Unemployment hit a four-year low in April, according to new Bureau of Labor Statistics (BLS) numbers out Friday, and numbers for the first two months of the year were revised upward. But the situation is still difficult. Massive budget cuts have only just begun to take effect and could still drag on the recovery.
"While more work remains to be done, today’s employment report provides further evidence that the US economy is continuing to recover from the worst downturn since the Great Depression," Alan Krueger, chairman of the White House Council of Economic Advisers, said in a statement Friday.
In April, American employers added 165,000 jobs, more than forecasters had projected, bumping the unemployment rate down from 7.6 to 7.5 percent. As my colleague Kevin Drum points out, "[A]bout 90,000 of those jobs were needed just to keep up with population growth, so net job growth clocked in at 75,000."
Friday's BLS report also revised up by 114,000 the jobs numbers for the prior two months, bringing average job growth for the last three months to 212,000. The news sent stocks soaring Friday morning.
Economist Dean Baker, cofounder of the left-leaning Center for Economic and Policy Research, cautions against too much enthusiasm. "[T]he growth reported for April was unbalanced with 34,000, more than a fifth of the total, coming from employment services," he wrote in a statement Friday. "There was also a disturbing decline in the length of the average workweek of 0.2 hours…That is equal to the largest drop since the recovery back began in 2009. In short, this report is at best a mixed picture."
Part of that is because of an aging population, CBPP says:
But the decline also reflects to an important extent an ongoing dearth of good job prospects. Some people retire earlier than they otherwise would or go on disability when they might be able, in a stronger job market, to find a job that accommodates their disability. Others become discouraged about their job prospects and stop looking until conditions improve. The unemployment rate doesn't reflect those decisions; to be counted as officially unemployed a person must be actively looking for work. But many of those people would start looking for work again if they thought jobs were available.
Sequestration, the across-the-board budget cuts that went into effect a couple months ago and hit everything from defense to Head Start programs, may also be hampering job growth. The budget cuts helped reduce government employment by 11,000 jobs in April. As the New York Times reports, "Economists have been warning that the economy—and job creation—will slow in the second-quarter, largely as a result of fiscal tightening in Washington…The mandated budget cuts, known as sequestration, officially went into effect in March, and if they continue, layoffs could increase."
Krueger echoed this, and called for Congress to take action to stanch the bleeding. "Now is not the time for Washington to impose self-inflicted wounds on the economy," he said in his statement. "The administration continues to urge Congress to replace the sequester with balanced deficit reduction, while working to put in place measures to create middle-class jobs, such as by rebuilding our roads and bridges and promoting American manufacturing."
Diane Swonk, chief economist for Mesirow Financial in Chicago, told the New York Times, "If the government simply did no harm, we could be at escape velocity."
On Wednesday, President Obama nominated Rep. Mel Watt, a Democrat from North Carolina, to head the Federal Housing Finance Agency (FHFA), the organization that oversees the mortgage financing giants Fannie Mae and Freddie Mac. Advocates for low-income borrowers are psyched.
The National Community Reinvestment Coalition (NCRC), a group that promotes access to affordable housing, says the move means that the agency will finally be freed to assist struggling borrowers. For over a year, the current acting director of the FHFA, Ed DeMarco, has blocked efforts to allow borrowers to reduce their mortgage balances. Prominent economists say principal reduction is the single most important thing the administration could do to revive housing, and even though the Obama administration only recently began to heed this advice, DeMarco wasn't into it. He claimed that reducing Americans' mortgage debts would encourage people to fall behind on their mortgages. And he said a write-down program wasn't worth the cost, even though, according to his own agency, loan balance reduction could help up to half a million borrowers and save taxpayers some $1 billion.
All that would likely change if Watt gets confirmed. The congressman, who sits on the powerful House Financial Services Committee, is known for promoting lending to low-income and minority borrowers. As John Taylor, president and CEO of NCRC, told Mother Jones, "He has a real commitment to ensure that working class people have access to mortgage products... I think he will jump-start that process." Taylor adds that this could in turn give the sluggish housing rebound a bump. "Fannie and Freddie have been in shut-down mode when comes to working-class borrowers... DeMarco ignored the foreclosure crisis and the roll Fannie and Freddie could play in trying to prevent more foreclosures, which is critical to the housing recovery," he says.
Taylor thinks that despite Watt's progressive creds, he has a good chance of being confirmed. "I think he's built up a lot of good will as somebody who has demonstrated the ability to cross the aisle and not personalize disagreements with members of the other party. He has a genuine possibility of going forward." Plus, banks like Watt. Insurers and financial firms are some of his biggest donors.
Still, as Annie Lowrey and Peter Eavis write in the New York Times, "Watt’s nomination will most likely inflame long-running political battles over how much the government should do to make mortgages available and support homeowners." And Taylor cautions, "It may not have to do with him. It may just have to do with Republicans not wanting to support the president in any way." If Watt does fail to win Senate confirmation, the White House has a secret weapon: it could give Watt the job as a temporary recess appointment.
Two months ago, $85 billion in automatic slash-and-burn spending cuts to federal and state programs kicked in because Congress couldn't come up with a better way to deal with the deficit. Today, my colleague Tim Murphy reports on the ways those cuts are playing out across all 50 states, from shuttered Head Start programs to massive layoffs. If that weren't bad enough, a pair of prominent researchers said Monday that austerity policies are making people sick.
