I’m big footing on Zandar and his link to the UK Business Insider regarding this month’s positive job report, as there was an interesting line I want to pursue:
In a note to clients after the report, economists at Capital Economics wrote that the report “adds to the evidence that the US economy is regaining momentum after another winter slowdown.” [emphasis mine]
For some reason the 1st quarter of the past several years have been dismal even as the rest of the year is seeing trend or above trend growth. We really should be seeing massively above trend growth to close the gap in potential output, but we won’t get that with austerians, assholes, economic illiterates and sadists occupying a significant number of policy veto points, so trend to slightly above trend growth is probably the best we’ll get.
One of the drivers of the 1st quarter drops has been absolutely miserable weather. It has been the polar vortex, it has been snows that bury Boston as if it is Buffalo, it is drought and deluge. It is climate change acting as predicted. And then spring comes around and people dig out and go about their normal life again and things rebound.
Politically this is important because a good number of the fundamental presidential models argue that economic growth is a key component of an incumbent or incumbent party winning re-election. The perception of economic growth through which the marginal members of the electorate is not anchored on Halloween. Instead economic expectations for a Presidential election are anchored during the first or second quarter preceding the election. Everything else short of a helicopter drop of money takes too long and is not sure enough for people to conclude that the current baseline is the real baseline.
So if economic expectations are anchored during the preceding winter and we’re expecting more frequently ugly weather due to climate change, this is yet another positive feedback loop where we keep dumping inputs into the system that worsen the situation without any stopping mechanism.
Time to look for new land by Hudson Bay.
SiubhanDuinne
After three hours, I don’t think it’s considered bigfooting.
srv
Winter is always coming.
WereBear
My hope is that the Republicans keep devolving and ruining their reputation among the young, the thinking, and the Non-racist.
rikyrah
just imagine what the economic numbers would be if we didn’t have one political party that decided to commit ECONOMIC TREASON against this country beginning January 20, 2009.
and, they haven’t stopped.
Fair Economist
Pretty much anything near Hudson Bay floods when the icecaps melt. Not a good place to be with climate change.
Bitter Scribe
A depressingly logical thesis.
MomSense
@rikyrah:
Exactly.
Richard mayhew
@SiubhanDuinne: when I first started to write the post, it would have been
catclub
I think the long slow growth is great for the Democrats’ chances in 2016, because:
a) expectations are low but positive
b)the chances of a recession are going away c) Janet Yellen really seems to know that wage growth is necessary before any squeeze in interest rates will be applied.
d) Hillary laid out that line about ‘the last two times we handed the economy over to the GOP look how they ruined it’. And she will use it again.
catclub
I think if the obstructionists in the GOP had been asked how much they would like to see the economy where it is due to NO government stimulus, they would not be as happy as the folks here are unhappy.
catclub
There is also the recent counter-example of the 2012 election. If you had asked how likely it was to re-elect a president when the unemployment rate during the entire period from Jan to september of the election year was over 8%, not many would rate those chances very high. But he was re-elected because people DID realize that growth ( yes growth) has been painfully slow, but still growth. Not the GOP making things worse.
Untwist those knickers!
Brachiator
@catclub:
This is really interesting. Where did you see Yellen commenting on wages? I am more used to seeing the head of the Fed and the Secretary of Treasury talking about GDP, unemployment and other figures, but not focusing on wages. This might be a very good sign if this area continues to be emphasized, even though I don’t think the Fed can do anything directly about wages.
Very smart of Hillary to hit this. The GOP likes to pretend that they are hard-headed job creators and tax cutters. Their actual failures needs to be emphasized again and again. And again.
SiubhanDuinne
@Richard mayhew:
Makes sense, and sounds like most of my comments.*
*(Timing, not erudition.)
retr2327
FWIW, there seems to be an emerging consensus among economists that the seasonal adjustments applied to winter results may be producing figures that are lower than “true output.” On the plus side, this tends to make the following quarters look better by comparison, so the results immediately pre-election may be getting a little extra boost . . .
catclub
@Brachiator:
I think mostly in my fevered hopes. They have been saying that they will be driven by ‘the data’. The data should be both
inflation actually going up, before they need to raise rates. The only thing that will drive up real inflation is wage growth.
I did hear Christine Lagarde saying that allowing inflation above the target 2% should happen. That is good to hear.
