Tuesday, July 12, 2011
Another JOLT of Bad News on Jobs
Ellen Freilich
Reuters Jul 12, 2011
As if last week’s dismal employment report was not enough, the clumsily-dubbed Job Openings and Labor Turnover Survey, or JOLTS, offers similarly discouraging signals. No wonder finding a job feels tough: there are nearly five workers (4.7) out there for every open position.
Credit Suisse Economist Henry Mo puts it rather starkly:
Labor demand is simply not strong enough to support a complete job recovery. Even if all job vacancies were filled overnight, almost 11 million workers would still be left unemployed.
Total job openings in May were about 40 percent above the trough of 2.1 million openings in July 2009. But the number is still more than one-third below pre-recession levels (4.56 million in 2007).
Weak labor demand is not limited to just a few sectors, like construction. It’s broad-based. That suggests a cyclical shortfall in aggregate demand, rather than a structural issue, Mo said.
Recent research from Goldman Sachs corroborates the notion that the job market rut is due to a weak economy rather than a mismatch in skills and available jobs. Goldman economists, like Federal Reserve officials, are still holding out for a second-half recovery. But they admit the prospects are looking dimmer, particularly with Europe’s debt crisis spreading and Washington still haggling over the debt ceiling.
The risks remain clearly on the downside. The biggest ones over the next month lie on the fiscal side, both in the US and in Europe
Reuters Jul 12, 2011
As if last week’s dismal employment report was not enough, the clumsily-dubbed Job Openings and Labor Turnover Survey, or JOLTS, offers similarly discouraging signals. No wonder finding a job feels tough: there are nearly five workers (4.7) out there for every open position.
Credit Suisse Economist Henry Mo puts it rather starkly:
Labor demand is simply not strong enough to support a complete job recovery. Even if all job vacancies were filled overnight, almost 11 million workers would still be left unemployed.
Total job openings in May were about 40 percent above the trough of 2.1 million openings in July 2009. But the number is still more than one-third below pre-recession levels (4.56 million in 2007).
Weak labor demand is not limited to just a few sectors, like construction. It’s broad-based. That suggests a cyclical shortfall in aggregate demand, rather than a structural issue, Mo said.
Recent research from Goldman Sachs corroborates the notion that the job market rut is due to a weak economy rather than a mismatch in skills and available jobs. Goldman economists, like Federal Reserve officials, are still holding out for a second-half recovery. But they admit the prospects are looking dimmer, particularly with Europe’s debt crisis spreading and Washington still haggling over the debt ceiling.
The risks remain clearly on the downside. The biggest ones over the next month lie on the fiscal side, both in the US and in Europe
As Talks Stall, New Debt Plan Offered
Wall Street Journal, July 13, 2011.
McConnell Breaks GOP Ranks, Says the President Should Be Given Authority to Raise the Borrowing Limit on His Own.
By CAROL E. LEE, DAMIAN PALETTA and NAFTALI BENDAVID
Negotiations over a deficit-reduction agreement spiraled downward Tuesday as the White House and congressional leaders dug in on their positions even as anxiety mounted that they could wait too long to reach a deal to avoid a government default.
Sen. McConnell, left, with Sen. Jon Kyl, blasted the president.
In one sign that top leaders worry they won't reach a deal in time, Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a new proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it. Because Mr. Obama would have to lift the debt ceiling, it could place any political fallout on him for doing so. But Republican conservatives protested that Mr. McConnell's plan would give up the leverage the GOP has to force the White House to approve government spending cuts in return for a debt-ceiling increase. And Mr. Obama also said Monday he would not sign any temporary debt-ceiling increase.
White House officials say the $14.29 trillion debt cap must be raised by Aug. 2 or the government will run out of cash to pay all its bills. Mr. Obama warned in an interview with CBS News that he could not guarantee that the government would be able to send checks to recipients of Social Security, military pensions and other government benefits next month without a debt-ceiling increase. "There may simply not be the money in the coffers to do it," he said.
