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Friday, forecasters expect the U.S. Labor Department to report the economy added 204,000 jobs in February, down from 243,000 in January. My estimate is 180,000.

Despite anecdotal reports of new hiring and consumer optimism, weaker jobs gains are likely for the next few months, because real consumer spending, the largest component of economic growth, was flat November, December and January. Auto sales are doing well but higher gasoline prices are crowding out most discretionary purchases.

Unemployment is expected to remain at 8.3% in February, as jobs creation barely outpaces population growth. Over the past three years, the percentage of adults participating in the labor force–those employed, self employed, or unemployed but looking for work–declined significantly. If the adult participation rate was the same today as when Barak Obama became president, unemployment would be 11%.

Adding adults on the sidelines, those who say they would reenter the labor market if conditions improved and part-time workers who would prefer full-time positions, the unemployment rate becomes 15.2%. Factoring in college graduates in low skill positions, like counterwork at Starbucks, and unemployment is closer to 20%. Continue reading…

A college adjunct instructor in Oklahoma responds to “HEARD ON THE STREET: Apollo, Blackstone Offer Private Member Benefits For Natural Gas’”:

Why would anyone on the production side of the natural gas industry want to use the futures market to lock in what would be marginal profits, if any?

The only thing keeping natural gas prices afloat is the price of the natural gas liquids, and we could find ourselves in a liquids “bubble” before long.

Natural gas prices don’t hit $5 until December 2017. The downside in this market is far less than the potential upside. Dry production is becoming less and less profitable so it seems highly unlikely that locking in forward prices at these levels would be a prudent strategy.

Private equity companies invested in midstream companies could lock in the lucrative forward spreads by buying natural gas futures and selling NGL forward swaps. Even using crude oil as a “dirty” swap would allow them to take some of the profit inherent in the processing spreads that exist.

While I enjoy reading Liam Denning’s articles and agree with his perspective most of the time, I have to disagree with his contention that private equity investment groups can use the futures market at this time to ensure profitability down the road. 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:

When Barack Obama assumed the presidency, gas prices were less than $2 a gallon. He proceeded to shut down deep-water drilling in the Gulf of Mexico, tightened other federal restrictions on petroleum development and vetoed the Keystone pipeline. Now, even with Americans driving not a lot more than three years ago and global growth slowing, gas is nearing $4 a gallon.

The liberal theocracy in academia, the media and Democratic Party leadership relentlessly expounds that drilling for oil in the U.S. won’t much affect U.S. gas prices, because petroleum prices are set in global markets. And, more domestic oil production or U.S. access to Canadian petroleum won’t much change global supplies, or the pace of economic recovery and unemployment.

Balderdash! 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 market for existing homes continues in the doldrums, as young couples continue to opt for renting and older couples can’t unload homes to retire or relocate to find employment.

The National Association of Realtors reported Wednesday that sales in January were 4.57 million, below the 4.69 million expected by forecasters. This confirmed concerns that large numbers of buyers were getting cold feet and canceling contracts. Reports of stronger buyer activity and pending sales must be taken with a sack full of salt.

Prices are falling–the average sales price was $154,700, down from $162,200 in December, raising new concerns that the job market might not be recovering as much as thought. A strong job market is necessary to give young couples confidence that they can take the plunge into home ownership, and not get caught in a fire-sale situation by losing a job or a forced relocation. 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:

Rick Santorum’s assertion that President Barack Obama’s agenda is not about the quality of life or jobs but “some phony ideal. Some phony theology” may not be an appropriate characterization of his religious views. However, it is an accurate description of what is wrong with the hard left in American politics, and the thinking that drives domestic policy in the Obama administration.

Too often liberal policies are based more on faith than reason–often those are premised on assertions having little foundation in facts or modern economics. Consequently, the president advocates or imposes solutions that make the nation’s problems worse, and when confronted with disappointing results he often tells us what he believes, without offering the data and logic that brought him to those conclusions.

Regarding the financial crisis, the president assigns blame to the lack of regulation. The facts are banks got into trouble making loans on real estate assigned inflated values to borrowers who could not repay. Loans were bundled into bonds and sold to investors. When not enough unwitting fools bought bonds, the big Wall Street banks put unsold securities into offshore special investment vehicles (SIVs), whose potential losses were not supposed to be a claim on bank capital. Other firms, like American International Group Inc., sold insurance to against potential losses on bonds without sufficient assets to back up that protection. 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’s fiscal 2013 budget projects a fiscal 2012 deficit (that’s the fiscal year ending in September) at $1.3 trillion–up from less than $1.0 trillion a month ago. However, like all presidents with lots of red ink he is promising to dramatically reduce the deficit by the time his successor takes office.

