Custom Search

How to read today's jobs report

Evan Sollas

Feb. 7, 2014

Welcome to Wonkbook, Wonkblog's morning policy news primer by Evan Soltas. To subscribe by e-mail, click here. Send comments, criticism, or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here.

Wonkbook's Number of the Day: 190,000. That's roughly the consensus for the number of jobs added in January. If it's much above or much below that, it may be time to revisit many narratives of the direction of economic growth in 2014.

Wonkbook's Quote of the Day: "Right now, Jesus himself couldn't be the speaker and get 218 Republicans behind something," said Rep. Patrick J. Tiberi, a Boehner ally.

Wonkbook's Graph of the Day: Jobs data, BLS versus ADP.

Wonkbook's Top 5 Stories: (1) unemployed are still in deep trouble; (2) the debt-ceiling debate; (3) doc fixed; (4) NSA phone-tapping has stopped "maybe one" criminal; and (5) the big Republican backtrack on immigration.

1. Top story: How to read 2014's first jobs report

The most important number in Friday's jobs report. "You won't have to dig too deep into January's jobs report to ferret out the most important number when the data is released Friday. In fact, I basically just told you what it is. This month, it's all about how many jobs were created. Seems sort of obvious, except for the fact that the government's numbers on hiring and unemployment have been acting in odd ways lately. December was particularly weird. The economy created only 74,000 jobs that month -- less than half the average pace of job growth during the rest of the year. Meanwhile, the unemployment rate dropped from 7 percent to 6.7 percent -- but much of that was due to people leaving the labor force rather than finding work." Ylan Q. Mui in The Washington Post.

What to conclude. "The actual figure for December, just 74,000, was the slowest pace of job creation in three years. After that disappointment, many economists suggested that wintry weather in December had caused the figure to come in low, sapping job gains in sectors like construction. Friday's report should tell us whether that indeed was the case, or whether there is a more fundamental loss of momentum at work." Nelson D. Schwartz in The New York Times.

@JimPethokoukis: Still some 140 million Americans trapped in jobs. And from Washington? Silence

Senate hits another dead end on unemployment benefits. "The Senate remained gridlocked Thursday over the effort to renew emergency unemployment insurance for the long-term jobless, including more than 1.7 million Americans without work who lost their benefits as the federal program expired in late December. In a largely party-line vote, Democrats came a single vote shy of the 60-vote hurdle to break a filibuster by Republicans, who complained that the latest proposal did not have a proper offsetting spending cut to lessen the impact on the federal deficit." Paul Kane in The Washington Post.

U.S. jobless claims fell more than expected. "Initial claims for jobless benefits, a measure of layoffs, decreased by 20,000 to a seasonally adjusted 331,000 in the week ended Feb. 1. That was slightly lower than the 335,000 forecast by economists and reversed most of the prior week's gain...The four-week moving average for claims, which evens out bumpy week-to-week data, ticked up slightly to 334,000 from 333,750...The decline in new jobless claims is a positive signal ahead of Friday's jobs report." Jonathan House in The Wall Street Journal.

@TheStalwart: Getting really excited for Jobs Day. Gonna be tough to sleep tonight.

U.S. productivity jumps. "Nonfarm labor productivity, or output per hours worked, rose at a 3.2% annual rate from October through December, the Labor Department said Thursday. It rose at an upwardly revised 3.6% rate in the third quarter. The productivity readings for the two final quarters of 2013 were the strongest since late 2009, offering hope that productivity hasn't permanently downshifted, as some had feared. Lower productivity would suggest lower economic growth over the long term" Jonathan House in The Wall Street Journal.

Don't expect 2014 to be much better for retail sales. "[The National Retail Federation] predicts that retail sales will grow by 4.1 percent this year, marginally higher than last year's figure of 3.7 percent. The group said online sales would increase by 9 to 12 percent compared with last year. Online sales during the holiday season grew by 9.3 percent, much lower than the federation's estimate of 15 percent." Amrita Jayakumar in The Washington Post.

@ddiamond: Another jobs report tomorrow. What I'm watching: How BLS revises December estimate - which showed once-in-a-decade jobs loss in health care.

