Explaining Southern California's economy

Encouraging data coming out ahead of Friday's jobs report

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A job seeker looks over event materials as she waits to enter the San Francisco Hirevent job fair at the Hotel Whitcomb in San Francisco. Two encouraging if not exactly thrilling reports on hiring and layoffs arrived this morning, ahead on Friday's official government jobs numbers.

Two relatively optimistic reports have come out this morning, ahead of tomorrow's official government jobs report from the Labor Department. The ADP National Employment Report shows that the economy added 176,000 new private-sector jobs in June — 93,000 by small businesses.

You have to be careful with the ADP report, however. It can deviate significantly from the government's numbers. Last month, ADP said the economy had added 133,000 jobs in May, while the Bureau of Labor Statistics (BLS) concluded that we added only 69,000.

Bloomberg surveys economist each month to develop a consensus on the jobs situation and this time around, the number is around 100,000 new jobs — lower than ADP by a good margin and well below the 150,000 that was anticipated for May.

Finally, Challenger, Gray & Christmas, a human-resources consulting firm that tracks hiring and layoffs, announced that employers are slowing their pace of layoffs to a 13-month low of 37,551. 


Eurozone crisis: Uncertainty meets more uncertainty

Petros Giannakouris/AP

Shipyard workers demand their unpaid wages in central Athens. Greece is now as close as it's ever been to leaving the eurozone.

I went on "The Patt Morrison Show" on Tuesday to join NPR "Planet Money" correspondent Zoe Chace and travel expert Terry McCabe to discuss the ongoing, seemingly neverending eurozone crisis. As you probably know, there are now serious conversations happening in Europe about Greece exiting the euro. Spain and Italy could be in trouble. Ireland and Portugal already are. Governments have fallen; most recently French President Nicholas Sakozy lost his re-election bid to socialist François Hollande. 

Despite all this, it's easy to talk yourself into a false sense of calm. After all, the eurozone crisis feels as if it's been going in for years — because it has been going on for years!

At the Financial Times, Martin Wolf doesn't think we should be calm. He thinks we should acknowledge reality: that post-financial crisis, the world is in a "contained depression." And we're unprepared for the consequences of a eurozone meltdown:


Why 'churn' is essential for the economy

National Unemployment Rate Drops To 8.6

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Jenny Pazar fills out a form as she looks for a job at a job fair Dec. 2, 2011 in Portland.

Great post from Ben Casselman at the Wall Street Journal's Real Time Economics blog. It's all about "churn," the phenomenon of people leaving jobs for new jobs, and new hires coming in to fill the jobs that were left behind. A healthy level of churn is a sign of a healthy economy. And obviously, for the past few years, churn in our sickly economy has been unhealthy.

That appears to be slowly changing, which is a positive indication:

Churn is a big deal. A new paper by Edward Lazear of Stanford and James Spletzer of the Bureau of Labor Statistics finds that during the recent recession, 80% of the drop in hiring was due to low levels of churn, rather than reduced job creation. The authors estimate reduced churn shaved two-fifths of a percentage point off GDP for the duration of the recession.

Quitting, of course, makes up just one half of churn. [My emphasis] Companies also have to be willing to fill those open positions. That’s happening too, but slowly. Companies hired a seasonally adjusted 4.4 million workers in February, up 3.4% from January and 7.2% from a year earlier, according to the Department of Labor....Job openings are rising faster than actual hires, which could suggest companies are dragging their feet on filling open positions.


March jobs report: The bad news and the good news

A jobs sign hangs above the entrance to


A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

Well, I wasn't even close. Yesterday, I predicted that we'd see another decent if not spectacular jobs report from the Bureau of Labor Statistics. My number was 225,000 jobs added. But the actual number, released by the BLS this morning, is miles lower then that: 120,000.

That's the bad news. The good news, if you can call it that, is that the national unemployment rate fell to 8.2 percent from 8.3 percent. But that's just because more than 120,000 Americans quit looking for work. (Did I say this was the good news part?)

There was some truly good news. The trend of the BLS revising up the previous month's result continues: a gain of 227,000 jobs was originally reported for February, but that number has been adjusted to 240,000.

It's a good thing the markets are closed today for Good Friday, as this "surprise to the downside" — given that most economists who follow the labor market expected another month of 200,000-plus new jobs in March — may very well not have been priced in (basically, already accounted for), given that the major stock indexes shed some gains this week.


Get ready for tomorrow's jobs report

A jobs sign hangs above the entrance to


A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

Time to take a crack at handicapping tomorrow's official March jobs report from the Bureau of Labor Statistics (BLS). If you'll recall, February came in at 227,000 and the national unemployment rate remained at 8.3 percent. That was good but not great; the economy really needs to add close to 400,000 jobs each month to reduce the rate to a pre-crisis level. But for the moment, adding 200,000-plus jobs each month shows that the economy is slowly recovering and expanding, even if GDP growth is only running at 2-2.5 percent.

There's a wrinkle to the March numbers — the data is usually released in the first Friday of the month, and this time around Friday is a holiday for the stock market (Good Friday). This basically gives traders a long weekend to digest the news.

Anyway, to the handicapping! The ADP report came out yesterday and said the economy added 209,000 in March. The Bloomberg consensus — a survey of 77 economists — says the number will be 205,000. Business Insider has been crunching various datasets of late and comes up with 193,000, a somewhat alarming figure given that we want to see 200,000 at least to support the idea that GDP is puttering along at around 2-2.5 percent, down from the 3 percent we saw in the fourth quarter of last year, but not the discouraging sub-2-percent pace we witnessed in much of 2011.