Taken together, the developments of the last two days suggest that the collapse of the effort by Mr. Obama and House Speaker John Boehner (R., Ohio) to strike a bigger and more historic deficit-cutting deal has made the effort to negotiate a smaller agreement harder rather than easier. House Republicans met privately on Capitol Hill before their leaders went to the White House for another round of deficit-reduction negotiations with Mr. Obama and their Democratic counterparts. The resounding consensus of the members was "we've got to stand our ground" against accepting any tax increases in an agreement and to keep pushing for more than $2 trillion in deficit reduction over 10 years, said one Republican who attended.
In the Republican caucus meeting, Mr. Boehner quickly dispelled any notion that he and Mr. Obama would continue to seek a $4 trillion deal including large cuts to entitlement programs such as Social Security, Medicare and Medicaid, and an overhaul of the tax code. "It became clear that they would only do entitlement reform if it came along with tax hikes," Mr. Boehner said, according to a person in the room. "Am I angry about it? I sure as hell am. I believe we are missing a great opportunity."
Mr. McConnell's proposal to allow the president to raise the debt ceiling came after he said in a Senate speech that the country cannot solve its fiscal problems with Mr. Obama as president. "After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable," he said. It was not immediately clear whether his debt-limit proposal has broader support within his party, or with the Democrats who would be needed to approve it in the Senate. Such a complex plan is unlikely to pass anytime soon. Senate Majority Leader Harry Reid (D., Nev.) said he did not want to "trash" Mr. McConnell's proposal, but said that he needs to study it.
Meanwhile, some 470 executives—including the chief executives from Alcoa Inc., DuPont, Citigroup Inc. and Procter & Gamble Co.—released a letter to the president and Congress urging them to raise the debt ceiling.
Hitting the Ceiling
See what the federal debt limit has been at year-end since 1940.
The executives warned that a government default could throw financial markets into "disarray" and "this is a risk our country must not take." The letter came after the U.S. Chamber of Commerce, National Association of Manufacturers, and Financial Services Forum have spent months in briefings with lawmakers warning about default. In some of those meetings, officials said that if the U.S. government's bond rating were downgraded from Aaa to Aa, it could shave 1% off the gross domestic product and cost at least one million jobs. "Now is the time for our political leaders to act," the executives wrote. Treasury Department officials have said the government would only be able to spend the money it brings in each day through revenue if the debt ceiling isn't increased. The government is scheduled to pay $23 billion in Social Security benefits on Aug. 3, and it is only expected to bring in $12 billion that day in tax revenue, according to the Bipartisan Policy Center.
Another emerging complication is a growing insistence by some Republicans that Congress pass a balanced-budget amendment to the Constitution before a vote to increase the debt limit. The House is expected to vote on such an amendment next week, and Senate Republicans may force a vote in their chamber as well. Democrats say a balanced-budget amendment is a political sideshow that's unlikely to pass, especially because the GOP version requires super-majorities in Congress for raising taxes or spending.
Janet Hook contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com and Naftali Bendavid at naftali.bendavid@wsj.com
McConnell Breaks GOP Ranks, Says the President Should Be Given Authority to Raise the Borrowing Limit on His Own.
By CAROL E. LEE, DAMIAN PALETTA and NAFTALI BENDAVID
Negotiations over a deficit-reduction agreement spiraled downward Tuesday as the White House and congressional leaders dug in on their positions even as anxiety mounted that they could wait too long to reach a deal to avoid a government default.
Sen. McConnell, left, with Sen. Jon Kyl, blasted the president.
