Good morning. I'm Brad DeLong, and this is my morning coffee.
Seasonally adjusted, only 46000 more people were at work in the fourth than in the third quarter of 2007. 17000 fewer people were working in January than in December. This morning's Employment Situation Summary is not good. Wage gains were low. The work week fell.
There are all the standard reasons to be very cautious in interpreting these data. Seasonal adjustment factors are always dicey. And this time the seasonal adjustment factors appear to be even more dicey than usual. But my tentative belief that the Federal Reserve perhaps went too far on Wednesday when it cut the Federal Funds rate to three-point-zero--that's now out the window. And I find myself shifting from the view that a short-run fiscal stimulus package will probably not be worth it--that we won't like what emerges from the Bush White House when the legislative process is concluded--to a view that a short-term fiscal stimulus is probably worth doing. The Senate, needless to say, appears to have its head much more screwed-on right than does the Republican and Blue Dog-dominated House, or the Bushies.
As Andrew Samwick says this morning, employment growth has averaged 66,000 over the last 4 months--and that is very weak growth in anybody's book. As Paul Krugman says, a better guide than focusing on this month's number is to look at the past several months and note that employment growth is well short of what is necessary to keep up with population growth. The unemployment rate is four-tenths of a percentage point higher than it was in the first half of last year.
Are we in a recession? I'm not confident one way or another, but Michael Carliner sees a personal income peak in September 2007, an industrial production peak in July, and a sales peak in October--he sees a duck.
I'm Brad DeLong, and this is my morning coffee.