(She did not mention that missing below the target for N straight quarters is reason to believe that one quarter above the target does NOT mean hyperinflation has arrived. I would have.)
Punchy
With the polar regions melting as fast as they are, I’d think real estate somewhere halfway up K2 would be a much safer bet….
dww44
We watch a lot of CNBC in my household and with the jobs numbers out this morning, there was roundtable after roundtable of economic pundits holding forth on their import. The political bias among most of those pundits, both CNBC employed ones and guests, becomes very evident after not so very long. Predictably they tilt right, like Rick Santelli (who hates Janet Yellen and Democrats) and Joe Kernan (who hates Democrats and ANY sort of regulation), but others are more moderate in their takes( Steve Liesman) and stick to facts without inserting obvious political bias into the discussion.
But this morning there was also the discussion of the Greek/German impasse vis-a-vis the Greek debt/possible default and its possible contagion effect on the global economy. The very English accented CNBC pundit was part of the round table with the NYTimes co.umnist, James Stewart (who was quite interesting) kept lambasting Greece and its LEFTIST government and its leftist Finance Minister. The Keynesians don’t have much influence at CNBC.
But to your point, when economic policy becomes so firmly anchored in partisan rhetoric we all suffer because it results in elected politicians who can’t see beyond their ideological blinders and are unable to make policy, aside from corporate tax breaks, that would truly grow the economy and the middle class.
Corner Stone
@dww44: I saw that bit. Hilarious.
Did you happen to see them interview the CEO of Gawker? I thought it was going to come to blows a few times.
shell
A positive job report and the Stock Market goes down? What’s the connection?
srv
IDK, Huck is demonstrating he can throw people under the bus, which is clearly a Presidential skillset
dww44
@Corner Stone: No, I didn’t see that one. CNBC is my husband’s preferred viewing choice, so it’s always on in the background. But I’ve watched enough (and I did spend a whole career in the brokerage industry, but in a support position) to figure out the lay of the land. So what was their beef with the Gawker CEO? It’s recent unionization, I bet. Maybe I’ll go look for a replay.
Corner Stone
@shell: Mainly it’s Greece I think, and the weird bond action that’s been happening recently.
piratedan
@shell: short term profit taking… the day traders are cashing in to go on vacation
catclub
@shell: Random.
http://thereformedbroker.com/2015/06/05/on-rates-jobs-stocks-and-the-economy/
Corner Stone
@dww44: Yes, it was about the union vote. They wanted him to be angry about it, or at least talk nasty about unions and he wouldn’t do it. So they started framing him and his company in really unflattering terms and putting him on the defensive. He tried a few times to say what a believer in the free market he was but after a couple tries he started getting angry.
Glidwrith
I don’t know how much slowdown really could be attributed to winter per se. I tend to believe that everyone is saving up their cash for the holidays. When they hit, by all that is holy (or not), people are going to spend that cash on themselves, their kids and their family because they have scrimped all that time. After the holidays, of course, they have exhausted their savings and/or credit cards and stop any spending that are not absolutes, thus a poor 1st quarter.
Krugman has made the case numerous times that we have a demand-side problem. Therefore, if people spend enough to create a demand, it will help pull us out of the slump. The one guaranteed spending that people will do over absolute necessities are the holidays.
What I have been looking for each year was enough spending during the holidays that the amount of cash put into circulation during the holidays was sufficient to power the economy through that 1st quarter slump and into the summer, when folks would go on vacation or do other summer-type spending. As of 2013, I could see that pattern.
It also doesn’t hurt that we created a back-door stimulus by offering subsidies through the ACA. It surprises me not at all that when that cash infusion hit we suddenly kick-started the economy.
Punchy
@Corner Stone: I’m thinking Greece ought to clean up its act. It’s a slipperly slope that Greece is on; a Greece default doesn’t mix well with the Water-ford crystal set in Europe. I would hate to see the EU burned by Greece, as it would almost certain to leave a mark; perhaps even a deutschmark.
