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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The U.S. economy added 146,000 jobs in November, up a bit from 138,000 in October. Unemployment fell to 7.7%, largely because 542,000 additional adults chose not to look for work.

Hurricane Sandy and business fears regarding the so-called fiscal cliff contributed to the slow pace of jobs creation; however, the overall picture is worse than these headline figures reveal and will remain difficult until the policy fundamentals change.

In the weakest recovery since the Great Depression, most of the reduction in unemployment from its 10.0% peak in October 2009 has been accomplished through a significant drop in the percentage of adults working or looking for work. Were adult labor-force participation the same today, the unemployment rate would be 9.7%.

Adding more than eight million part-time workers who can’t find full-time work, the unemployment rate becomes 14.4%. That measure rose above 14% in the wake of the financial crisis and remains stuck there.

Convincing millions of Americans they don’t want a job or compelling desperate workers to settle for part time work has been the Obama administration’s most effective jobs program.

Economic growth remains weak, as most of the pickup to 2.7% in the third quarter was attributable to inventory build and a temporary surge in exports. Consumer spending and business investment weakened, substantially, and goods piled up warehouses–either in the fourth quarter or early next year, inventories will be adjusted and growth will slow. Exports will slow as Europe’s recession continues. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The economy is expected to register 3% growth or better for the fourth quarter, thanks to stronger consumer spending; however, the growth in consumption has been outpacing income, debt is piling up again, and some pullback in consumer activity is likely in the first half of 2012.

Unlike the boom years of the last decade, households will not be able to refinance credit card debt and auto loans by further mortgaging homes, and consumers simply must slow down during the first half of 2012.

The economy will register growth at or below 2% in the first half of 2012, perhaps picking up in the second half of the year to 2.2% to 2.5%. Continue reading…

These are the views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:

Recent indicators continue to suggest a potentially decent spring up in economic growth in the fourth quarter of 2011, perhaps in the vicinity of 3% or better. We anticipate consumer spending to advance at a respectable clip of around 3%, business fixed investment to rise at a decent, though slower, pace of roughly 10% and residential investment to inch up slightly more.

While we also factor-in positive, albeit somewhat conservative, contributions to growth from inventory rebuilding and net exports, the subtraction from government (federal plus state and local) might prospectively offset a goodly portion of the foregoing additions.

The message from our proprietary High-Frequency Activity Tracker, which takes mostly weekly and daily indicators through mid-December or so into account, also seems consistent with economic growth greater than 3% in 4Q11. Therefore, we are revising up our 4Q11 real gross domestic product growth forecast to 3.3% from sub 3% previously. Overall, in light of the final read on 3Q11 growth of 1.8%, we expect full-year 2011 to average 1.8%. Continue reading…

These are the views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:

The net gain of 120,000 in November nonfarm payrolls last Friday was close to expectations, though the prior two months were revised up by 72,000. The private sector added 140,000 jobs, slightly better than the prior month, but the gains were narrower. Similarly, the rise in manufacturing employment over the past two months failed to broaden.

While the trend in temporary payrolls appears to be holding, the average workweek for production and nonsupervisory employees fell. Collectively, the forward-looking indicators of payroll employment suggest that the modest near-term momentum for job growth is not poised to fizzle out. Broadly, the pace of hours worked also seems consistent with an economy that is growing between 2.5% and 3.0% in the fourth quarter.

Nevertheless, the eye-catching portion of the November labor market report came from the household survey–a separate labor market survey of individuals used to calculate the unemployment rate. Specifically, the 0.4%-point dive in the unemployment rate to 8.6% in November caught the headlines (the down move was more than 2.5 times larger than the average monthly variability over the past five years). Even though the 0.1%-point uptick in the employment-to-population ratio to 58.5% in November leans positively with the sharp unemployment move, the down tick in the labor force participation rate [(employed plus unemployed)/civilian non-institutional population)] to 64.0% implies a more negative connotation. But additional details reveal that both lesser inflows into, and greater outflows from, the pool of unemployed contributed almost equally to the apparent improvement in unemployment. Mainly, the data on gross flows indicate that more unemployed exited the labor force and less job seekers from outside the labor force flowed into unemployed.

