Saturday, April 6, 2013

February Jobs Report Causes Panic In River City – And Elsewhere

Macroeconomics Works People – What Exactly Did You Expect

The world is full of “deniers”, people who do not like reality and hence deny its existence.  Some people do not like the policy implications of global warming and so deny it is happening.  Other people don’t like the fact that science is not compatible with a literal Bible, and so they deny science.

In economics the deniers consist largely of conservatives who do not believe economic theory that has been studied, tested and verified for over 75 years.  Macroeconomic policy says that when government spending is reduced and taxes are increased the impact on the economy is negative.  At the beginning of 2013 government spending was reduced and taxes were increased.  Hm, wonder what that will bring?

Well it brought exactly what was expected, a reduction in the growth of employment.

American employers increased their payrolls by 88,000 last month, compared with 268,000 in February,according to a Labor Department report released Friday. It was the slowest pace of growth since last June, and less than half of what economists expected.

Well, duh.

But the U. S. economy has pretty good momentum, and it may be that if there is no increase to the shocks to the economy from fiscal policy that the economy can continue to grow and add jobs.  And everyone needs to remember that this is just one month.  Let’s see where things stand in 3 to 6 months.  And if the U. S. economy starts to resemble Europe, then that is because U. S. economic policy is resembling Europe.


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