In one sign that top leaders worry they won't reach a deal in time, Senate Minority Leader Mitch McConnell (R., Ky.) unveiled a new proposal that would allow President Barack Obama to raise on his own the federal borrowing limit by $2.4 trillion in three installments before the end of 2012, unless two-thirds of Congress votes to block it. Because Mr. Obama would have to lift the debt ceiling, it could place any political fallout on him for doing so. But Republican conservatives protested that Mr. McConnell's plan would give up the leverage the GOP has to force the White House to approve government spending cuts in return for a debt-ceiling increase. And Mr. Obama also said Monday he would not sign any temporary debt-ceiling increase.
White House officials say the $14.29 trillion debt cap must be raised by Aug. 2 or the government will run out of cash to pay all its bills. Mr. Obama warned in an interview with CBS News that he could not guarantee that the government would be able to send checks to recipients of Social Security, military pensions and other government benefits next month without a debt-ceiling increase. "There may simply not be the money in the coffers to do it," he said.
Taken together, the developments of the last two days suggest that the collapse of the effort by Mr. Obama and House Speaker John Boehner (R., Ohio) to strike a bigger and more historic deficit-cutting deal has made the effort to negotiate a smaller agreement harder rather than easier. House Republicans met privately on Capitol Hill before their leaders went to the White House for another round of deficit-reduction negotiations with Mr. Obama and their Democratic counterparts. The resounding consensus of the members was "we've got to stand our ground" against accepting any tax increases in an agreement and to keep pushing for more than $2 trillion in deficit reduction over 10 years, said one Republican who attended.
In the Republican caucus meeting, Mr. Boehner quickly dispelled any notion that he and Mr. Obama would continue to seek a $4 trillion deal including large cuts to entitlement programs such as Social Security, Medicare and Medicaid, and an overhaul of the tax code. "It became clear that they would only do entitlement reform if it came along with tax hikes," Mr. Boehner said, according to a person in the room. "Am I angry about it? I sure as hell am. I believe we are missing a great opportunity."
Mr. McConnell's proposal to allow the president to raise the debt ceiling came after he said in a Senate speech that the country cannot solve its fiscal problems with Mr. Obama as president. "After years of discussions and months of negotiations, I have little question that as long as this president is in the Oval Office, a real solution is unattainable," he said. It was not immediately clear whether his debt-limit proposal has broader support within his party, or with the Democrats who would be needed to approve it in the Senate. Such a complex plan is unlikely to pass anytime soon. Senate Majority Leader Harry Reid (D., Nev.) said he did not want to "trash" Mr. McConnell's proposal, but said that he needs to study it.
Meanwhile, some 470 executives—including the chief executives from Alcoa Inc., DuPont, Citigroup Inc. and Procter & Gamble Co.—released a letter to the president and Congress urging them to raise the debt ceiling.
Hitting the Ceiling
See what the federal debt limit has been at year-end since 1940.
The executives warned that a government default could throw financial markets into "disarray" and "this is a risk our country must not take." The letter came after the U.S. Chamber of Commerce, National Association of Manufacturers, and Financial Services Forum have spent months in briefings with lawmakers warning about default. In some of those meetings, officials said that if the U.S. government's bond rating were downgraded from Aaa to Aa, it could shave 1% off the gross domestic product and cost at least one million jobs. "Now is the time for our political leaders to act," the executives wrote. Treasury Department officials have said the government would only be able to spend the money it brings in each day through revenue if the debt ceiling isn't increased. The government is scheduled to pay $23 billion in Social Security benefits on Aug. 3, and it is only expected to bring in $12 billion that day in tax revenue, according to the Bipartisan Policy Center.
Another emerging complication is a growing insistence by some Republicans that Congress pass a balanced-budget amendment to the Constitution before a vote to increase the debt limit. The House is expected to vote on such an amendment next week, and Senate Republicans may force a vote in their chamber as well. Democrats say a balanced-budget amendment is a political sideshow that's unlikely to pass, especially because the GOP version requires super-majorities in Congress for raising taxes or spending.
Janet Hook contributed to this article.
Write to Damian Paletta at damian.paletta@wsj.com and Naftali Bendavid at naftali.bendavid@wsj.com
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