Market Talk

It only took one month of job growth to change public perception about the labor markets and overall economy.

First, Harvard economist Jeff Frankel earlier this week proudly announced the recession’s over. Now, University of Oregon economics professor Mark Thoma reluctantly says he’s giving up on pushing policymakers to pass more aggressive fiscal policy to help labor markets. From Thoma:

I’ve been pushing hard for more help for labor markets for quite awhile — at times I’ve thought it was a bit repetitive, but necessary — but it’s probably time for me to give up and accept that we are going to have a slower recovery than we could have had with more aggressive fiscal policy. Unless there is a dramatic reversal of recent indications that we are at the beginning of a recovery, Congress is not going to provide anything more than token help from here forward.

He believes more stimulus funds devoted to creating jobs could help the economy return to full employment sooner rather than later. But with the economy already growing jobs, it looks like Congress may have missed its chance at passing additional fiscal policy.

“I’ll still complain – there’s no reason to let policymakers off the hook – but it’s time to give up the hope that anything more will be done to help the unemployed find jobs,” he says.

UC Berkeley economist Brad DeLong follows up on Thoma’s post and notes his frustration with Congress’ inability to pass a jobs-creation bill. From DeLong:

He is, of course, right. There is right now a stunning disconnect between an Obama administration that says that unemployment is and will for a long time remain unacceptably high and an Obama administration that is not pushing for policies to boost jobs on the scale needed in a continent-spanning economy.

It’s unfortunate that all of this comes after just one month of job growth. As Paul pointed out yesterday, it’s hard to get too excited about 162,000 additional jobs, especially considering its a drop in a bucket compared to the overall work force of 134 million.

With the unemployment rate perched at 9.7%, the broader underemployment rate at 16.9% and the long-term unemployed making up 44% of all the unemployed, this jobs recovery is destined to be sluggish, at best. And without any sort of jobs bills in the offing, expect years to pass before we get anywhere close to full employment.

Oy.

- Record low new-home sales don’t deter surging stocks. “New home sales are far more important for the economy than existing home sales, and new home sales will remain under pressure until the overhang of excess housing inventory declines much further,” Calculated Risk says. “Obviously this is another extremely weak report.” Still, Dow rallies 91 points.

- Supplementary Financing Program, the Treasury’s program for assisting with the Fed’s balance sheet, is making a sudden and dramatic comeback, James Hamilton writes.

- “The Volcker rule is following the tried and true path of all Obama ‘reforms,’ meaning an idea announced with great fanfare is being whittled back to meaninglessness,” Yves Smith says.

- Martin Wolf offers quite the depressing economic outlook, predicting a sovereign debt crisis on the horizon. “This, in turn, would surely result in defaults, probably via inflation,” he says. “In essence, stretched balance sheets threaten mass private sector bankruptcy and a depression, or sovereign bankruptcy and inflation, or some combination of the two.”

- Princeton economist Paul Krugman adds his two cents: “”What we really need now is… higher spending and lower trade surpluses in surplus nations, China especially but also Germany,” he says. And “some big driver of investment, such as green technology. Absent those things, it’s hard to see how we get a durable recovery.”

- Drop in bank lending truly is “epic.”

- $15 billion jobs-creation bill seems to have some limitations, Time’s Curious Capitalist blogger notes.

- Washington Post’s sales slump improves, sort of. “As always: remember what the economy was like a year ago when you think about these year-over-year comparisons,” Peter Kafka says.

- Consumer confidence data falling ten points has only happened 21 times since Conference Board began its monthly survey in 1977. “Almost every such ten-point drop can be attributed to an unusual market-moving event,” Jim Bianco says. “This is not meant to imply a cause and effect relationship, but is certainly something worth watching over the following months.”

- Critics rip new short-sale rules. “This puts a government thumb on the scale of stock prices,” says legendary short seller Jim Chanos. “Efforts to prop up stock prices where the fundamentals will not sustain them will inevitably fail.”