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How to Kill a Recovery June 10, 2010

Posted by geoff in News.
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None of us were happy with the passage of Obamacare; we’re all pretty much convinced that it’s going to do far more harm than good, and that it will end up costing more and providing less. But I don’t think that we’re as unhappy as we should be, because the health care reform bill damaged our economy even before it was passed. [The rest is below the fold. If you just want to skip to the punchline, click here.]

We’ve been talking for the past few months about the dramatic change in the initial unemployment claims data last November. Before November we were improving steadily, looking at turning the corner on jobs recovery by September 2010 – just a few months from now.

But after November, the recovery suggested by the claims data flattened. That is, rather than recovering in June, it now looks like we might reach recovery in about 3 years. The difference between pre- and post-November 1st is dramatic. Just look.

And today’s unemployment data didn’t help a bit. Besides revising last week’s data up (from 453,000 to 459,000), the report has this week’s claims at 456,000. And that means that initial unemployment claims are falling more than 4 1/2 times more slowly than they were last year.

[An Aside. The first line of the report reads: “In the week ending June 5, the advance figure for seasonally adjusted initial claims was 456,000, a decrease of 3,000 from the previous week’s revised figure of 459,000.” A decrease? This is strictly true, but comparing this week’s preliminary figure to last week’s revised figure is a little misleading, since almost all of the revisions have been upward. Comparing last week’s preliminary number to this week’s preliminary number shows an increase of 3000 claims. Sometimes I think they inflate the previous week’s revised number just to show a drop this week.]

Back to our mystery. What could have caused the steady improvement pre-November to stop so dramatically? What could have pushed the jobs recovery point back 3 years? Here’s one guess:

Thanks, Nancy!

UPDATE:  I didn’t choose the beginning of November arbitrarily. I plotted the correlation coefficient of the trend line and terminated the first series at its peak. That is, the second series (beginning of November onward) begins where the data starts deviating significantly from the trend of the Jan-Oct data.

[Note from Site Administration:  More on causation vs. correlation in the comments.]

Comments»

1. Chart of The Day « Nice Deb - June 10, 2010

[…] See Innocent Bystanders for Geoff’s commentary. […]

2. nicedeb - June 10, 2010

No Instalanche yet?

3. reason - June 10, 2010

Here, Deb. You can have a Bystandalanche.

*clicks link*

4. geoff - June 10, 2010

Thanks for the link, NiceDeb. This chart is as damning as The Chart once was, though it may not be as easy to see. We’ve been complaining that the Democrats prioritized health care reform ahead of fixing the employment situation, but the fact is they sacrificed employment for health care reform.

5. nicedeb - June 10, 2010

And things are only going to get worse. Have you been reading what Arthur Laffer has been saying at the WSJ? (I linked to his opeds in my post).

Michelle Malkin linked to my post…a few of those folks should be coming here…I would think.

6. geoff - June 10, 2010

Have you been reading what Arthur Laffer has been saying at the WSJ?

Oh yes.

Michelle Malkin linked to my post…a few of those folks should be coming here…I would think.

Doesn’t matter where they read it, as long as the message gets out.

7. Instapundit » Blog Archive » I GUESS THERE MUST STILL BE PEOPLE WITH JOBS HE HASN’T ALIENATED: Obama Puts Mortgage Interest Dedu… - June 10, 2010

[…] UPDATE: Related: How To Kill A Recovery. […]

8. nicedeb - June 10, 2010

Thar she blows!

9. Michael - June 10, 2010

OK, I finally got around to pimping this post all over the place. Insty just linked it. You’re welcome.

10. geoff - June 10, 2010

Wow, Michael. You are the man! I’ve always said that the marketing is at least as important as the chart. You, lauraw, DinTX, and NiceDeb have always been fantastic at getting these charts in front of eyeballs.

But now you’ve taken a commanding lead, you muffin of stud.