U.S. trade gap widens in December. "The U.S. trade deficit widened in December as exports slipped, reflecting a volatile overseas environment that could become an impediment to faster economic growth at home. U.S. exports fell 1.8% to a seasonally adjusted $191.29 billion in December from a month earlier, the Commerce Department said Thursday. Imports rose only 0.3% to $229.99 billion. That pushed the trade gap to $38.70 billion from $34.56 billion the prior month. Economists surveyed by Dow Jones had forecast a trade deficit of $35.9 billion in December." Jeffrey Sparshott in The Wall Street Journal.

The good (and maybe bad) of the declining U.S. trade deficit. "Much of the improvement in U.S. trade accounts came from the displacement of imported oil with domestically produced energy. The folks at the Economic Policy Institute and the Alliance for American Manufacturing were quick to note that, once oil is factored out, the deficit in manufactured goods grew wider over the year, while the gap with China stood at over $318 billion. That makes a single country responsible for two-thirds of the total U.S. goods and services trade deficit of $471 billion. Are we swapping our role as an industrial giant to become a resource economy? Not quite - the trade accounts were also supported by the country's large surplus in services." Howard Schneider in The Washington Post.

@morningmoneyben: Also remember January #jobs report at 8:30 a.m. tmrw. Consensus is 184K. My guess is between zero and all of the jobs.

Fischer to sell holdings in financial firms if confirmed to Fed board. "Stanley Fischer, President Barack Obama's pick for Federal Reserve Vice Chairman, will sell his holdings of several financial firms to avoid conflicts of interest if confirmed by the Senate, he said in a letter released Thursday by the U.S. Office of Government Ethics. The firms include asset manager BlackRock Inc. and American Express Co. He would also divest his interests in the Citigroup Employees Fund of Funds I, LP. His wife would sell holdings in Warren Buffett's Berkshire Hathaway Inc., General Electric Co., American Express and MasterCard Inc." Pedro Nicolaci Da Costa in The Wall Street Journal.

Music recommendations interlude: Neko Case, "Man."

Top opinion

KRUGMAN: Health, work, lies. "On Wednesday, Douglas Elmendorf, the director of the nonpartisan Congressional Budget Office, said the obvious: losing your job and choosing to work less aren't the same thing. If you lose your job, you suffer immense personal and financial hardship. If, on the other hand, you choose to work less and spend more time with your family, "we don't sympathize. We say congratulations." And now you know everything you need to know about the latest falsehood in the ever-mendacious campaign against health reform." Paul Krugman in The New York Times.

KLEIN: Republicans discover evidence of jobs crisis. "In context, the freakout over the CBO estimate is perverse. Is it really the Republican position that we should do nothing - - in fact, cut aid -- for the millions of long-term unemployed, but express shock and terror that employed people will, in a few years, cut back their hours or leave the labor force by choice? Shouldn't we be more concerned about people desperate to join the workforce, who can't, than about people voluntarily leaving the workforce, who can?" Ezra Klein in Bloomberg.

REINHARD: Where is the Democratic Party's pro-Obamacare campaign? "A Democratic super PAC indirectly plugged the health care law in a December ad, boasting that Sen. Kay Hagan of North Carolina "forced insurance companies to cover cancer and other preexisting conditions." Before that, campaign ad trackers say the last exclusively positive message on Obamacare aired in August when Rep. Frank Pallone of New Jersey bragged about helping to write the law. Even Organizing for Action, the advocacy offshoot of President Obama's campaign, is focusing elsewhere, currently airing ads touting President Obama's support for raising the minimum wage. The last time OFA ran pro-Obamacare ads was last summer." Beth Reinhard in NationalJournal.

NORRIS: How to make retirement possible again. "The Harkin proposal would create new pension plans, not tied to a single employer or industry, where retirees would receive annuities that pay until they die. But because there is no government or employer guarantee, there would still be a risk that benefits would need to be reduced if the plan's investments suffered. Even so, that would provide a lot more peace of mind than is available now to many retirees. While employers could choose to match contributions from workers, they would not have to do so. As a result, the senator says, companies would face almost no expense other than the cost of adding one more deduction to a paycheck." Floyd Norris in The New York Times.

BROOKS: Other people's views. "I can't find any universal rules about when to defer to outside approval. It depends on the circumstances. It does seem that people should defer less to public approval as they age. At 15, it's normal to be socially insecure. By 45, unless you're in a crisis, you should have distilled enough ancient wisdom to have inner criteria. Plus, sometimes it's smart to attract ridicule for its own sake. You'll learn that it really does you no harm if you don't let it. Your friends will laugh at you. And accept you in the end." David Brooks in The New York Times.

