March 5, 2014

Obama Praises the Higher Minimum Wages in Four Underperforming States

Early Wednesday morning, Josh Lederman at the Associated Press, aka the Administration’s Press, opened a report on President Barack Obama’s upcoming afternoon trip to Connecticut by writing that “Obama wants the U.S. to follow Connecticut’s lead by raising the minimum wage.” In a dispatch after Obama’s speech in New Britain, Lederman wrote of “a show of support from like-minded governors,” including those from the Nutmeg State, Massachusetts, Vermont and Rhode Island, all of which have minimum wages higher than the federally mandated rate of $7.25 per hour.

Correlation doesn’t necessarily mean causation, but the four states Obama highlighted as examples to follow have economic performances ranging from mediocre to horrid during the past several years arguably tie to poor policy choices like high minimum wages — something Lederman should have noticed and didn’t.
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AP Quickly Buries Today’s Disappointing Economic Reports, While Dispatches Understate Their Weakness

You don’t even need to know the specifics to realize that today’s economic reports were weak. All you need to know is that there was no mention of them in the Associated Press’s list of Top 10 business stories as of 3:35 p.m. Among stories considered more important: a product review of Apple’s tiny market-share program called “iWork” and three dozen passengers suing Carnival Cruise Lines.

This morning’s release from ADP on February private-sector employment growth reported 139,000 jobs added; the previous four months were revised down by a total of 138,000. The Institute for Supply Management’s Non-Manufacturing Index came in at 51.6%, showing relatively slow expansion (anything above 50% indicates expansion) compared to January’s 54.0%. The reports missed expectations of 155,000 jobs added and 53.5%, respectively. AP coverage of these two reports somewhat understated their weakness, one quantitatively and the other qualitatively.

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The Julie Boonstra Videos: An Obamacare Victim

Harry Reid claims that the “vast majority” of horrorific personal and administrative Obamacare horror stories are false.

This one isn’t.

First, the original Americans For Prosperity ad about Julie Boonstra, a leukemia patient fighting for her life, followed by a Fox News segment with Megyn Kelly, and AFP’s/Julie’s rebuttal ad:

   

If Michigan Congressman Peters, who voted for Obamacare and is attacking Ms. Boonstra, has a case, he should make it on the air himself instead of sending out lawyers to try to intimidate TV stations into not carrying the ad by threatening their licenses to operate.

If there’s a bright side to this, it’s that Peter’s tactics have brought more attention to the matter.

The bottom line is this: Julie Boonstra would not have lost her insurance coverage if Obamacare hadn’t become law. But she did.

Score: Assad 1, US 0; Game Apparently Over

Filed under: National Security,Taxes & Government — Tom @ 12:02 pm

From David Francis at the Fiscal Times:

Taken together, Assad’s victory (in taking Yabroud, “the last major town held by Sunni Muslim rebels”) his continued slaughter of those who oppose him, his repeated human rights violations, his failure to live up to the terms of the deal, and his undermining of the peace talks amount to a stunning defeat of American diplomacy. Nearly 50,000 people have died since the United States confirmed the use of chemical weapons last summer, bringing the total number of casualties to more than 140,000.

Taken together, this also represents a clear victory for Bashar al Assad. He has accomplished every goal he had when the United States and its partners ignored the so-called “red line” and allowed the war to continue without intervention.

He has defeated the rebels, splitting them into warring factions. He still has the majority of his chemical weapons. He is still in power, and with negotiations stalled, it’s unlikely he’ll be removed.

In short, he’s won.

John Kerry is still maintaining that diplomacy can work.

The world is doing a collective “ROTFLMAO” at us.

February 2014 ISM Non-Manufacturing: 51.6%, Down from 54.0% in Jan.; Employment Goes Into Contraction; One Respondent Notes ‘Unprecedented’ Negative Health Care Impact

Filed under: Economy — Tom @ 10:13 am

From the Institute for Supply Management — a big miss (bolds are mine; some paragraph breaks added):

Economic activity in the non-manufacturing sector grew in February for the 49th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 51.6 percent in February, 2.4 percentage points lower than January’s reading of 54 percent.

