Budgetology: March Jobs Report Lowest Gain in Ten Months

| April 7 2013

With the March jobs report showing the smallest gain in 10 months, it’s not a good day for America. While the sequester has become the Obama Administration’s go-to scapegoat for all things bad, it’s not to blame for the disappointing jobs numbers. It’s more likely the “downtick” is a result of the payroll tax hikes in the fiscal cliff deal, a deal that included all tax hikes and no spending cuts because of the White House’s demands for “balance.”  TGIF, huh?

 

WHITE HOUSE BLAMES SEQUESTER FOR WEAK MARCH JOBS REPORT

Jobs Numbers End Up Below Expectations. “The Labor Department reported Friday that the economy added 88,000 jobs in March while unemployment dropped to 7.6 percent. The number was far below the expectations of analysts who predicted the economy added about 190,000 jobs in March.” (Seung Min Kim, “Jobs Report: March Numbers A Big Miss,” POLITICO4/5/13)

White House Cites Sequester For Bad Report. “It is important to bear in mind that the March household and payroll surveys are the first monthly surveys to look at employment since the beginning of sequestration. While the recovery was gaining traction before sequestration took effect, these arbitrary and unnecessary cuts to government services will be a headwind in the months to come, and will cut key investments in the Nation’s future competitiveness.” (White House Chairman of the Council of Economic Advisors Alan Krueger, “The Employment Situation in March,” WhiteHouse.gov, 4/5/13)

 

BUT MAJOR NEWS OUTLETS SAY OTHERWISE

New York Times: Sequester Not To Blame For Weak Jobs Report. “The March jobs report came in much weaker than expected, with employers adding just 88,000 workers over the course of the month.  Did sequestration – the $85 billion in mandatory budget cuts that Congress never managed to unwind, despite promises to the contrary – take a bite? … The short answer is no. Government employment actually climbed during March, if you exclude the Postal Service, which shed nearly 12,000 workers. Economists expect the government ranks to take a hit as agencies and offices carry out their budget cuts before the end of the fiscal year in September.” (Annie Lowery, “Sequestration and the Jobs Report,” New York Times, 4/5/13)

·       “At Least According To The Preliminary Data, Sequestration Does Not Seem To Be Particularly At Fault.” “The March jobs report came in much weaker than expected, with employers adding just 88,000 workers over the course of the month. Did sequestration – the $85 billion in mandatory budget cuts that Congress never managed to unwind, despite promises to the contrary – take a bite? The short answer is no. At least according to the preliminary data, sequestration does not seem to be particularly at fault.” (Annie Lowrey, “Sequestration and the Jobs Report,” The New York Times, 4/5/13)

Washington Post: Not The Sequester. “So, what is the culprit? March was the month that the policy of sequestration, across-the-board government spending cuts went into effect. But the patterns of what sectors added and lost jobs doesn’t match what you would expect if this was the major driver of the weakness.” (Neil Irwin, “Today’s jobs report is a disaster. But why?,” The Washington Post, 4/5/13)

·       The Washington Post: “It’s Not That The Sequester Won’t Have Some Negative Effects On The Economy Eventually, But You Have To Squint Awfully Hard To See Them In This Report.” (Neil Irwin, “Today’s jobs report is a disaster. But why?,” The Washington Post, 4/5/13)

New York Magazine: Many Blaming Sequester, But That’s Not The Case: “Today’s non-farm payroll report showed that just 88,000 jobs were created in March. That’s well below the 190,000 jobs economists had expected … Many people are blaming the sequester for the big downtick, but that’s not really the case.” (Kevin Roose, “Today’s Jobs Number Is More Disappointing Than Justin Timberlake’s New Album,” New York Magazine, 4/5/13)

Slate: Strong Month For Nonpostal Employment Despite Sequestration. ”A weak jobs report out today, with initial estimates suggesting just 88,000 jobs were added in March. A bit oddly, despite sequestration this was actually one of the strongest months for nonpostal employment we’ve seen in a long time.” (Mattew Yglesias, “March Jobs: No Good,” Slate, 4/5/13)

Moody’s Economist Mark Zandi: “I don’t think the sequester is in here at all, I think it’s way too premature for the sequester having an impact, but the retail trade number would be consistent, not only with the payroll tax, but again I think healthcare reform might be having an impact.” (Moody’s Economist Mark Zandi, “Opening Bell, CNBC, 4/5/13)

 

MOST AGREE THAT FISCAL CLIFF TAX HIKES ARE THE REAL CULPRIT

MSNBC: “Why The Bad Jobs Report? It’s The Payroll Tax, Stupid.” ”The March jobs report was, well, not so good. But don’t blame the sequester — blame the payroll tax.” (John Flowers, “Why the bad jobs report? It’s the payroll tax, stupid,” MSNBC,4/5/13)

Washington Post:  Payroll Taxes To Blame For Job Loss. ”So, what is the culprit? March was the month that the policy of sequestration, across-the-board government spending cuts went into effect. But the patterns of what sectors added and lost jobs doesn’t match what you would expect if this was the major driver of the weakness. … The more plausible case is that the increase in payroll taxes that took place in January, lopping 2 percent off of most workers paychecks, is damaging the retail sector.” (Neil Irwin, “Today’s Jobs Report Is A Disaster.  But Why?”, The Washington Post, 4/5/13)

New York Times: Expiration Of The Payroll Tax Cut “Might Be Having A Serious Effect On Jobs.” “But another change emanating from Washington seems as if it might be having a serious effect on jobs: the expiration of the payroll tax cut. In January, Congress effectively increased payroll taxes by declining to extend a temporary tax holiday. That wiped out a full year’s worth of wage gains for millions of Americans, and economists expected it to depress consumer sentiment and consumer spending.” (Annie Lowrey, “Sequestration and the Jobs Report,” The New York Times, 4/5/13)

New York Magazine: “Payroll Tax Hike Is To Blame.” ”So, what happened [with the jobs report]? Most likely is that the payroll tax hike is to blame. That would explain some of the weakness in retail, and in other industries like ‘transportation and warehousing’ (which lost 2,800 jobs). And it would augur badly for future jobs reports, since much of the payroll tax’s effect on consumer spending patterns may not be felt until May or June, when the hit to people’s paychecks really sinks in.” (Kevin Roose, “Today’s Jobs Number Is More Disappointing Than Justin Timberlake’s New Album,” New York Magazine, 4/5/13)

Slate: Pointing The Finger At The Payroll Tax Hike: “People are initially pointing their finger at the impact of the end of the payroll tax holiday as a culprit. Job losses in the retail sector were large. That was 15,000 lost jobs in clothing stores plus 10,000 lost jobs in building material stores with the rest of retailing flat.” (Mattew Yglesias, “March Jobs: No Good,” Slate, 4/5/13)

 

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