There has been a recurring theme in the last few months. At the beginning of each new month, everyone waits with bated breath for the new Employment Situation Summary report to be released by the Bureau of Labor Statistics. These numbers affect the candidate’s fortunes, but more importantly, they show us whether we need to contemplate further action to stimulate the economy and job growth and how successful our previous attempts to do so have been.
As of writing this, the Federal Reserve has announced a new round of quantitative aimed at helping the economy. These measures probably won’t be the panacea that so many of us are looking for, but that’s because economic science is an imperfect one. In fact, our modern notion of economics only really took shape in the last 250 years with thinkers such as Adam Smith pioneering new trains of economic thought.
With this in mind, we can look at August’s jobs report with a little more clarity. The jobs report is culled from a plethora of variables such as the unemployed, (those who had searched for work in the last 4 weeks), the marginally attached, (those who were not in the labor force, wanted to work and had looked within the last year), and those employed both full and part time.
Also, jobs reports are frequently modified and revised to account for unknown loss or growth. This means that the assumptions we make today based on the August numbers could change next month based on new data.
In August, the economy added 96,000 jobs and saw the unemployment rate drop from 8.3% to 8.1%. This drop was due to a rise in what are called discouraged workers (marginally attached) who want work but have given up looking for it. Critics were quick to lambast President Obama’s economic as failed with the release of these numbers. While the numbers were weaker than previous months, this isn’t due to the failing of the stimulus, but rather the nature of the economy in August. In July, many automobile companies closed factories for retooling, but laid off fewer workers than expected meaning that fewer jobs were added in August in the manufacturing industry. And many of the jobs that did disappear came from the public sector, as federal and state governments cut back on spending.
August is also back to school month for many families and this factors into the equation. August had 844,000 discouraged workers which is a DECLINE from the previous year by 133,000. In addition, of the 2.6 million workers who are marginally attached “1.7 million persons marginally attached to the labor force in August had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.”
This number includes season unemployment such as college and high school youth, as well as parents who stay home to care for them.
State economies are a fluid, dynamic environment. No two are exactly alike, and some recover quicker than others. States like North Dakota (Oil Boom), Florida (Tied to tourism), and others all have unique factors which effect their recovery. President Obama’s stimulus was a bandage on a hemorrhaging wound. In some states, it had more effect than in others. But it always had a positive effect.
“Economists at Goldman Sachs, IHS Global Insight, JPMorgan Chase and Macroeconomic Advisers, who say the stimulus boosted gross domestic product by 2.1% to 2.7%.”
States which made full use of the stimulus recovered faster than those which dallied, only choosing to make use of the support after they saw the positive effects in other states. Ask Congressman Ryan about this.
To those who think we didn’t get our monies worth, I would ask you to reconsider. A reversal in the job market from loss to gain, a boost in the GDP, and an investment in infrastructure which will shape the nation as it develops. And I’m not solely talking about roads and bridges, programs often criticized by the temporary benefit they provide to the worker hired, but long term improvement such as the digitalization of medical records which created thousands of permanent IT jobs and benefitted every American which goes to a doctor’s office.
Was the stimulus the perfect solution to the problem?
Who knows, economists will probably debate this for years to come. But it did turn around the economy, invest in America on a large scale and provide the image of a government doing something to help the people, not just bickering. Nothing is perfect. But the stimulus was exactly what was needed, and its benefits have been felt throughout America since its passing.