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Economics

Overly Optimistic on Economy Due to Global Warming?

My latest is up at thegrio.com (click the link here), and it’s a reaction to the latest jobs report on Friday, which was weak by itself, but especially ominous if it was not a blip in the radar, but was instead indicative of a larger trend.   And the reason why it’s time to worry that it might be a trend instead of a blip even based on just one month is because job growth in past months, specifically January and February, may have been inflated due to the unusually warm weather that occurred during the winter months, which then potentially pulled employment forward from the spring season, especially in certain industries like construction.  Bu unlike other industries, construction is frequently project based as well, so it could very well be that these projects are just getting started earlier, not that they will last longer.

So what does this mean?

A couple of things…

  1. The expected job growth for future months should probably be adjusted down to account for this seasonal variation (which typically is done, but appears to have missed the mark this year due to the highly unusual weather patterns).  This, obviously, would not be welcome news to anyone and does not bode well for our economy.
  2. Perhaps even more importantly, there is a real danger for policy makers, and people in general, to get overly excited about growth early in the year which reduces the urgency to continue to tackle the unemployment crisis that remains.
While #2 may seem preposterous, I have two words for you: Recovery Summer.  Actually, I have two more for you from a year later: Debt Ceiling.  We already made the mistake of thinking the economy turned the corner and could auto-pilot it’s way to health on two occasions.  I have a fear that a third time may be in the cards, especially when considering that at the end of the year, you have the combined fiscal tightening scheduled of the expiration of the Bush tax cuts, the expiration of the payroll tax cut and the deficit reduction trigger that resulted from the debt ceiling debate and subsequent failed Super Committee.

So, the April jobs report will certainly go a long way to answering that question.  We should all hope that it brings better news than March.  If it doesn’t?  Hope that policy makers will be able to avoid past mistakes and recognize that the issue remains urgent.

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