Friday, February 3, 2012

JEC Hearing: January's Employment Situation

"The labor market is not recovering fast enough considering how depressed it has been. Thirty-one months into the Reagan recovery, we had added 8.7 million new payroll jobs. Today, however, the economy, at best, is at a crawl. We still are 6 million jobs short of the prerecession employment level; labor force participation is the lowest in decades; and yet unemployed workers still account for more than 8% of the shrunken workforce.

Whatever claims that President Obama makes about how much worse the recession could have been, his policies have not “stimulated” the economy. We now have a huge federal debt, continuing large deficits, and sluggish growth.

More than 2 1/2 years have passed since the recession formally ended, yet real GDP growth is now expected to decline this year from a less-than-stellar 2.8% in the last quarter. In contrast, we averaged 6.1% real GDP growth during the first 10 quarters of the Reagan recovery. Business is hoarding cash as it still holds investments below pre-recession levels, and it still is not materially stepping up hiring, despite what the payroll job number says....."

Opening Statement

Kevin Brady
Vice Chairman
Joint Economic Committee

See the rest of Vice Chairman Brady's Opening Statement here

See videos of Republican JEC members at today's hearing at the JEC youtube page

General Economics

USA Today | Minimum wage rates may climb this year
At least 17 states recently raised the minimum wage or are considering doing so in 2012, the most in at least six years.
CNN Money | Nevada's triple economic whammy
The Silver State, which will hold the Republican caucus on Saturday, has the dubious distinction of leading the nation in unemployment, foreclosure filings and share of homes worth less than the mortgages on them.
FOX News | US service industry growth surges in January
The Institute for Supply Management said Friday that its index of non-manufacturing activity jumped to 56.8 percent in January from 53 percent in December.
Bloomberg | Euro-Area Manufacturing, Services Expand
European services and factory output strengthened in January, led by growth in Germany and France, as the region’s leaders sought a solution to the debt crisis.
CNN Money | Small firms want more from Obama's U.S. manufacturing plan
A new Obama administration push to strengthen U.S. manufacturing has the support of smaller firms, but it might not be enough to stir many into action.
Politico | Private-equity firms gird for attacks
Private-equity firms, preparing for a tough year of attacks in the presidential race and by Capitol Hill Democrats, are launching an education campaign designed to mitigate the damage and improve the industry's image.
Market Watch | U.S. factory orders up 1.1% in December
Factory orders rose 1.1% in December, the Commerce Department reported Friday. Economists polled by MarketWatch had expected a 1.4% rise. But the report was bolstered by an upward revision to November

Econ Comments & Analysis                                                                                            
Real Clear Markets | America's Flawed, Outdated, Trade Policy
Over the last several decades, the character of international trade has changed dramatically. Drastic advances in communication and information technologies have allowed businesses to slice the production process into pieces which are then located in their most efficient locations.
Investors | Obama’s Promised Regulatory Reforms Are A Joke
Last August, regulatory czar Cass Sunstein announced rule changes to supposedly "save U.S. businesses billions of dollars in regulatory burdens." But contrary to his assertions, the regulatory review that led to these changes was neither "unprecedentedly ambitious" nor likely to have a significant effect on the economy.
Real Clear Markets | Defending Capitalism from Inequality Hokum
Inequality happens. It is inevitable in a political system such as ours. The "division of labor" inherently reflects different desires and different outcomes in earnings. Free people are precisely that-and they are free to choose their profession.
AEI | America's flawed, outdated trade policy
Drastic advances in communication and information technologies have allowed businesses to slice the production process into pieces which are then located in their most efficient locations.
Politico | Infrastructure's long, long road
GOP leaders insist they will bring their energy-expanding and road-building plan to the floor this month, but it’s clear they have a ways to go before uniting the Republican Conference.

CafĂ© Hayek | More British “austerity”
The government elected last spring in the United Kingdom committed itself to rapidly reducing the size of its deficit. This government austerity was supposed to give a big boost to the private sector.
Coordination Problem | Capable, but Fallible Actors; Orderly, yet Inefficient Systems
To my mind, one of the really serious problems with modern economic thought is to confuse the concept of rational action with 'correct action', and to conflate the orderly coordination of the market economy with the perfect dovetailing of plans that defines an equilibrium state of affairs.
Library of Economics | Concerns with the CBO
In its overall budget forecasting, the CBO offers a useful check on politicians of both parties. I admit to being a big fan of the CBO for that reason.
WSJ | Geithner Defends Dodd-Frank, Pledges Housing Moves
Treasury Secretary Timothy Geithner defended the Dodd-Frank financial-overhaul law against mounting attacks on Thursday, the latest in a series of moves by the Obama administration to push ahead with its signature Wall Street overhaul.
National Review | Obama's Regulatory Record
At first I was impressed by what seemed to be the president’s admission that the financial crisis wasn’t caused by deregulation. But then I wondered whether his statement was correct.
Heritage Foundation | Economic Inequality: Does Unequal Wealth Cause Hardship for the Poor?
In a functioning market economy, however, the total amount of income is decidedly not static.  Societies can generate new income.  If someone’s slice of the economic pie gets bigger, therefore, that doesn’t mean another person’s slice gets smaller. 

