Economic ‘recovery’ talk dwindles as job creation lags again
Claims of an economic recovery took another hit Wednesday as private sector job creation fell for the third straight month.
According to the ADP National Employment Report, U.S. businesses created a mere 119,000 non-farm jobs in April, down from an already anemic 158,000 new jobs in March and a continuation of a trend that has seen job creation lag population growth since the purported end of the recession in mid-2009.
Although these numbers suggest that the six-year downturn is once again worsening, Dean Baker, co-founder of the liberal Center for Economic and Policy Research, said they were not unexpected.
“We ended the payroll tax cut,” Baker told The Daily Caller. “We’ve had the sequester and a reduction in government spending. This is what the Congressional Budget Office and private analysts have been projecting.”
Robert Higgs, the libertarian Independent Institute’s senior fellow in political economy, countered that it is “silly” to blame sequestration — a 2.1 percent reduction in the rapidly increasing rate of federal spending growth — for the long-term slump in jobs.
“Sequester’s just not a big enough deal to cause anything you’ve seen on a month-to-month basis,” Higgs told TheDC. “This is what we’ve been seeing for years. You can’t blame something that’s been going on for three years on something that just happened in March.”
Higgs concurred that the weak job creation numbers were no surprise. “There’s no reason it should have changed,” he said. “Investors are subject to so many big questions — particularly on federal debt, which continues to increase — that it doesn’t make a lot of sense to launch new projects. As long as net private investment remains low, you won’t see substantial economic growth or substantial job growth.”
The ADP report follows news last month that labor force participation — the measure of how many work-ready Americans are either employed or looking for work — sank to 64.3 percent, the lowest rate in more than 30 years.
Although the large number of Americans leaving the workforce allowed the Department of Labor to claim a decline in the widely disputed U-3, or “headline” employment statistic, it is unlikely that this accounting gimmick will work again this month. Baker expects U-3 will tick up when the April numbers are released Friday.
Job creation has been falling rapidly since a none-too-impressive peak in November, and the steady trickle of bad news has dampened attempts to claim that the economy is strengthening or recovering. In a popular new column, CNBC senior writer John Carney points to the Bureau of Economic Analysis’s new attempt to inflate GDP numbers and declares that it “won’t hide the reality that in terms of actual growth, this is also the worst economy in 83 years.”