11. geoff - June 10, 2010

Over 1000 from Insty – guess I owe you a beer, Michael.

I think that’s about 5 beers total, so far.

12. Michael - June 10, 2010

I think that’s about 5 beers total, so far.

I’m a little nervous about drinking that much with you after you calling me a “muffin of stud.”

But I’ll get over that.

13. This chart and article are « gregormendelblog.com - June 10, 2010

[…] damning. The Obama socialize medicine plan killed jobs even before it was enacted–when it was merely threatened!   No Comments […]

14. lauraw - June 10, 2010

I tweeted it too!

That probably brought you…six or eight pairs of eyeballs…

15. geoff - June 10, 2010

I tweeted it too!

That’s more than I did – I mentioned it to NiceDeb and then collapsed, exhausted from my marketing effort.

16. lauraw - June 10, 2010

the health care reform bill damaged our economy even before it was passed.

Amazing isn’t it. That graphs the collective ‘Fuuuuuck, they’re really going to try to do this…’ exhaled by businesses as they cut their inventory reorders and pushed off plans for any new hires or re-hires.

17. reason - June 10, 2010

“That’s more than I did – I mentioned it to NiceDeb and then collapsed, exhausted from my marketing effort.”

IIRC, there is a certain Hostage who recently lost a marketing-type job…

18. geoff - June 10, 2010

Amazing isn’t it….

It’s the message I’ve been trying to get across for 2 months, but wasn’t able to make clear. Someone like Sweasel could have probably made a gorgeous graphic which would have immediately resonated with readers.

Oh well, I keep hammering on these things until I either improve my message or people get annoyed enough to figure it out despite my presentation.

19. Brain Shavings - June 10, 2010

Obamacare and unemployment…

Initial unemployment filings were struggling back toward a tolerable level last year until something interesting happened. Obamacare: the gift that keeps on giving…….

20. Scrap - June 10, 2010

You’ve got to be kidding me.

CORRELATION IS NOT CAUSATION.

Jobless claims kept falling until mid-January 2010. That’s when they stalled.

By your logic, we could blame the recovery faltering on the longest solar eclipse of the third millennium, which happened… in mid-January 2010!!!

But it’s easier to pick a date in October to fit your argument.

21. Michael - June 10, 2010

That’s more than I did – I mentioned it to NiceDeb and then collapsed, exhausted from my marketing effort.

You’re just lazy because you expect me to be your pimp.

I feel so cheap.

22. Michael - June 10, 2010

CORRELATION IS NOT CAUSATION.

Correct, but when faced with correlation, common sense and widely understood economic principles can be brought to bear.

The health care reform proposed by the Dems introduced uncertainty into the labor markets at the worst possible time, with the predictable effect of suppressing new hires and reinforcing the urge to pare down the payroll in the private sector. Obama masked this with the “stimulus” spending that ballooned the deficit to historic levels (even as a percent of GDP), which mostly maintained the bloat of the public sector, thereby further suppressing investment by crowding out capital in the private sector.

23. Michael - June 10, 2010

TARP, on the other hand, was probably a necessary evil in order to prevent the collapse of the financial sector. I can swallow hard and try to justify most of the bailouts (but not GM) that most conservatives revile. Doing nothing was a risk we probably could not afford to take.

Oh yeah, TARP happened on Bush’s watch, before Obama could start wrecking the recovery.

24. BrewFan - June 10, 2010

CORRELATION IS NOT CAUSATION.

That is one (simplistic) way to look at it. Another would be “correlation is required for causation”. Chew on that, Scrappy.

25. Michael - June 10, 2010

One thing I have personally witnessed here in Dallas is that construction projects take too long. I’ve seen it all over the place — the new gatehouse and some road repairs in my subdivision, highway expansion on my commute to work, renovating the concourse level and modernizing the elevators at my office building. These jobs take forever. For example, half the roof gets put on the gatehouse, then nothing happens for six weeks while the tiles sit there in stacks, then the roof gets finished. Same thing with the landscaping that was needed to finish this job.