Oxford University political economist David Stuckler and Stanford University epidemiologist Sanjay Basu are publishing a new book this week detailing how austerity cuts are causing ill health across Europe and North America by driving up depression, suicide, and infectious diseases, and limiting access to medicines and healthcare. Reuters reports:
[T]he researchers say more than 10,000 suicides and up to a million cases of depression have been diagnosed during what they call the "Great Recession" and its accompanying austerity across Europe and North America.
In Greece, moves like cutting HIV prevention budgets have coincided with rates of the AIDS-causing virus rising by more than 200 percent since 2011—driven in part by increasing drug abuse in the context of a 50 percent youth unemployment rate.
Greece also experienced its first malaria outbreak in decades following budget cuts to mosquito-spraying programs.
And more than five million Americans have lost access to healthcare during the latest recession, they argue, while in Britain, some 10,000 families have been pushed into homelessness by the government's austerity budget.
Previous work by the same researchers has also linked rising suicide rates to austerity measures. But they maintain that the bad health effects are not inevitable, even in the worst crises, and point to the Great Depression as an example. "During the 1930s depression in the United States, each extra $100 of relief spending from the American New Deal led to about 20 fewer deaths per 1,000 births, four fewer suicides per 100,000 people and 18 fewer pneumonia deaths per 100,000 people," Kate Kelland writes at Reuters.
Last week, Mother Jonesreported that some financial reform advocates were worrying that Treasury Secretary Jack Lew was not taking a sufficiently fierce stance against a group of House bills that would weaken Wall Street reform. Similar measures died last year, and with some Democrats and Republicans in the process of reviving them, reform advocates have become nervous, especially since Lew has not yet echoed the strong opposition to these proposals that was voiced last year by his predecessor, Timothy Geithner.
Treasury Department officials, though, say there is nothing to fear. Last week, a Treasury Department spokesman told Mother Jones, "Of course the Treasury secretary would oppose any effort to weaken Wall Street reform," known as the Dodd-Frank law. She pointed to Lew's recent comments on Bloomberg television. "The purpose of Dodd-Frank was to make sure the American taxpayer would never again be in the position where they had to step in when banks failed," he told the news channel. "We are committed to that purpose." Treasury is not condemning these measures yet because, as a Treasury spokeswoman told Mother Jones last week, the bills have not even won approval at the committee level. A Treasury Department official this week reiterated Lew's opposition to the crusade to water down Wall Street reform, but the official noted that the department doesn't want to get into the habit of denouncing all the various bills that are thrown into the hopper on Capitol Hill. The official emphasized that Lew's previous public statements opposing efforts to undermine Dodd-Frank or delay its implementation do indeed cover the set of bills that have been re-introduced in the House. The word at Treasury: if these bills do gain traction, Lew will not hesitate to slam them.
On Wednesday, Mother Jonesran a story on how newly-minted Treasury Secretary Jack Lew is reluctant to take a stand against a series of Wall Street deregulation bills now being considered by the House Financial Services Committee. After the story pubbed, a spokeswoman for Treasury got in touch with Mother Jones to clarify its position.
Last year, Geithner slammed a series of seven bills that would have deregulated Wall Street banks. Those bills never made it to the Senate before the last Congress ended, but a spate of nearly identical bills are being considered again. When asked by Mother Jones whether Lew would echo Geithner's opposition to them, Lew's office had no comment, but pointed to recent testimony by another Treasury official warning against messing with the Dodd-Frank Financial Reform Act, the sweeping 2010 law aimed at preventing another 2008-style financial crisis.
Once the story started making the rounds, a spokeswoman for Lew called Mother Jones. "Of course the Treasury secretary would oppose any effort to weaken Wall Street reform," she said. She pointed to Lew's recent comments on Bloomberg television. "The purpose of Dodd-Frank was to make sure the American taxpayer would never again be in the position where they had to step in when banks failed," he told the news channel. "We are committed to that purpose."
Lew's spokeswoman also pointed out that Geithner made his statement condemning the bills last year after several of the them had already moved out of committee, and some had passed the House. "We didn't send the letter until after committee mark up, not while the bills were still in committee," she said. "It doesn't mean it won't happen." Reformers complain that silence—or stalling, as it may be—on Lew's part corresponds with Obama administration's general reluctance to protect Dodd-Frank from attacks on all sides, whether that be in the courts, or regulatory agencies, or in Congress.
The seven deregulatory bills have been presented as technical fixes to Dodd-Frank, but most of them aren't. One bill would allow certain derivatives that are traded among a corporation's various affiliates to be exempt from almost all new Dodd-Frank regulations. Another measure would expand the types of trading risks that banks can take on. A third bill would allow big multinational US banks to escape US regulations by operating through international arms.
Financial reform advocates say it's way too early to alter Dodd-Frank, because even though it is technically the law of the land, regulatory agencies have yet to finish crafting it into rules that can be enforced. Whatever Lew's reasons for waiting to denounce lawmakers' efforts to gut Wall Street reform, reform advocates are hoping he'll stick to a recent promise his spokeswoman pointed to: "We have to finish implementing [Dodd-Frank]," he said on CNBC. "I'm committed to using the authority that I have to drive that process forward."