It’s clear the goose is cooked with Greece; only a matter of time, heated rhetoric, and small waves of protests (perhaps micro waves) to spice up the fail parade. Next up comes Turkey….Kenya believe it?
dww44
@Corner Stone: Yep, figures. That’s the problem with CNBC and financial news in general, the talking heads think that they have to be in the tank for the conservative view of business and their leaders. They cannot possibly fathom that there are other ways to look at economic policy while not being anti-free market. An unfettered free market would not be a good thing. It’s a darn good thing that Warren Buffet, political/economic moderate that he is, has been so successful; otherwise he’d have no credibility with them at all.
peach flavored shampoo
@Punchy: You’re making me Hungary with your comments. I guess I Congo get some Swede tea and Finnish off some Danishes.
Brachiator
@peach flavored shampoo: And remember that sufficient economic stimulus makes Brussels sprout.
fuckwit
@Punchy: See also Italy, Spain. Last I heard they were the next-weakest links in the Euro chain after Greece.
agorabum
@SiubhanDuinne: why is ‘bigfooting’ such a big deal, unless it’s an open thread on an open thread? I never quite got that…
Patricia Kayden
@WereBear: And keep showing how obnoxious they are by making jokes when political “enemies” are in mourning. And then only apologize when called out for being a troll.
http://www.nbcnews.com/politics/2016-election/ted-cruz-apologizes-making-joe-biden-joke-during-his-time-n369566
trollhattan
Would like to add that California and a large hunk of the American West experienced no weather-related slowdown last winter (or the winter before that and the winter before that…) so I guess we kept things going out here. You’re welcome.
Corner Stone
@Punchy: Mmmm…fried turkey…
raven
@agorabum: Some people give a shit. It’s like that dumb ass, OT.
raven
Air Force intel uses ISIS ‘moron’ post to track fighters
burnspbesq
Richard, I would go for the I-81 corridor between Syracuse and Binghamton. Easier to get your crops and/or livestock to market. Soon enough, given current trends, Michigan, Ohio, Pennsylvania, and upstate New York will have to pick up the slack after growing stuff in California is no longer cost-effective (or, perhaps, even possible)
Tan Don
For the first time I’ve contributed to a politician. I’m going to work for Bernie Sanders, again, knocking on doors for a politician for the first time since Bill Clinton ran for gov of Ark in ’78. Bernie is the only politician who is advocating for my family to get a raise to $15/hr.
Minimum Wage for the Middle Class
The “billionaire class.” How much is enough? How much is too much?
I want a bumper sticker that says “Bernie, baby!”
muddy
25 years ago I had a Bircher gun nut roommate who was very concerned about climate change. No one else talked about it at all back then. I know, right? How odd! But he said it was “a government plot to raise land values in Canada”. I was rather interested in this, how were the Canadians behind it? No, not them. “The Government.”
US government wants to raise land values in Canada? In the end apparently some secret world order I guess, I could not get him to be more specific. Anyway I said it would be great for him, as his house was only about 30 miles from the Canadian border, he’d be getting in on some of that sweet $ in the future. Then he got mad and wouldn’t talk about it anymore.
burnspbesq
OT: 25 minutes in, the US is looking very good against the Netherlands. Have hit two posts, and forced two quality saves from Cillesen. Michael Bradley is going a good job of running the show.
And of course, as soon as I write that, John Brooks goes to sleep and Huntelaar puts the Dutch on the board against the run of play.
sparrow
@Brachiator: Also, Kansas. Kansas, kansas, kansas. Jesus, what a clusterfuck my home state is. Even Krugman had an article saying it was breathtaking to have such a pure example of the utter failure of supply-side economics to work.
Lizzy L
Where can I sign up for the helicopter drop?
catclub
why isn’t this a bigger deal?
https://news.vice.com/article/airstrike-hits-islamic-state-car-bomb-factory-in-iraq
New thread?
cmorenc
@burnspbesq:
What will they grow, snow-peas?
Chris
@muddy:
Well, they’re convinced that the government is infested by a thing called “political correctness,” which is defined by hatred of all True Red Blooded
White SkinnedChristian Americans and a determination to favor all groups that aren’t them while disadvantaging them. Canadians are one of these Groups That Aren’t Them, therefore, the liberal federal government must be secretly helping them to one-up Real Americans.You say he grew up right near the Canadian border? There’s your answer. People usual center their anxieties on the Other that’s closest to them (which is why, for example, ground zero for anti-black racism was historically the South, but for anti-Catholicism it was the urban North)… For the John Birchers in the part of the country he grew up in, that was presumably Canadians.