The reason is obvious. Construction contractors are slow-rolling the jobs because they won’t hire!!!. They are trying to save the jobs of the people they have.

They have absolutely no confidence in the future of our economy, because there is a goofball in the White House who is still talking about stuff like “cap and trade” as the solution to the the discredited AGW myth, or a VAT as the solution to funding our irresponsible entitlement programs and overpaid public employees.

26. geoff - June 10, 2010

Jobless claims kept falling until mid-January 2010. That’s when they stalled.

I didn’t choose the beginning of November arbitrarily. I plotted the correlation coefficient of the trend line and terminated the first series at its peak. That is, the second series (beginning of November onward) begins where the data starts deviating significantly from the trend of the Jan-Oct data.

So your claim is incorrect – it was not at all arbitrary, and jobless claims started stalling much earlier than you claim. You have foolishly mistaken some oscillations in the data for a meaningful trend.

And you’re not very polite, either.

27. Michael - June 10, 2010

No free beer for Scrap, I’m thinking.

28. sandy burger - June 10, 2010

CORRELATION IS NOT CAUSATION.

No, but if you have a solid theory of causation, and you look at the data and see the expected correlation, that does tend to support your theory, doesn’t it?

Read Michael’s post #22. Companies, uncertain about the future non-salary costs of their employees, would certainly reign in hiring as a result of that uncertainty. To claim otherwise is to defy common sense.

29. sandy burger - June 10, 2010

Another source of uncertainty is the deficit. Companies don’t know if their money is going to be devalued by inflation, or if their profits are going to be reduced by higher taxes.

30. geoff - June 10, 2010

CORRELATION IS NOT CAUSATION.

That only applies to other people’s correlations. Mine are always causation.

31. Michael - June 10, 2010

You’re right, Sandy.

If interest rates start shooting up (as many predict), bonds are going to rise in value, and stocks will tank.

Geoff, I am going to take the liberty, of adding the first paragraph of your comment at #26 to the post. I think that it is a really important point that you were not cherry-picking the endpoints of your two lines.

32. geoff - June 10, 2010

I didn’t put it in the post because I figured it was boring, and that people would ask (politely) about it if they were curious. But if you’re sure that people who read it aren’t operating heavy machinery, then I’m all for it.

33. PattyAnn - June 10, 2010

Is this the metal detector graph?

34. Michael - June 10, 2010

Is this the metal detector graph?

Yes, honey, it is.

Now show us your boobs again.

35. PattyAnn - June 10, 2010

*snort
Well, I can tell it’s not a hockey stick.

No boobs for you.

36. geoff - June 10, 2010

Well, I can tell it’s not a hockey stick.

We were just glad to see you.

37. mesa in Texas - June 10, 2010

I’d give you a Hostage-a-lanche, but I don’t want to stink up your place.

38. Michael - June 10, 2010

Thanks for your kind consideration, Mesa.

39. ChrisP - June 10, 2010

Well, at least WordPress is working again! Patty Ann, could you flash us for that?

40. PattyAnn - June 10, 2010

Anything for you, ChrisP.

*flash

41. ChrisP - June 10, 2010

Thank you, my dear!

42. ChrisP - June 10, 2010

WoW!
Lex links IB!

http://tinyurl.com/39hglp9

I’m impressed. Obviously, Lex is too!

43. qwerty - June 10, 2010

I want purple triangles Graph McGraphalot! Give me purple triangles or give me death!!

(Just kidding, nice work geoff.)

44. Ironman - June 10, 2010

Funny how certain pieces of legislation can somehow negatively affect the job market from the very moment they’re introduced…. I wonder how many of these coincidences it takes for causation to be confirmed?

45. Narb - June 10, 2010

little early to draw any conclusions since health care bill legislation will come on-line over many years, but IF it were to have the desired effect of slowing the rate of health care cost inflation, it will then create jobs in the future.

