It will only get worse from here.
Jobs growth was mediocre in August and slower than originally advertised in June and July. And it will be even lousier in September.
Before you start sending me hate mail, let me say that pessimistic predictions are no fun for me either. But since economic policy that affects all of us will be made based on little more than wishful thinking, I feel it’s my job — no, make that my obligation — to set things straight.
Last Friday, the Labor Department announced that only 169,000 new jobs were created in August, which was below the estimates by the “experts”and not nearly enough to even absorb people coming into the workplace for the first time.
Worse, the government said it had overcounted June and July’s new jobs by 74,000.
Without getting into too many details, that mistake occurred because the government is guessing high on the number of jobs being created by newly formed companies that may not actually exist. These phantom jobs are the result of something called the birth/death model.
As I said, June and July’s numbers were revised lower, and in a month we’ll probably see that 169,000 figure for August was also overly optimistic.
Worse, the Labor Department’s computers don’t add phantom new jobs to the September jobs tally. So this month’s numbers, which come out on Oct. 4, should be awful even before revisions.
It would be wrong of me to give you bad news without proposing a solution. So let me suggest this again.
The economy will be in a funk for the rest of our lives unless something is done to stimulate it. War has always been a good choice, but a limited strike on Syria just isn’t going to do it. (It may, however, distract Americans from what they should be focusing on — the economy.)
Besides, we can’t afford another war right now and might never be able to pay for a good fight again if the US continues its current road to fiscal ruin.
So, instead, Congress needs to find another economic stimulus. How about mine? Change the rules on retirement plans so — at the very least — people can use IRA, 401(k) money and the like to invest in real estate.
This would be stimulus that would come with very few side effects. And it will add revenue to the US Treasury at a time when we desperately need it, since withdrawals will be taxed to some extent.
Someday Washington will wake up to this brilliant idea. In the meantime, I’ll just keep harping on it.
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Here’s the problem with blogs that reporters put out on the fly without giving the facts much thought.
On Friday, the Washington Post’s Jim Tankersley wrote that a 22,000 drop in jobs in the entertainment field was caused by an HIV-related shutdown of the porn industry.
“The adult film industry appears to have made a disappointing August jobs report look even worse,” he wrote about an hour after the Labor Department reporter.
Here’s the problem, which the Washington Post would have caught if it had thought about this for more than a millisecond before pressing the send button.
The porn industry did shut down for a time in August after an “actress” named Cameron Bay reported she had tested HIV-positive. The rules say that anyone who worked with her had to be tested before filming could resume.
But that was on Aug. 21.
The Labor Department conducted its jobs survey the week before Bay showed her test results and shut down the industry.
So, just on the basis of dates alone, the porn industry’s misfortune — which, of course, saddens us all — couldn’t have had an impact on the overall jobs report.
Even if Bay had come forward earlier, those porn-industry layoffs wouldn’t have counted in the August report because the jobs aren’t counted as having been lost if the employees received even one check for the month.
I’m not familiar with how porn actors are compensated. But I assume they would have been paid before mid-August even if their industry was shuttered for a time.
What caused the drop in entertainment and music jobs in August? Nobody knows. But John Mullins, the economist at the Labor Department who follows Hollywood, said, “If you look over a long period of time, employment in the motion picture and sound industry is essentially unchanged.”
Everyone likes to poke around porn, as I’m proving now. But as they say, even if you are the Washington Post you shouldn’t stick your nose into things you don’t understand.
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Standard & Poor’s last week got into a catfight with the Justice Department.
S&P said in a court filing that it was sued by the government early in 2013 as retaliation for essentially doing its job by lowering the credit rating on US government debt. I expressed that same suspicion in a column last February.
Here’s what I would do if I were S&P: I’d hold the Treasury hostage. The Justice Department would have a week to drop the suit or the US credit rating would go down another notch.
“Call the cops, and you’ll end up a Junk Bond Nation,” I’d threaten.
Sure, you’d find my body floating in the Potomac. But it would be a very dramatic way to go.