South By North Strategies, Ltd.

Around the Dial – April 19

Economic policy reports, blog postings, and media stories of interest:

• Paul Krugman discusses “looters in loafers.”
• The News & Record reports on business incentives in Greensboro.
• Calculated Risk asks about the tie between household size & housing starts.
• Econbrowser analyzes recent drops in consumer confidence.

It’s Aggregate Demand, Stupid!

From a recent speech by Christina Romer of the Council of Economic Advisers …

My first and most fundamental point is that when it comes to the economy we are very far from normal.  The unemployment rate is currently 9.7 percent.  I find it distressing that some observers talk about unemployment remaining high for an extended period with resignation, rather than with a sense of urgency to find ways to address the problem.  Behind this fatalism, there seems to be a view that perhaps the high unemployment reflects structural changes or other factors not easily amenable to correction.  High unemployment in this view is simply “the new normal.”  I disagree.
…
The high unemployment that the United States is experiencing reflects a severe shortfall of aggregate demand.  Despite three quarters of growth, real GDP is approximately 6 percent below its trend path.   Unemployment is high fundamentally because the economy is producing dramatically below its capacity.  That is, far from being “the new normal,” it is “the old cyclical.”

Regarding long-term unemployment …
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Is This Really Good News?

Mark Thoma asks if a falling deficit really is good news.

But taking a different view, one that focuses on people rather than votes, there is a reason to help households struggling to find employment. Even if there is little political gain to doing so, every job that is created changes the circumstances some household faces for the better, and that alone ought to be enough motivation to do as much as possible to help. But Stan Collender is correct, as I explain here, to conclude that the administration has no plans to even propose doing more to help. No matter what effect that decision has on votes, with households still struggling to find decent jobs, or any job, I think that’s the wrong choice to make.

NC March Employment Report

The March employment report released today by the Employment Security Commission points to few changes in the state’s labor market. Job growth remains insufficient to accommodate all those who wish to work, and unemployment remains at an elevated level.

Last month, North Carolina employers added 3,300 more positions than they eliminated; private-sector and public-sector employers contributed roughly equally to that gain. Since December 2007, North Carolina has lost, on net, 280,200 positions or 6.7 percent of its payroll employment base.

Moderating labor market conditions are reflected in March’s household data. Last month, the labor force expanded by 0.3 percent as 15,300 additional people sought work. The number of employed individuals rose, and the number of unemployed individuals declined. Consequently, the unemployment rate dipped from 11.2 percent to 11.1 percent. Nevertheless, the past year saw the number of unemployed Tar Heels grow by 7.3 percent and the unemployment rate rise to 11.1 percent from 10.3 percent.

Click here for South by North Strategies’ full analysis of the March employment report.

NC Labor Market Little Changed in March

CHAPEL HILL (April 16, 2010) – The March employment report released today by the Employment Security Commission points to few changes in the state’s labor market. Job growth remains insufficient to accommodate all those who wish to work, and unemployment remains at an elevated level.

Last month, North Carolina employers added 3,300 more positions than they eliminated; private-sector and public-sector employers contributed roughly equally to that gain. Since December 2007, North Carolina has lost, on net, 280,200 positions or 6.7 percent of its payroll employment base.

“Labor market conditions have stabilized since last September,” says John Quinterno, a principal at South by North Strategies, Ltd., a research firm specializing in economic and social policy. “2010 has witnessed some slight job creation, consistency in the unemployment rate, and a decline in new unemployment claims, but job growth is insufficient to absorb new workers or those displaced earlier in the recession.”

In March, North Carolina employers added 3,300 more positions than they cut. The public sector gained, on net, 1,600 positions (federal hiring accounted for 38% of the total), and the private sector added, on net, 1,700 positions. Among private industries, leisure and hospitality services gained the most positions (+2,200), followed by manufacturing (+2,100). Professional services posted the largest loss (-2,400), followed by trade, transportation, and utilities (-2,100). Additionally, a downward revision to the February data raised net job losses for that month from 2,800 to 3,800.

“So far in 2010, private-sector employers have added 12,600 more positions than they have eliminated, and employment appears to have leveled off in such hard-hit industries as manufacturing and construction,” adds Quinterno. “Unfortunately, private-sector job growth is not occurring at the pace needed to bring about a swift recovery.”

Despite the recent moderation in job losses, conditions deteriorated over the last year. Compared to March 2009, the state had 61,600 fewer jobs (-1.6 percent). In terms of individual industries, manufacturing (-30,200) and construction (-27,700) lost the greatest number of positions over the past year, while construction also declined the most in relative terms (-13.7 percent). Government employment grew the most in numerical (+17,400 positions) and relative (+2.4 percent) terms.

Moderating labor market conditions are reflected in March’s household data. Last month, the labor force expanded by 0.3 percent as 15,300 additional people sought work. The number of employed individuals rose, and the number of unemployed individuals declined. Consequently, the unemployment rate dipped from 11.2 percent to 11.1 percent. Nevertheless, the past year saw the number of unemployed Tar Heels grow by 7.3 percent and the unemployment rate rise to 11.1 percent from 10.3 percent.

“A jobless recovery clearly is taking shape in North Carolina,” observes Quinterno. “While job losses have abated and some private-sector payroll growth has occurred, the growth is insufficient to accommodate the sizable share of the workforce that is jobless anytime soon.”