Health Care

National Journal | States Under Pressure as Health Law Deadlines Approach
The health care law's biggest changes don't take effect until 2014, when states and insurers must be ready to begin signing up an estimated 32 million people in Medicaid and private insurance. But a successful rollout in two years hinges on critical decisions that states must make -- and take quick action on -- this year.
National Journal | HHS Celebrates Donut Hole Savings
Many Medicare beneficiaries are saving hundreds of dollars a year in reduced drug fees and premiums because of efforts to close the "donut hole" in Part D prescription drug coverage, according to a new report from the Department of Health and Human Services.

CATO | The Real Tragedy of the Komen/Planned Parenthood Flapdoodle
One private organization pulling funding for another private organization is way more important than Congress voting to repeal an entitlement program … isn’t it?


WSJ | Bernanke Questioned On Fed's New Policies
It is becoming a regular ritual for Federal Reserve Chairman Ben Bernanke: Announce new policies and get grilled about them by congressional lawmakers.
CNN Money | Kiss QE3 hopes goodbye. And good riddance!
The Federal Reserve is still exercising caution when discussing the U.S. economy. Last week, it even suggested that it may need to keep short-term interest rates near zero until the end of 2014.

Econ Comments & Analysis                                                                                            
Bloomberg | Bernanke Won’t Tolerate Inflation to Boost Jobs
Federal Reserve Chairman Ben S. Bernanke defended the central bank’s newly established price goal and rejected suggestions he was prepared to allow higher inflation to create jobs.
CATO | The Federal Reserve's Crony Capitalism
By keeping the federal funds rate close to zero for three more years, and switching from shorter to longer-term securities, the Fed hopes to spur investment and growth. The problem is that manipulating interest rates and allocating credit to favored parties fosters crony capitalism, not market liberalism.


WSJ | With Tax Break, Corporate Rate Is Lowest in Decades
U.S. companies are booking higher profits than ever. But the number crunchers in Washington are puzzling over a phenomenon that has just come into view: Corporate tax receipts as a share of profits are at their lowest level in at least 40 years.

Econ Comments & Analysis                                                                                            
Bloomberg | The Problem That the Buffett Rule Won’t Fix: Michael Kinsley
As everybody knows by now, Warren Buffett -- class traitor -- pays a smaller share of his income in taxes than does his secretary, Debbie Bosanek. In his State of the Union address last month, President Barack Obama proposed the “Buffett Rule” to rectify this.


WSJ | AstraZeneca Plans to Cut 7,300 Jobs
U.K. drug maker AstraZeneca PLC said Thursday it would eliminate another 7,300 jobs, bringing its total cuts over the past five years to nearly 30,000.
Washington Times | Jobless rate has fallen because of dropouts
The big drop in the unemployment rate in recent months to 8.3 percent from double-digit rates during the recession came at a fortunate time for President Obama, but economists say it as much because of young people dropping out of the labor market as it is the result of businesses adding jobs.
FOX News | Unemployment drops to 8.3 pct. after hiring burst
 In the most impressive surge for the job market since early last year, the United States added 243,000 jobs in January, far more than economists expected. The unemployment rate dropped to 8.3 percent, the lowest in three years.

Econ Comments & Analysis                                                                                            
WSJ | Government Cannot Create Sustainable Jobs
Persistently high unemployment is more severe in Europe and the United States today than at any time since the Great Depression. What is the solution?
Market Watch | Reactions from economists, D.C. to jobs data
Economists said Friday’s report that the U.S. economy added 243,000 jobs in January was positive for the U.S. economy and that it raised the possibility that the Federal Reserve could raise interest rates before the end of 2014. Both the White House and congressional Republicans said even more job-creating measures were needed to keep up the employment growth.
Heritage Foundation | Heritage Employment Report: January Jobs
For the last three months, job creation has averaged 201,000 a month, a sign that the labor market recovery may be truly underway.

Calculated Risk | January Employment Report Revisions and Issues
Bloomberg is showing the consensus is for an increase of 135,000 payroll jobs in January, and for the unemployment rate to remain unchanged at 8.5%.
WSJ | Strong Factory Hiring? Don’t Bet On
“More factory workers!” It’s one campaign slogan Democrats and Republicans agree on. There’s just one problem. U.S. factory jobs have been on a structural downtrend, and government policy can’t change that.
Neighborhood Effects | What Can Government Do to Create Jobs?
We may not know how to instantly breathe life back into a sick economy, but economists do know a great deal about how government can create an environment which is conducive to growth.


Econ Comments & Analysis                                                                                            
Washington Times | The Greek bailout cycle
In Europe, every day seems to be Groundhog Day. The Greek economy woke up Thursday morning, saw its shadow and retreated for six more weeks of bailouts.
MSN Money | The world's $8 trillion debt hole
There's a huge pit of private and public borrowing we have to work our way out of to really get the developed world's economy moving again. And budget-cutting won't do the job.
Washington Times | Obama’s recipe for poverty
The CBO report by Congress‘ nonpartisan budgeteers reads like one of those disaster movies in which America is under attack by an alien enemy that destroys everything in its path.
Politico | Ben Bernanke: Spending 'unsustainable'
Federal Reserve Chairman Ben Bernanke told a congressional panel Thursday that shrinking the deficit “should be a top priority,” saying that spending projections over the next decade are “clearly unsustainable.”