Your correlation also could be one big coincidence as the pace of job losses normalized…examining BLS data from 2000 – 2007, you’ll notice new unemployment claims have a tendency to spike in Q4 every year. Also in July as well for what it’s worth. Point is, the overall economy and the wealth effect from a sharply rebounding stock market may have assisted the decline in the weekly average in 2009 from the abyss which was Q1 2009, but a weak recovery would seek out a new normal as the recovery proves choppy and uneven.

I sincerely doubt business owners manage hiring and firing on legislation -> they do so based on profit & loss projections -> not to mention employment is a lagging indicator and there’s little chance the market would respond that quickly. Biz Owners didn’t suddenly wake up en masse and say we have to cut back because of a new law -> they’d evaluate the effects over time, and adjust based on actual observed effects. Sometimes folks see what they want to see, hmm?

46. Dave in Texas - June 10, 2010

Narb makes an interesting point about business owners “just waking up”.

We started pulling back a year ago.

We’re not stupid.

also the rest of his stuff is cut and pasty.

47. wiserbud - June 10, 2010

The health care reform proposed by the Dems introduced uncertainty into the labor markets at the worst possible time, with the predictable effect of suppressing new hires and reinforcing the urge to pare down the payroll in the private sector.

And this explains why I am currently unemployed. Purchasing in the healthcare market, specifically spending by physicians, has dried up. Uncertainty about the economy and the expectation that the HC bill will radically reduce the amount of money that physicians will make has caused spending freezes throughout the sector.

Meaning a whole lot of people who’s jobs depended on that spending will soon be unemployed, if they are not already.

THANKS, OBAMA!!!

48. wiserbud - June 10, 2010

I sincerely doubt business owners manage hiring and firing on legislation -> they do so based on profit & loss projections ->

Upon which which legislation can have a significant impact.

It’s not just those “rich doctors” who are getting screwed by the HC bill. It’s all of the ancillary businesses that support the physicians.

Anyone who can’t see that is either totally ignorant of economics or intentionally obtuse.

49. daveintexas - June 10, 2010

or a copy the talking points goofball

50. wiserbud - June 10, 2010

Sometimes folks see what they want to see, hmm?

And sometimes people simply ignore what they must ignore to maintain the security of the safe little cocoon they have built for themselves..

51. Scrap - June 11, 2010

Of course correlation is necessary for causation. But let’s take it one step further then:

Is Obamacare responsible for killing the entire global recovery? Is that why China began to tighten? Is that why the PIIGS are collapsing?

Or could it be that this is a very complex issue with many causes that cannot be reduced to a simple line of best fit?

I agree that it was an absolutely garbage plan, and that it will hamper already shell-shocked businesses.

But to assume a V-shaped recovery after the greatest debt binge in history is a pretty farfetched conclusion, if you ask me. Perhaps you should question whether this magical unicorn of a V-shaped recovery was a mere illusion brought about by government spending in the first place.

52. Scrap - June 11, 2010

Geoff,

I sincerely apologize if I was impolite. I have difficulty restraining my incredulity sometimes, and it doesn’t type well.

But why is Japanese unemployment ticking up? UK unemployment? This is a global problem, a global asset bubble, and one misguided policy in the US isn’t what is continuing its ongoing bursting.

53. geoff - June 11, 2010

Is Obamacare responsible for killing the entire global recovery?

Certainly there are many factors that play into the economy and unemployment. But there was a sudden and dramatic change in the slope of the claims data at the beginning of last November. In a 2-week span the improvement in the claims data disappeared. This graph, which I posted last week, shows a larger section of the time series (it also shows that Narb’s “4th quarter increase” in claims doesn’t appear in the seasonally adjusted data.).