The Non-Manufacturing Business Activity Index decreased to 54.6 percent, which is 1.7 percentage points lower than the reading of 56.3 percent reported in January, reflecting growth for the 55th consecutive month and at a slower rate. The New Orders Index registered 51.3 percent, 0.4 percentage point higher than the reading of 50.9 percent registered in January.

The Employment Index decreased 8.9 percentage points to 47.5 percent from the January reading of 56.4 percent and indicates contraction in employment for the first time after 25 consecutive months of growth. The Prices Index decreased 3.4 percentage points from the January reading of 57.1 percent to 53.7 percent, indicating prices increased at a slower rate in February when compared to January.

According to the NMI®, ten non-manufacturing industries reported growth in February. The majority of respondents’ comments indicate a slowing in the rate of growth month over month of business activity. Some of the respondents attribute this to weather conditions. Overall respondents’ comments reflect cautiousness regarding business conditions and the economy.

INDUSTRY PERFORMANCE

The 10 non-manufacturing industries reporting growth in February — listed in order — are: Other Services; Management of Companies & Support Services; Public Administration; Agriculture, Forestry, Fishing & Hunting; Finance & Insurance; Utilities; Transportation & Warehousing; Educational Services; Professional, Scientific & Technical Services; and Information.

The eight industries reporting contraction in February — listed in order — are: Mining; Arts, Entertainment & Recreation; Real Estate, Rental & Leasing; Retail Trade; Accommodation & Food Services; Wholesale Trade; Construction; and Health Care & Social Assistance.

This is a cold water bath for the optimists. In the silver lining department, the backlog of orders went back into expansion (from 49.0% to 52%).

Health Care and Social Assistance contracted, even though Obamacare theoretically brought healthcare providers more customers.

The ISM composite, weighing Manufacturing at 12% and Non-Manufacturing at 88%, is (53.2% x .12 + .88 x 51.6%) is 51.79%, which is surely the lowest in quite a while.

The initial figures in ADP’s employment report came in well above the government’s jobs number in December and January. If that repeats on Friday, job additions will be under 100K. The ISM’s report today would seem to make that scenario more likely.

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UPDATE: From one of ISM’s respondents — “The Affordable Care Act is creating significant financial uncertainty to healthcare organizations. With little warning, the negative impact on revenue has been unprecedented.”

UPDATE 2: The consensus predictions were 53.2% at Bloomberg and 53.5% at Business Insider.

February ADP Employment Report and Conference Call (030514): 139K Private-Sector Jobs Added; Previous Four Months Revised Down

Filed under: Economy,Taxes & Government — Tom @ 7:12 am

Prediction: Bloomberg’s estimate is 155,000 private-sector jobs added.

February’s number will appear here at 8:15 a.m.

I’ll be live-blogging the ADP conference call at 8:45 a.m.

HERE IT IS (direct link).

Topside announcement:

Private-sector employment increased by 139,000 from January to February, on a seasonally adjusted basis.

Highlights:
- Small businesses (1-49 employees) +59,000
- Medium businesses (50-499 employees) +35,000
- Large businesses (500 or more employees) +44,000

Whoa — this was a big month for prior-month knockdowns:
- January went from 175K to 127K.
- December went from 227K to 191K.
- November went from 289K to 245K.
- October went from 206K to 196K.

That’s a combined reduction of 138,000 jobs from the four previous months.

Going back further, the four previous months (June through September 2013) were revised up by a combined 122K (Note: Changed from 12 K earlier this morning; apologies for the error). February through May revisions totaled +48K.

From press release:

Mark Zandi, chief economist of Moody’s Analytics, said, “February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month, weighed on payrolls. Job growth is expected to improve with warmer temperatures.”

CONFERENCE CALL NOTES with Mark Zandi:

Number “was on the soft side,” third month in a row of weak job growth. Pretty broad-based, even some of the usual gainers were at relatively slow pace.

“Somewhat disappointing report.”