The budget projects a $612 billion deficit in FY2017–if Congress follows the president’s prescriptions to raise taxes on the wealthy and if we buy the president’s growth assumptions.

The budget assumes Mr. Obama will have a second term that astounds economists–his budget assumes 3.9% growth from 2014 to 2017. That is well beyond what most private economists would concede is likely.

If you believe that one, New York Mayor Michael Bloomberg is selling shares in the Brooklyn Bridge.

The author can be reached at pmorici@rhsmith.umd.edu and followed on Twitter at @pmorici1.

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:

Democrats rejoiced that unemployment fell to 8.3% and 247,000 new jobs were added in January, confirming to them President Barack Obama will take them to victory in November.

Whoa! Prospects for more improvement are not great, and President Obama was smart to greet the jobs report with caution. He inherited a mess. Unemployment jumped from 6.8% to 10% from his election to October 2009. Since, most of the progress has been statistical, not real.

Jobs creation has barely kept up with population growth–the same percentage of adults is employed today as when unemployment peaked. Three-quarters of the reduction in joblessness is attributable to fewer adults employed or seeking work. The most effective Obama jobs program has been to convince more Americans they don’t want a job–without that, the unemployment rate would still be at least 9.5%.

Many of the jobs created in recent months don’t pay well, and too many well-educated Americans are relegated to low-skilled and part-time work for lack of opportunities. Gains are concentrated in areas such as restaurants, health care and education, and business services categories–lots of waiters, and more nurse’s aides than nurses, record keepers than teachers, and clerical workers than architects and lawyers. 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:

In his State of the Union Address, President Barack Obama hammered on two resounding themes–fairness and the economy.

Both hollow from a president who has failed on the job. He has not kept his promise to get the economy going again, and inequities in income and opportunities have hardened during his tenure. Scratch the surface of his largely reworked proposals, and too much political opportunism and hypocrisy emerges.

Once again, he promised to tax the wealthy and lambasted oil companies, and offered the vision of an economy where every American has a decent shot at success through education and hard work. Yet, too many of his tax proposals are intended to punish his opponents and protect his friends, and his education proposals simply won’t help the unemployed if the economy is creating too few new jobs each month.

The big fairness problem with taxes is that wage and salary incomes are taxed at much higher effective rates than capital gains and carried interest in partnerships–the latter include the income managing partners and employees receive for running private equity firms and hedge funds.

Mr. Obama’s minimum tax for millionaires would punish mom and pop businesses that create so many of the new jobs, as well as raise taxes on capital gains and carried interest. For the former reason, such a tax simply won’t pass the Republican House. Doing more to tax investment income would upset lots of Democrats and Wall Street financiers, and consequently, the president won’t do much to surgically fix that problem. 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:

Mitt Romney lost South Carolina by failing to convince voters he has the character and platform to turn the country around.

South Carolinians, burdened by shuttered factories, high unemployment and vanished dreams, keenly see problems. Large corporations, sitting on $2 trillion in ready cash, invest too little in American jobs, and instead move production and research and development to Asia as quickly as they can.

President Barack Obama has further tilted the playing field in favor of Asian venues by tolerating higher tariffs, more discrimination in government procurement and increased manipulation of currency values by China and others. He has raised the cost of doing business in the U.S. by shutting down oil production, raising health-care costs and tolerating the monopolization of commercial banking by Wall Street.

Mr. Romney promises to aggressively develop domestic oil and stand up to China, but will encounter fierce opposition from Democrats in Congress on energy issues, and from them and House Speaker John Boehner (R., Ohio) on China. In addition, Wall Street bankers are among Mr. Romney’s largest campaign contributors, and they don’t want China confronted. Continue reading…

Mitt Romney’s rigid position on illegal immigration and embrace of Kris Kobach, former law professor and architect of a law to rid Arizona of illegal aliens, may well cost him the fall election even if helps him win the Republican nomination.

The U.S. has an unwritten but plain immigration policy.

The U.S. Border Patrol imposes significant risks on people trying to enter the country illegally but once inside, illegal immigrants usually can find work and remain here. They manage to obtain false documents or work off the books, and are significant shares of the work force in agriculture, construction and many service activities. Continue reading…