January 12, 2014

AP’s Rugaber: ‘Jobs Report Puzzles Economists’; Fails to Cite Obamacare Confusion or Costs

Following up on Friday’s awful jobs report from the government (only 74,000 seasonally adjusted jobs added, with the unemployment rate dropping to 6.7 percent only because adults continued to leave the workforce), the Asssociated Press’s Christopher Rugaber tried to search for excuses.

To its credit, the headline at Rugaber’s report didn’t blatantly dissemble like the one at Bloomberg, which, in revising the title of an underrated Stevie Wonder song from the 1970s (“Blame It on the Sun”), blamed it on the cold and snow: “Old Man Winter Put a Chill on U.S. Labor Market at End of 2013.” But the AP reporter predictably failed to entertain the possibility that Obamacare’s virtual chaos, plan cancellations, and impending 2014 premium hikes might have thrown a great deal of sand into the job market’s gears, even though a virtual halt in healthcare hiring stuck out like a sore thumb. Excerpts follow the jump (bolds and numbered tags are mine):


It came as a shock: U.S. employers added just 74,000 jobs in December, far fewer than anyone expected. This from an economy that had been adding nearly three times as many for four straight months – a key reason the Federal Reserve decided last month to slow its economic stimulus.

So what happened in December? Economists struggled for explanations: Unusually cold weather. A statistical quirk. A temporary halt in steady job growth.

Blurring the picture, a wave of Americans stopped looking for work, meaning they were no longer counted as unemployed. Their exodus cut the unemployment rate from 7 percent to 6.7 percent – its lowest point in more than five years.

Friday’s weak report from the Labor Department was particularly surprising because it followed a flurry of data that had pointed to a robust economy: U.S. companies are selling record levels of goods overseas. Americans are spending more on big purchases like cars and appliances. [1] Layoffs have dwindled. [2] Consumer confidence is up and debt levels are down. Builders broke ground in November on the most new homes in five years. [3]

“The disappointing jobs report flies in the face of most recent economic data, which are pointing to a pretty strong fourth quarter,” said Sal Guatieri, an economist at BMO Capital Markets.

Few analysts saw the sharp slowdown as the beginning of a much weaker trend. [4]

“There is a good possibility this is just a one-shot deal that could either get revised away or made up for in next month’s release,” Scott Anderson, chief economist at Bank of the West, said in a note to clients.

… Perhaps as surprising as last month’s weak job growth was the flood of people – 347,000 – who stopped looking for jobs. The proportion of people either working or looking for work fell to 62.8 percent [4], matching a nearly 36-year low.

Rugaber’s take on the other economic data is overly generous:

[1] — Vehicle sales only increased by 0.3 percent in December 2013 over December 2012. Though analysts are also blaming that on the weather, I don’t see how the weather explains a 6.3 percent year-over-year drop at General Motors.

[2] — In September, weekly seasonally adjusted initial claims for unemployment averaged only 305,000. In the five weeks ended January 4, they averaged 353,000. Though Christmas season figures can fluctuate, we’re certainly not looking at anything resembling a long-term “dwindle.”

[3] — Rugaber’s characterization of the housing starts statistics continued the press’s more than annoying habit of treating seasonally adjusted figures as if they represent what actually happened. His statement as written, that “Builders broke ground in November on the most new homes in five years,” is simply not true, especially because the term “seasonally adjusted” is nowhere in his report:


November’s actual 51,900 starts, though encouraging, were nowhere near “the most … in five years.” They weren’t even the most in four months. Starts didn’t become “the most … in five years” until they were seasonally adjusted into an annual rate.

But the average reader is going to believe, based on what Rugaber wrote, that November’s actual housing starts were at a five-year high even compared to typically far busier summer months. Obviously, they’re not. Intentional or not, what Rugaber wrote is a flat-out deception.

[4] — The “analysts” who don’t think there’s a “weaker trend” are failing to note that the labor force participation rate has not stopped weakening since late 2008, when Barack Obama was elected:


Finally, while Rugaber noted that the health care sector lost 6,000 jobs in December (seasonally adjusted, though not flagged as such), he failed to tell readers that this was the sector’s first loss in over 10 years. On a not seasonally adjusted basis, the 1,800 jobs added represented the sector’s worst December since related recordkeeping began in 1990.

But somehow, Obamacare isn’t at all relevant to the disappointing results. Give me a break, Chris.

Cross-posted at NewsBusters.org.


1 Comment

  1. There is also another factor that takes the bite on consumer spending, inflation. Food and fuel inflation which particularly targets those more at the lower end of the economic spectrum (which also are an increasing proportion of the population) disproportionately causes them to husband their financial resources for survival. The CPI excludes food and fuel which btw are consumables. Any increase in food and fuel prices increases the GDP since it is counted in dollars. As I have contended all along, the GDP deflator is undercounting inflation, hence we have a situation where the government is reporting an increase in GDP which includes food and fuel but people are buying less goods, i.e. less of everything else other than food and fuel. Increases in total food and fuel costs DO NOT cause an increase in employment in their sectors since the infrastructure to sell those items doesn’t change all that much, in fact because of the razor thin margins it probably decreases employment in those sectors as costs rise.

    If the government would finally relent on Ethanol to bring it down to 5% instead of the current 10% content in gasoline, you would see food and fuel prices drop which in turn would increase money for the purchase of other goods and services. This in turn would increase economic activity including employment but at the same time perversely cause the GDP to level off or drop. The bottom line is we never came out of the Recession, we are in a sustained Depression similar to that of the 1930′s, all due to incompetent government policies that impede economic growth. It was no accident that when FDR died, his policies died with him and then the country turned the economic corner.

    Comment by dscott — January 13, 2014 @ 8:45 am

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