Reasons for slowdown in private employment growth:
1) bad weather, esp during survey week in mid-Feb.; affecting all economic data. ADP counts are based on people on payroll vs. BLS which will not include people not currently being paid. (So he expects BLS is likely come in low relative to the ADP estimate, as was the case last month).
2) expiration of unemp. benefits and the Nov. food stamp reductions which will clips a couple tenths of a point off of GDP growth for a couple of quarters.
3) less inventory accumulation, particularly affecting manufacturing.

Considers all of these factors temporary, and thus we’ll see faster growth in future quarters past 1Q. Economy is much stronger than data suggests. 1Q14 is tracking at about 2% annualized. Underlying is closer to 3%.

Underlying job growth trend is 200K, and expects snapback from weather effects, starting in April or so.

He believes his view is the consensus view and that markets’ continued rise reflect that.

Company size comment: Job creation is more balanced and broad-based across company size. Small businesses had previously been lagging, but aren’t any more. Likely traceable to the housing recovery gaining traction. Anticipates housing will continue to improve this year.

Questions:
- Rugaber from AP — about previous month reductions — goal is to try to get to BLS employment estimate. If BLS is weaker, it gets reflected in ADP numbers.
- Blumer, re 4Q13 GDP next est. and Obamacare impact on GDP — Zandi expect slight rise to maybe 2.5%. Q1 looks like 2%. Obamacare — spending on healthcare went up $55 billion (a “positive”). But also work disincentives.
- Annalyn Kurtz from CNN, re weather — she thinks BLS says people would have to be out of work for the whole pay period for them not to be counted. With people paid every two weeks, does that happen a lot? (GREAT question) Zandi’s response is also good, saying that hiring stops in really bad weather and start dates get deferred, people aren’t immediately replaced. Also indirect impacts on service providers when power is out, etc. Hours worked reductions statistic might go down in Feb., that a “tell.”
- Kurtz again, re const. jobs (+48K in Jan., seasonally adjusted). Jan. survey week was the warmest in the month. Wouldn’t be surprised if const. goes negative or small gain in Feb.
- Kathleen M from WSJ, asking for BLS estimate for Feb. Zandi says 130K is his best estimate. Risks of that number being off are on the downside.

Wednesday Off-Topic (Moderated) Open Thread (030514)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread will stay at or near the top today. Rules are here. Possible comment fodder may follow. Other topics are also fair game.

Positivity: ‘Son of God’ movie shines at box office on opening weekend

Filed under: Positivity — Tom @ 6:00 am

From Los Angeles:

Mar 4, 2014 / 12:19 pm

“Son of God,” a new movie depicting the life of Christ according to Gospels, saw tremendous success and positive reviews when it opened in theaters at the end of February.

The movie, which opened Feb. 28, grossed $26.5 million at the box office on opening weekend, far surpassing BoxOffice.com’s prediction of $17.5 million.

Yahoo fans gave the film 4.5 stars, and on March 4, it became the No. 1 fan-rated film on Fandago.

Bishop David Zubik of Pittsburgh has joined several other Catholic commentators in praising the movie, saying that it “really brings to the center of our attention” that Mary and Joseph “like all of us, struggle to really embrace the promises that God gives us.”

“The film captured that human struggle that obviously both of them had, a human struggle that we all have, of taking to heart that when God makes a promise, he’s going to keep it.”

The bishop said he was struck by several “powerful” scenes, but especially the movie’s depiction of the birth of Jesus.

“When the Magi bow down before the infant Jesus, the look of both surprise and relief in the eyes of both Mary and Joseph really confirmed the promise that they were both given, a promise that they both struggled with, that this really was a special gift, that this was the son of God,” he said in a video released by Motive Entertainment, a marketer for the movie.

“Son of God” was released by the makers of the popular History Channel television miniseries “The Bible.” The movie, based on the Gospels, covers the life, death, resurrection and ascension of Jesus Christ.

Portuguese actor Diogo Morgado plays the role of Jesus.

Eduardo Verastegui, an executive producer of the movie, said the story of Jesus Christ is “the perfect story, the most beautiful love story of all times.” He said he believes the movie is “a spiritual experience.” …

Go here for the rest of the story.