Advice interlude: Life is a game. This is your strategy guide.

2. The weekend before the debt-ceiling deal?

Once again, we're skating close to the edge. "As of Friday, the Treasury will no longer have the authority to issue bonds as necessary to pay the government's bills. In a matter of weeks, the government could run out of cash and begin defaulting on some payments unless Congress acts to raise the official ceiling on the national debt. And once again, Congress is struggling to avoid a potential fiscal and economic train wreck. But this fourth debt ceiling standoff in three years is taking place in an atmosphere of fatigue and caution rather than brazenness and conviction. A confrontational parliamentary tactic that came in with a bang might finally be exiting with a whimper." Annie Lowrey in The New York Times.

Read: The CRFB (Committee for a Responsible Federal Budget) is putting together a series of posts on the CBO's 2014 budget outlook.

House Speaker John Boehner still mulling over debt-ceiling options. "House Speaker John A. Boehner moved closer to a debt-ceiling solution on Thursday, mulling over several new plans that the House could consider early next week. But Boehner (R-Ohio) remains undecided about how House Republicans will proceed, and will spend the weekend reviewing a handful of bargaining options that have drawn GOP interest...On Thursday, however, two ideas gained traction, with dozens of Republicans predicting that versions of the pitches could hit the floor next week once House members return to Washington. At the top of the list: a proposal to link a one-year extension of the debt ceiling to a restoration of recently cut military benefits. Another popular option is tying the "doc fix," which would alter the way doctors are reimbursed for Medicare treatments, to an extension." Robert Costa in The Washington Post.

Why it might not be a problem that Obamacare's Innovation Center doesn't use RCTs. "[A] New York Times story this week was eye-catching for a different reason: author Gina Kolata mostly assailed Medicare's researchers for how they're choosing to do that research...But many researchers and economists that I talked to at this week's Academy Health conference say that's not the case at all..."RCTs attempt to control for all unplanned variables to the greatest extent possible," Su points out, "and that is nearly impossible to do when you consider the scale and diversity of models that CMMI is pursuing...multi-year, multi-stage models that may not lend themselves to a traditional RCT timeline."" Dan Diamond in The Daily Briefing blog.

Cultural interlude: Art created with computer code, a new exhibit.

3. Doc fixed

Lawmakers reach deal on doctor payments. "Medicare will increase the amount it pays physicians by 0.5% each year for the next five years, said aides familiar with talks between the top members of the Senate Finance Committee, House Energy and Commerce Committee, and House Ways and Means Committee...Members of Congress from both parties had been long seeking a way to avoid the prospect of steep cuts that prompted lawmakers to scramble to find temporary fixes nearly every year for the past decade." Louise Radnofsky in The Wall Street Journal.

Jails are enrolling inmates in Obamacare to pass costs onto the federal government. "At least six states and counties from Maryland to Oregon's Multnomah are getting inmates coverage under Obamacare and its expansion of Medicaid, the federal and state health-care program for the poor. The fledgling movement would shift to the federal government some of the more than $6.5 billion in annual state costs for treating prisoners. Proponents say it also will make recidivism rarer, because inmates released with coverage are more likely to get treatment for mental illness, substance abuse and other conditions that can lead them to crime." Mark Niquette in Bloomberg.

This is why we can't have nice things -- health costs edition. "This could be the start of a backlash against narrow network plans, which have made headlines for limiting patients' access to doctors. While patients tend not to like these limits, there's a reason they exist: to hold down premiums by only including less expensive providers. That doesn't mean, by the way, excluding better hospitals: There's a lot of health economics analysis that shows little, if any, relationship between price and quality in health care." Sarah Kliff in The Washington Post.

Massachusetts to retain health insurance exchange vendor CGI. "Mr. Patrick, a Democrat, said a clean break with CGI could be too disruptive, but that "we're only going to pay them if we get a workable system." The state thus far has paid about $15 million on a $68 million contract that runs through September, he said at a news conference. The governor said the state also brought on UnitedHealth Group Inc. unit Optum to help make repairs and clear a backlog of applicants. Optum will be paid nearly $10 million." Jon Kamp in The Wall Street Journal.

Drug companies have always been bad at collaboration. That's changing. "The new consortium is meant to unravel the biological roots of the disease, so companies know how to make drugs to attack them, and there's no way any one company could do that by itself. BCG's Sarah Cairns-Smith, who helped set up the partnership, compares this "pre-competitive" of the drug discovery process to a giant archaeological dig." Lydia DePillis in The Washington Post.