Essentially, our calculations suggest that without the 0.2%-point decline in labor participation to 64.0%, all else equal, the November unemployment rate would have only fallen marginally to 8.9% from 9.0% in the prior month. Indeed, when the participation rate is on a decline, the required amount of job growth needed to reduce the unemployment rate is also lower. Hence, the behavior of the participation rate, especially in the current environment of sub-average labor force participation, could easily complicate the interpretation, and increase the forecast variability, of the unemployment rate going Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

America’s finances are headed for a train wreck.

By Nov. 23, the Supercommittee in Congress must come up with a package to cut the federal deficit by $1.2 trillion over ten years or draconian cuts in defense and discretionary spending follow.

Something still may be cobbled together but the federal deficit would remain too large, and could easily fly out of control. Genuine progress is not possible, because the principals won’t even accept the facts.

Democrats harp that Bush tax cuts, wars and the prescription-drug plan for seniors caused the deficit to swell to $1.3 trillion in 2011. Yet, with all those at play, the deficit was only $161 billion in 2007.

Spending is up $847 billion, and additional temporary tax cuts–such as the payroll tax holiday–account for the rest of the increased deficit. Only $62 billion was necessary to accommodate inflation, and social security, health care and other entitlements account for 78% of the rest.

Most economists agree GDP growth is likely to be in the range of 2% over the next several years, and such slow growth and high unemployment will accelerate spending on entitlements, while retarding the growth of tax revenues. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Barack Obama faces three daunting challenges–jobs, deficits and re-election. His actions reveal he places a second term ahead of fixing the economy and federal finances.

If Obama runs on the economy, he loses. Too many voters are unemployed, underemployed, standing discouraged on the sidelines, or watching their paychecks dwindle for Obama to win. And most voters recognize, had President Obama’s economic policies permitted the economy to grow as it should, deficits in Washington and state capitals would be much more manageable.

If he runs on handling the financial crisis, he loses. He inherited a mess, but trillions in bailouts for Wall Street, Chrysler and GM rewarded the best-paid white collar and blue collar workers for lousy management and worse, while the other 98% watch their paychecks shrink in value. Now charges of fraud in his solar energy program and revelations about White House management dysfunction cast a president lacking judgment and leadership qualities.

On both jobs and the deficit, the president seeks to present a sharp contrast with his eventual GOP rival premised on “fairness”–presenting himself as guardian of the working family, and his prospective Republican opponents as champions of privilege.

An additional $447 million in stimulus and tax cuts, over two years, if spent smartly, could create about 2.5 million jobs for that period. However, he proposes paying for teachers by cutting aid to states for health-care workers and that won’t create many jobs. Extending the payroll tax holiday for the middle class by taxing those who earn over $200,000 only adds marginally to new spending and few jobs. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

As President Obama campaigns for more government spending–a.k.a. his jobs plan–new unemployment claims provide fresh evidence the economy is stalling and in danger of slipping into a second recession. Big government could easily take unemployment above 15% and create a hole too big to ascend.

New jobless claims for the Sept. 10 week rose to 428,000, up from a revised 417,000 the previous week. Having slipped below 400,000 last spring, these are trending upward. Generally, weekly jobless claims below 350,000 are associated with a healthy economy and above 450,000 with recession. Recent data indicates the economy is at the precipice of a second Great Recession–perhaps worse.

Recent data on car sales and broader retail sales, personal consumption and consumer attitudes indicates Americans are scared. Other than high-income folks in the luxury category, a general lack of confidence in the president to adequately get the U.S. economy going is becoming a self-fulfilling prophecy of economic decline.

Bad leadership equals bad outcomes. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The economy added no jobs in July. Unemployment stayed constant at 9.1% only because so many adults are too discouraged to look for work.

Retail, manufacturing, information services, and construction all lost jobs indicating the fragile recovery is faltering. Finance posted small gains.

Government employment fell by 17,000, and private sector jobs added 17,000.

The economy is growing so slowly that employment should have fallen, but worker productivity is dropping precipitously–an ominous sign of future nominal as well as real wage declines.

Government subsidized private employment in social services and health care gained 36,000 jobs; otherwise, the private sector contracted.