There was only one significant event in domestic politics at the time. There was no sudden change in the stock market, Greece hadn’t started failing, none of the fundamentals changed much. Find me another cause and I’ll certainly consider it. But right now, I think the most likely culprit was the realization by businesses that: 1) the Democrats were not serious about economic recovery; 2) the Democrats were going to disrupt the health care & insurance industry; and 3) the Democrats were going to continue to enact legislation that would increase deficit spending and the debt.

IF it were to have the desired effect of slowing the rate of health care cost inflation

Hahahahahahaha!!! Not a chance. Not the tiniest of chances. Unless they cut services, of course.

Biz Owners didn’t suddenly wake up en masse and say we have to cut back because of a new law

You’ve obviously never run a business. I have, and I’ve got to tell you, my optimism and pessimism depended a lot on what moves the government and the economy were making. You don’t think business owners were paying attention to the legislation? All the business associations have been putting out action alerts on all the major pieces of legislation. It’s SOP.

54. Retired Geezer - June 11, 2010

Oh well, I keep hammering on these things until I either improve my message or people get annoyed enough to figure it out despite my presentation.

Have you ever considered using little… triangles?

55. Michael - June 11, 2010

We’re not stupid.

Yeah. My business (telecom) has a pretty good window on the economy. The business sector is dependent on “butts in chairs” that need a phone line and and an internet connection. We stopped hiring well ahead of the curve, except for growth sectors like wireless broadband.

56. Michael - June 11, 2010

Historically, revenue growth in the telecom business is highly correlated with unemployment.

If you segregate the business, as opposed to consumer, segment of the telecom industry, revenue growth is even more highly correlated with industrial production.

I’m just saying — the pace of new phone lines and internet hookups are pretty good bellwethers of where the economy overall is headed.

Right now, these indicators suggest that the worst of this recession is over, but businesses should still clamp down on labor costs, and tightly control their capital budgets.

In other words, hunker down to see how much more damage Obama/Reid/Pelosi are going to do.

57. Michael - June 11, 2010

I should also add this observation — the telecom sector has enormous leverage in the U.S. economy. It is a capital-intensive business, and it is infrastructure that affects all other businesses, as well as consumer behavior, especially as consumers adopt wireless apps. Capital spending in telecom creates productivity gains for the overall economy, which translate to employment gains and GDP growth.

That is why the current initiative of Obama’s FCC to regulate the internet is so totally wrong. They are chilling the capital spend in telecom which otherwise might kick-start our economy. This is an issue where there is rare agreement between the Wall Street Journal and the New York Times.

Right now, I can say out loud “oil change” into a Google app on my iPhone, and it will suggest a variety of local businesses willing to change my oil, and tell me how far away they are, and how to get there. All of this is possible thanks to highly-sophisticated voice recognition technology, the GPS position of my phone, local search technology that is based on Yellow Pages-type data bases, mapping databases like MapQwest, and, most importantly, the network infrastructure that all this data rides on.

It is a miracle to me.

Another app, a navigator, will talk me to that location as I drive with step-by-step directions and a visual display telling me when to turn.

Another app on my iPhone tells me how to get to any kind of doctor, anywhere in the country, who is a participant in the network for my medical insurance, so I can get treated at minimal cost.

Do we really want bureaucrats in D.C. to interfere with this market?

58. lauraw - June 11, 2010

In other words, hunker down to see how much more damage Obama/Reid/Pelosi are going to do.

And/or replace their full time staff with part timers in advance of government run health care. Because it will penalize businesses most for having full time employees.
Which is a super-smart idea, because government is full of super-smart people who know how to steer the economy and also know how to especially punish “rich” people.

Now they can’t hire as many employees! HAH! Take THAT, mean rich people!

59. Dave in Texas - June 11, 2010

>> My business (telecom) has a pretty good window on the economy.

Not only planning, but immediately reacting with a billion-dollar writedown in the 2nd quarter.

>> And/or replace their full time staff with part timers in advance of government run health care.

See *Wal-Mart, et.al

60. Michael - June 11, 2010

Not only planning, but immediately reacting with a billion-dollar writedown in the 2nd quarter.

