren’t confused yet about what the economy is doing, you haven’t been paying close enough attention to recent news reports.
Take, for example, last Friday’s employment report in which the Labor Department announced the nation’s unemployment rate in December was “unchanged at 7.8 percent” from November’s level. That’s easy enough to understand — until you look back at the November report when “the unemployment rate edged down to 7.7 percent.”
How, you might be asking, can December be unchanged at 7.8 percent when November was 7.7 percent? Didn’t the jobless rate go up 0.1 percent from one month to the next?
Well, here’s the way the Labor Department explained it: “Seasonally adjusted household survey data have been revised using updated seasonal adjustment factors, a procedure done at the end of each calendar year.”
Got it? Well, of course you don’t. And if you read any more, you’ll probably get one of those piercing headaches that come from absorbing something that’s too confusing too fast.
So let me explain what happened. The Labor Department (last week) revised its November rate up to 7.8 percent, from 7.7 percent, and therefore, the 7.8 percent rate in December looked like it was unchanged instead of increased.
But that’s not the only puzzle.
The government also announced that 155,000 new jobs appeared in the economy during the last month of 2012. The editors of the New York Times thought that warranted the premier space on Saturday’s front page and the headline “Job Growth Is Still Steady Despite Worry.” The Wall Street Journal saw things a little differently: “Tepid Job Growth Fuels Worry.” (Like The Post, the Wall Street Journal is owned by News Corp.)
So, was December’s job growth good or bad? Steady or tepid?
Let’s just say that Friday’s report wasn’t good enough or bad enough to cause me to do an extra column for Saturday’s Post. That kind of growth — seasonally adjusted — was so-so.
The bigger issue is whether the economy should be doing just so-so after all the desperate actions Washington and the Federal Reserve have taken to make it grow.
I’ll let you decide from the unadjusted figures for December. This will confuse you some more.
In November, the country had 135.065 million jobs, says the Labor Department. Despite Christmas hiring, that figure declined to 134.822 million in December. So while the seasonally adjusted figure used in the headlines showed growth of 155,000 jobs, there was actually a loss of 243,000 jobs in the raw, unadjusted data.
But there was also a contraction of 207,000 jobs from November to December 2011. Looking back at the unadjusted data, a decline from November to December is an annual event. This year’s drop was bigger than 2011’s but not as bad as it was in the previous few years.
So should we be happy like the Times or sad like the Journal?
Let me confound you some more.
The 134.822 million jobs I just mentioned represent — according to the Labor Department — an improvement of 1.857 million jobs compared with December 2011.
Good news, right?
Well, maybe not. For one thing, the quality of those new jobs is very suspect, as everyone with half a brain and any sense of honesty knows. A large percentage of these new jobs are nothing more than part-time work.
And besides, 535,000 of those 1.857 million new jobs are just a guess by the Labor Department — something it calls the birth/death model that tries to estimate the number of potential newly forming companies that aren’t being counted. The department will revise that 1.857million figure next month.
I hope I’m not making anything too clear for you. That is not my intention. That would be like telling you the secret to a magic trick or tipping off the ending of a movie. I don’t want to take any of the intrigue out of your future reading of economic reports.
And if you think the situation is confusing now, just wait until we get into the debt ceiling negotiations. If you thought the recent fiscal cliff battle was exciting, you are going to love the debt-ceiling fight. And, as I explained in a column last week, the word in Washington is now that the government could run out of money sooner than people originally thought.
The battle lines are drawn. The Democrats want to raise taxes some more. This time the Republicans will insist — they insist — on spending cuts.
The only thing that’s clear is that this is very confusing.
As I’ve proposed before, the solution lies in getting the economy to grow faster. And budget cuts and tax increases both, at least initially, slow down an economy. My idea still is the best: Let Americans stimulate the economy by allowing people to invest money that’s now set aside for their retirement in real estate.
I have another idea.
Last week I asked our readers to hum Irving Berlin’s “God Bless America” while reading a particularly glum column of mine. I’d like to change that suggestion a little bit. If the economy in this country keeps going like it is, we should change the title of Berlin’s song to “God Help America.”