Adorable animals interlude: Toronto Zoo giant panda plays in the snow.

4. That NSA sure does great work

How many criminals have NSA's phone records busted? Maybe one. "Representative Ted Poe, a Texas Republican, questioned how many criminal cases federal investigators have filed using information from the phone records program. There "may be one," said James Cole, deputy attorney general in the U.S. Department of Justice. "One criminal case?" Poe said. "[The program] is an invasion of personal privacy, and it's justified on the idea that we're going to capture these terrorists. The evidence that you've told is all this collection has resulted in one bad guy having criminal charges filed on him."" Grant Gross in PCWorld.

U.S. scales back USIS's role in security clearances. "The federal government is scaling back the role of the company that carried out a background check of former intelligence contractor Edward Snowden. The decision announced Thursday will prevent workers from US Investigations Services LLC, the company accused of defrauding the government while carrying out background checks, from reviewing security-clearance cases done by its own employees." Dion Nissenbaum in The Wall Street Journal.

Several cybersecurity initiatives lost after Snowden's NSA leaks. "Alexander wanted to use the NSA's powerful tools to scan Internet traffic for malicious software code. He said the NSA could kill the viruses and other digital threats without reading consumers' private emails, texts and Web searches. The NSA normally protects military and other national security computer networks. Alexander also wanted authority to prevent hackers from penetrating U.S. banks, defense industries, telecommunications systems and other institutions to crash their networks or to steal intellectual property worth billions of dollars...But after Snowden, a contractor, began leaking NSA systems for spying in cyberspace that went public in June, Alexander's proposal was a political nonstarter, felled by distrust." Ken Dilanian in The Los Angeles Times.

NSA spying on Congress. "The National Security Agency "probably" collects phone records of members of Congress and their staffs, a senior Justice Department official conceded Tuesday. Deputy Attorney General James Cole buckled under questioning from multiple lawmakers during a House Judiciary Committee hearing reviewing proposals to reform the NSA's surveillance activity." Dustin Volz in NationalJournal.

Twitter seeks to disclose more about government data requests. "Twitter said Thursday that it is pressing the Justice Department for permission to disclose more information about government data requests on its customers. The company said that if it does not get approval, it will consider taking legal action to tell the public more specifically how many court orders and subpoenas it receives from the National Security Agency and other law enforcement authorities." Cecilia Kang in The Washington Post.

What if J.R.R. Tolkien worked in advertising? interlude: One ad to rule them all.

5. The big Republican backtrack?

Boehner: Immigration reform stalls because GOP has 'widespread doubt' about Obama. "A week after signaling that House Republicans would pursue an overhaul of immigration laws, Speaker John A. Boehner declared Thursday that his caucus is unlikely to move forward until President Obama regains their trust. "There's widespread doubt about whether this administration can be trusted to enforce our laws," Boehner (R-Ohio) said during a midday news conference at the Capitol. "And it's going to be difficult to move any immigration legislation until that changes."" David Nakamura and Ed O'Keefe in The Washington Post.

What if Boehner isn't moving? "All three of these men think it'd be good for the GOP to pass an immigration bill, and all three know that the bulk of their conference is against it. So they have to couch the proposal in whatever language mollifies the rest of the party...That's not to say that the Congress will actually pass a bill this year. It's just to prove that Boehner was managing his conference and generating the headlines that would not rouse any anti-reform groups." David Weigel in Slate.

Reading material interlude: The best sentences Wonkblog read today.

Wonkblog Roundup

Draghi stays out of the sandbox while others play on. Howard Schneider.

The U.S. is losing market share in global science and technology. Don't panic! Lydia DePillis.

Why is Ralph Nader cozying up to a bunch of hedge funds? Lydia DePillis.

Why you should keep your debit card at home. Danielle Douglas.

Drug companies have always been bad at collaboration. That's changing. Lydia DePillis.

The good (and maybe bad) of the declining U.S. trade deficit. Howard Schneider.

This is why we can't have nice things -- health costs edition. Sarah Kliff.

The most important number in Friday's jobs report. Ylan Q. Mui.

Coal ash is spilling into North Carolina's river. Here's why it's so hard to regulate. Brad Plumer.

Et Cetera