Heh. The Obama administration and Henry Waxman did not like that.

The stock market took it in stride. The health-care risk was already baked into the price.

61. Car in - June 11, 2010

Biz Owners didn’t suddenly wake up en masse and say we have to cut back because of a new law -> t

Absolutely correct. They do not suddenly wake up. They watch these things develop over time. They held back on hiring to see how the healthcare thing would turn out. Now they’re holding back fearing wtf is going to happen with the EPA. And taxes.

62. Michael - June 11, 2010

The funny thing is, Waxman summoned a bunch of corporate execs to a congressional hearing so he could grill them about those write-downs. He thought they were politically motivated.

Then, his staff, and the SEC staff, told him what those hearings would place on the public record about the accounting rules and true costs of Obamacare.

So, Henry canceled the hearings.

63. geoff - June 11, 2010

They do not suddenly wake up. They watch these things develop over time.

Yes, 10/29 was just the “Oh shit, they’re really going to do it” moment.

64. Dave in Texas - June 11, 2010

That was funny, except for the sheer audacity of Waxman bitching about laws he had a hand in passing.

When you consider that part of it, it becomes downright insulting.

65. geoff - June 11, 2010

That was funny, except for the sheer audacity of Waxman bitching about laws he had a hand in passing.

…and for the fact that they didn’t think about those sorts of financial consequences before passing the bill.

66. geoff - June 11, 2010

Yes, 10/29 was just the “Oh shit, they’re really going to do it” moment.

…as lauraw already described in #16.

67. Tushar - June 11, 2010

Waxman’s brain stem escaped through his nose and ran away a long time back. It now serves Pina Coladas to tourists in Aruba.

68. lauraw - June 11, 2010
69. clifford - June 11, 2010

#16 is right. November was the “oh, shit, this could happen” moment for us, too. It was a factor in our decision to defer hires for new projects in 2010. We have also cut staff, and have no plans to add new staff now. We are also thinking about dropping employer-paid health plans for employees (going to 100% employee paid) after our insurance agent said we could expect 12%-20% premium increases next year as ObamaCare begins to kick in. Simply put, we cannot afford ObamaCare.

Because of all the strings we fear will be attached to the ObamaCare small business credits/subsidies, we will not take them, and in future will opt out of health care as a benefit. Paying a fine and staying small is, for us, the price of economic freedom.

(FWIW, I am an architect and partner in our firm.)

70. MostlyRight - June 11, 2010

Clifford…former architect here, now own and manage real estate instead of designing, unless the designing is for myself…it’s funner that way.

Regardless, most members of my professional circle are owners in the real estate/construction/engineering/design fields here in Phoenix. A rough place to be post 2006. We had just all been part of what will probably be the biggest booms of our lives, and the smart players knew it. We “made hay while the sun was shining”. And we prepared for the inevitable. I sold half my portfolio of real estate from May-August 2005, keeping only my best positioned properties in terms of equity, cash flow and future potential. The inevitable crash/bubble burst began in 2006, before Obama was on most anyone’s radar. We braced for recession, took necesarry steps to survive through the rough patches ahead. Typical firms in our area reduced 10-15% of staff (much of it dead weight…brutal but true), and reduced salaries (top level as much as 25%, lower level staff around 10%). This took place in design and engineering firms across the board. Older owners of small to mid-size firms often made the rational decision to simply close up shop. Made no sense to tread water for the next 5 years of recovery and then retire. That helped save many younger firms, as business was referred from the old guys to the good young guys. In 2008-2009, much of the talk in board rooms and building industry conferences was about the Democratic House and Senate and pending White House, and the potential ramifications. Smart businesses made the moves they felt made sense. Then the health care debate started in spring 09, and we watched. In July/August the town halls began and the feeling was this would not pass, or more accurately something would pass but it would be small and meaningless, a token “win” for Obama and things would move on. However, October did become that “oh shit” moment, and board rooms met, and did what board members do…take in the knowns, make educated guesses about the future unknowns, and adjust. Scrappy, if correlation doesn’t mean causation, and business owners don’t typically create their business plans around legislation. But this legislation was enormous…significant…and it required major adjustments, because it greatly impacts the balance sheet. The balance sheet is god.

