Stimulus Judgment Day 1: ADP Says Private Sector Jobs Fell 473,000 in June
Yesterday, the Obama administration gave us permission (as if we need it; HT Third Base Politics) to judge the results of the mislabeled, time-delayed, historically ineffective stimulus that was rushed into law with Ohio Senator Sherrod Brown’s deciding vote, and without anyone having read it, in February:
Robert Gibbs: “We should begin to judge it now.”
ADP issued its report on June private sector employment this morning:
June, 2009
Nonfarm private employment decreased 473,000 from May to June 2009 on a seasonally adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from April to May was revised by 47,000, from a decline of 532,000 to a decline of 485,000.
Monthly employment losses in April, May, and June averaged 492,000. This is a notable improvement over the first three months of the year, when monthly losses averaged 691,000. Nevertheless, despite some recent indications that economic activity is stabilizing, employment, which usually trails overall economic activity, is likely to decline for at least several more months, although perhaps not as rapidly as during the last six months.
4-1/2 months after its passage, yours truly now has the mighty Robert Gibbs’s and Dear Leader’s permission to judge the legislation’s impact.
Okay, here goes.
ADP’s reported June drop of 473,000 is a whole 12,000 jobs below May’s revised 485,000.
At that steady rate of “improvement,” the economy will start adding jobs in October 2012, after having lost over 9,000,000 jobs in the meantime:
If that steady rate of “improvement” occurs, the nationwide unemployment rate will rise to something like 16% – 17%.
So what’s the problem? (/sarc)
4-1/2 months after its passage, readers also are now allowed to judge the effectiveness of the the mislabeled, time-delayed, historically ineffective stimulus that was rushed into law with Ohio Senator Sherrod Brown’s deciding vote, and without anyone having read it, for themselves.
So by all means, please do so. You have Dear Leader’s permission.
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UPDATE: The Institute for Supply Management’s Manufacturing Index, covering about 15% of the economy, came in at 44.8%, up from 42.8% in May. It takes 50% to be in expansion mode. A full history is here.
June’s number is a nice improvement, especially from the year-end value. But remember that hitting 50% will only signify a bottom-out and the very beginning of a recovery. The stimulus-related takeaway is that 4-1/2 months after its passage, we’re not very close to that point yet.
The Non-Manufacturing Index will come out on Monday.
Yellen Takes a Big Swing at Inflation Hawks
http://blogs.wsj.com/economics/2009/06/30/yellen-takes-a-big-swing-at-inflation-hawks/?mod=rss_WSJBlog?mod=marketbeat
“In past deep recessions, the Fed was able to step on the accelerator by cutting the federal funds rate sharply, causing the economy to. This time, we already have our foot planted firmly on the floor. We can’t take the federal funds rate any lower than zero. I believe that the Fed’s novel programs are stimulating the flow of credit, but they simply aren’t as powerful levers as large rate cuts, so this time monetary policy alone can’t power a rapid recovery.”
The Fed has admitted they shot the wad thus there is nothing more they can do to achieve a recovery. It is all up to the consumer!
Tom, connecting the dots between what you outlined and the Fed admitted: The so called stimulus bill acted in direct opposition to whatever the Fed attempted to accomplish with the net result of less than zero. We already know the so called novel programs failed to attract the hoped for private capital in the Keynesian worldview.
Btw- Since the BLS counts people as unemployed even if they just graduated from school (Household Survey), the ADP showing the documented shedding of jobs (not layoffs) means not only were 473,000 jobs shed but 3 million high school students who graduated in June did not get a job. So the BLS will be reflecting that number. This is why the MSM has been focusing on the DOL Unemployment Claims figures instead of the BLS Unemployment figures as those Claims are about HALF of what the BLS reports due to the Household Survey. While it is true that many of the high school and college students will end up on the Not In Laborforce figure, due to the normal job turnover many of them will backfill jobs that older workers lost, this is why that figure dropped previously. Tomorrow is the moment of truth! Will the BLS report 11% or something lower?
Comment by dscott — July 1, 2009 @ 10:12 am
#1, thx for the alert re tomorrow. I thought it would be Friday.
Comment by TBlumer — July 1, 2009 @ 10:43 am
June ISM Not Encouraging
http://www.news-to-use.com/2009/07/june-ism-not-encouraging.html
Interesting table for June
Comment by dscott — July 1, 2009 @ 2:38 pm
Talk about digging your hole deeper by not learning from your mistakes:
US Government Goes Subprime
http://www.news-to-use.com/2009/07/us-government-goes-subprime.html
…Federal Housing Finance Agency director James Lockhart, in a press conference last week, acknowledged rising mortgage rates pose an issue to the agency refi program. “There’s a big pipeline so it probably won’t hit for a couple months,” he said. “But at some point, if we don’t see some moderation of rates, it could have an impact.”
He also acknowledged the administration is considering expanding the LTV range to cover borrowers with more than 105% LTV, although he would give no exact figure for the new LTV target.
FHFA, Fannie and Freddie’s conservator, has said applying Lockhart’s comment to the effect of 125% LTVs are eligible for sale into Real Estate Mortgage Investment Conduits toward plans for a new refi LTV limit are a misrepresentation of Lockhart’s comments.
Media reports that the LTV limit could top as much as 125% might be speculation, but the idea is catching on, with JP Morgan commentary on the mortgage-backed securities market late last week echoing the figure.
“We expect the proposal to raise the Obama refi LTV limit to 125[%] will have a minimal impact on speeds since only under 10% of the universe could benefit theoretically,” the analysts said…
Comment by dscott — July 1, 2009 @ 2:42 pm