Economist Predicts 'Disappointing' September Jobs Numbers
Loop 21 interviews economist and unemployment expert Chad Stone
The unemployment rate for September will be released by the Department of Labor on October 7 and people will be watching to see if there's been any progress made, especially with President Obama demanding Congress to "pass this jobs bill" almost daily throughout the month. The Center on Budget and Policy Priorities is one organization where economists obsessively analyze federal government policies and determine whether they are hitting the mark on the economy, especially for low-income families. Chad Stone is CBPP's chief economist on unemployment matters and regularly delivers the explanations of the government's monthly unemployment reports after they come out. We reached out to Stone to discuss the coming September unemployment numbers before they come out Friday -- what to expect, the impacts of the Americans Jobs Act proposals, and how to restore confidence in the economy.
Loop 21: So what can we expect to see Friday in unemployment rates for September?
Chad Stone: I don’t have my own predictions, but the numbers we are seeing are maybe 60,000 jobs created, and that’s relatively disappointing for sure. We need 125,000 jobs created a month just to keep the unemployment rate constant, and we need 200,000-300,000 jobs a month for a robust jobs economy recovery.
Loop 21: Will President Obama's American Jobs Act get us to those robust numbers?
Stone: The American Jobs Act has some of the right kinds of things, but its $450 billion, not the $800 billion that was in ARRA. So the jobs bill will largely offset the contraction that’s already in place because unemployment insurance is scheduled to expire at the end of year as is the payroll tax cut. If those things happen, that will drag on the economy. There’s going to be a vote soon on the bill in the Senate on the whole package but no one expects it to pass.
Loop 21: Obama is pretty much conceding that the bill may come to him in parts. Which parts of the bill are essential to recovery?
Stone: Two really important things are to not let the payroll tax cut expire -- ideally we want to extend the payroll tax cut for another year and then expand it -- and then the really important thing is unemployment insurance. Right now, the extra weeks of unemployment insurance benefits come to an end at the end of this year and not only do unemployed workers need the money, but the economy needs the boost from them spending it. President Obama is targeting the right areas with infrastructure and programs to help repair and update schools and those are pretty close to shovel-ready jobs. You have a bunch of construction work and school repair work that needs to be done for things like putting in more energy efficient heating systems.
Stone (cont.): One category of spending that is also important in the President’s plan is helping out states so they don’t have to fire teachers, cops, and firemen. States have budget requirements that cause them to have to cut jobs even when the economy is in a drag. And so to the extent that you give states money that allows them to keep giving grants to local government for education and so forth, that is stimulative in the sense that it prevents the states from having to slam breaks on the economy by doing layoffs which would short-circuit the economy. Now whether this bill politically will make it through Congress is entirely another question.
Loop 21: Would bleak numbers Friday get Congress to finally start moving on the jobs bill?
Stone: We have one party whose only position is to cut spending right away, and we have another party that is worried about the budget deficit and about jobs, so it’s hard to get 60 votes in the Senate and hard to get anything passed in the House that is stimulus because one party thinks stimulus didn’t work before and won’t work again. It’s really an uphill battle. If we have bad unemployment numbers Friday that might give some impetus to move some of the pieces in the bill, but not the whole package. Even a small package helps, but to make a dent in this 9.1% unemployment rate we’ll need more. That’s why the President needed to go with a relatively big jobs package.
Loop 21: How will another poor unemployment report affect voters' confidence in the economy?
Stone: Another mediocre month doesn’t do anything for confidence and who gets blamed for this are the incumbents. Of course Congress’ rating is substantially lower than the President’s, but presumably whoever the Republican nominee is will not be a current Congress person so they don’t have to accept responsibility for any of this. But the fact is that we really were falling off of a cliff in 2009. We’ve had growth every quarter, though not fast enough, and we’ve had private sector job increases every year, but things are just moving too slowly.