The recession was caused by the details you mentioned. The recovery, in unemployment and other economic indicators, has been slowed by the policies of our Democratic led government. Geoff’s first chart demonstrated this brilliantly, and this second chart does as well. My position would be that the world suffered a recession, as it should have, after an irrationally exuberent boom. The Democratic policies and legislation from 2006 on (stimulus, C4C, health care reform, housing tax credits, etc) have slowed the recovery. And future proposed legislation and longtime Democratic policies regarding regulation, cap and trade, immigration, “green jobs” are still on the horizon.

71. MostlyRight - June 11, 2010

By the way, cool to see new “faces”. I first came here after an Instalanche on Geoff’s original chart, and this place is full of good people and also Dave in Texas.

72. Top Posts — WordPress.com - June 11, 2010

[…] How to Kill a Recovery None of us were happy with the passage of Obamacare; we’re all pretty much convinced that it’s going to do […] […]

73. d3ft punk - June 11, 2010

…is full of good people and also Dave in Texas

…and Michael.

Good people, Dave in Texas, and Michael.

74. Narb - June 11, 2010

Some of u guys crack me up. So much assumed about a person after one post.

Evidently the cherry picked line of the day is: “Biz Owners didn’t suddenly wake up en masse and say we have to cut back because of a new law” Point being: job cuts that occurred in Nov 2009 were planned well ahead, more likely in May 2009. No self-respecting biz issues pink slips in knee-jerk fashion.

What part of lagging indicator do you not understand? No way 200,000 jobs are eliminated based on new legislation immediately after it happens. That’s the same bullshit people spread when Obama took office and the stock market dove for 6500 over the next
7 weeks. ‘Oh, it’s a referendum on Obama. People are yanking their money out.’ And yet somehow the market rebounded HARD to 10,000 over the next 6 months and not a peep about how that could happen with O still in office.

75. Narb - June 11, 2010

Looking back at 22: Let’s suppose you’re right and the employment recovery was dealt a shot to the gut by Obamacare. You say it introduced uncertainty at a bad time.

Let’s turn that on it’s head. Health care costs have been the single greatest thorn in Corporate America’s side and long term..no, medium term.. something had to be done about these costs. Settting aside whether what was passed was good legislation or not, I’d argue the best time to try to employ a fix and introduce uncertainty is during a crisis. Just like firms cram as much bad news into a bad quarter as they can to get it out of their system, taking on major overhauls to taxation, entitlements, health care are best attempted in the midst of crisis.

76. Michael - June 11, 2010

No self-respecting biz issues pink slips in knee-jerk fashion.

True.

A reduction in force (RIF) typically takes two or three months of planning, just to deal with legal requirements.

But businesses can, and do, freeze hiring in a knee-jerk fashion, while normal attrition reduces the work force. I’ve seen it happen, repeatedly.

Same thing, really. A hiring freeze is just a slow motion RIF, resulting in a shrinking work force. Legally, it’s easy. Practically, it hurts productivity, because managers stop firing people who should be fired, because they can’t be replaced.

Also, for many companies, it’s pretty easy to move work overseas if the U.S. labor market looks bad. That can also be done in a “knee-jerk” fashion.

77. MostlyRight - June 11, 2010

Narb, what line of work are you in, and do you own a business?

78. geoff - June 12, 2010

Some of u guys crack me up.

You hear that, slackers? Only some? Narb is not sufficiently amused! You’d better start bringing the funneh.

That’s the same bullshit people spread when Obama took office and the stock market dove for 6500 over the next 7 weeks.