Jobs creation will remain inadequate to keep unemployment from falling in the months ahead, especially considering the mass layoffs recently announced in banking and pharmaceuticals.

The unemployment rate stayed constant at 9.1%, despite the fact that at least 130,000 jobs are needed each month to keep up with growth in the adult population. Many adults quit looking for work and were not counted among the unemployed.

Factoring in those discouraged adults and others working part time for lack of full time opportunities, the unemployment rate is about 16%. Add in college graduates in low-skill positions, like counterwork at Starbucks, and the unemployment rate is closer to 20%.

The economy must add 13.7 million jobs over the next three years–381,000 each month–to bring unemployment down to 6%. Considering continuing layoffs at state and local governments and federal spending cuts, private-sector jobs must increase at least 405,000 a month to accomplish that goal. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

Analysts expect the Commerce Department to report on Wednesday the deficit on international trade in goods and services was $47.7 billion in March, up from $45.8 billion in February.

This trade deficit subtracts from demand for U.S.-made goods and services, just as a large federal budget deficit adds to it. Consequently, a rising deficit slows economic recovery and jobs creation and limits how much Congress and the President may cut the deficit without sinking the economic recovery.

Rising oil prices and imports from China are driving the trade deficit up, and these are major barriers to creating enough jobs to pull unemployment down to acceptable levels over the next several years.

Jobs Creation

The economy added 244,000 jobs in April; however, 360,000 jobs must be added per month to bring unemployment down to 6% over the next 36 months. With federal and state governments trimming civil servants, private-sector jobs growth must exceed 360,000 per month to accomplish this goal.

Americans have returned to the malls and new car showrooms but too many dollars go abroad to purchase Middle East oil and Chinese consumer goods that do not return to buy U.S. exports. This leaves too many Americans jobless and wages stagnant, and state and municipal governments with chronic budget woes.

Simply, policies regarding energy and trade with China are not creating conditions for the 5% GDP growth that is needed and easily could be achieved to bring unemployment down to acceptable levels.

In April, the private-sector added 268,000 jobs per month, but many were in government-subsidized health care and social services. Netting those out, core private-sector jobs have increased only 229,000 in April. That comes to 73 non-government-subsidized jobs per county for more than 5,000 job seekers per county.

Early in a recovery, temporary jobs appear first, but 22 months into the expansion, permanent, non-government-subsidized jobs creation should be much stronger.

Economic Growth

Since the recovery began in mid 2009, GDP growth has averaged 2.8%, disappointing administration economists who have consistently assumed 4% growth in budget projections and forecasts for the job-creating effects of stimulus spending.

Consumer spending, business technology and auto sales have added strongly to demand and growth, and exports have done quite well. However, soaring oil prices and the continued push of subsidized Chinese manufactures in U.S. markets have offset those positive trends.

Administration imposed regulatory limits on conventional oil and gas development are premised on false assumptions about the immediate potential of electric cars and alternative energy sources, such as solar panels and windmills. In combination, administration energy policies are pushing up the cost of driving and making the United States even more dependent on imported oil and indebted to China and other overseas creditors to pay for it.

To keep Chinese products artificially inexpensive on U.S. store shelves, Beijing undervalues the yuan by 40%. It accomplishes this by printing yuan and selling those for dollars and other currencies in foreign-exchange markets.

Presidents Bush and Obama have sought to alter Chinese policies through negotiations, but Beijing offers only token gestures and cultivates political support among U.S. multinationals producing in China and large banks seeking additional business in China.

The United States should impose a tax on dollar-yuan conversions in an amount equal to China’s currency market intervention divided by its exports–about 35%. That would neutralize China’s currency subsidies that steal U.S. factories and jobs. It is not protectionism; rather, in the face of virulent Chinese currency manipulation and mercantilism, it’s self defense.

These are the views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:

Following a bunch of apparently softer-than-expected releases earlier, the April labor market report on Friday took on more prominence. The increase of 244,000 April non-farm payrolls combined with upward revisions of 46,000 in the prior two months was respectable. The fairly widespread gain in private (goods-producing up 44,000 and service-producing up by 224,000) employment of 268,000 was inspiring. But the continued contraction in government jobs of 24,000 (mainly in state and local governments–down 22,000) was not a surprise.

Continue reading…