You apparently don’t remember Geithner’s gaffes which led to the market crash. The market wanted to hear that Geither had a plan, but he didn’t, so the market tanked. As soon as he got his act together, the market came roaring back. It was certainly a referendum on Obama’s team, and it failed. That crash was completely unnecessary.

Health care costs have been the single greatest thorn in Corporate America’s side and long term..no, medium term.. something had to be done about these costs.

Not really. The market was starting to correct anyway. Insurance companies were losing customers, clinics were coming up with fixed price service schedules, and doctors were starting to give discounts to cash patients. All of those items were working to restore the market’s long-lost influence over health care prices.

I’d argue the best time to try to employ a fix and introduce uncertainty is during a crisis.

I truly hope you’re not an Obama adviser. What an ill-considered argument.

“The recovery is suffering due to uncertainty!”

“Add more uncertainty”

“Aye, sir!!”

79. geoff - June 12, 2010

I forget which article it was over the past few days that pointed out that the problem with unemployment is not in the loss of jobs – that hasn’t been unusual in this recession. The problem is with the lack of creation of jobs in the private sector.

The sudden slowing of improvement, then, is most likely due to lack of uptake of the newly unemployed, not an increase in the layoff rate.

80. geoff - June 12, 2010

Narb, what line of work are you in, and do you own a business?

My guess is he’s still in college.

81. BrewFan - June 12, 2010

New cherry-picked line of the day: “I’d argue the best time to try to employ a fix and introduce uncertainty is during a crisis”

*waves bye-bye to Narb’s credibility*

82. Michael - June 12, 2010

I forget which article it was over the past few days that pointed out that the problem with unemployment is not in the loss of jobs – that hasn’t been unusual in this recession. The problem is with the lack of creation of jobs in the private sector.

I read the same article, but can’t remember where it was either. I bet we both saw it a Memeorandum or something.

83. Dave in Texas - June 12, 2010

>> What part of lagging indicator do you not understand?

The “ging” part. That one is confusing.

84. geoff - June 12, 2010

Looked around a bit: the article came from the Heritage Foundation, and was based on a previous article here.

The “ging” part. That one is confusing.

*snicker*

But I guess those “lag” classes really paid off.

85. Dave in Texas - June 12, 2010

>> Let’s turn that on it’s head. Health care costs have been the single greatest thorn in Corporate America’s side and long term..no, medium term.. something had to be done about these costs.

I remember when I used to craft arguments with uninformed assertions of fact too.

I was in high school. And I told her it would be magical.

Magical baby.

86. lauraw - June 13, 2010

We braced for recession, took necesarry steps to survive through the rough patches ahead. Typical firms in our area reduced 10-15% of staff (much of it dead weight…brutal but true), and reduced salaries (top level as much as 25%, lower level staff around 10%).

In other words, “The rich just want to keep what they got.” According to an otherwise nice lady I was chatting with in the grocery store a while back. The convo turned to health care and layoffs…I almost invariably regret getting into these conversations.

Some folks seem to really believe the government should be able to run other folks’ businesses to prevent people from becoming wealthy. At least, that is the assumption created in their minds from top-down Dem party policy.

And then life will be perfect and just.

87. geoff - June 13, 2010

And then life will be perfect and just.

It’s a Rawlsian world. We’re just greedy capitalist pigs immorally and selfishly making money in it.

88. Michael - June 13, 2010

We’re just greedy capitalist pigs immorally and selfishly making money in it.

So true. That’s why somebody needs to write regulations on how much bubble-wrap or Styrofoam peanuts are needed to pack something. We can’t leave that up to capitalists. They will screw you.

89. A Closer Look at the Recent Trend in Layoffs | Purchase Euros - July 27, 2010

[…] Bystanders hadn’t identified a potential cause driving the current trend in U.S. layoffs. He did, finding that the introduction of health care legislation in the House of Representatives on 29 […]

90. r�sultats bac 2011 minist�re - May 27, 2011

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