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View Diary: Government reports just 88,000 jobs added in March, with 7.6% jobless rate. U6 falls to 13.8% (85 comments)

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  •  Don't forget (2+ / 0-)
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    MrAnon, Tweedledee5

    Something like $20 billion is coming out of the economy on a monthly basis due to the loss of relief in FICA taxes. The sequester results in an additional $14 billion that must be cut from the Fed budget over the next 6 months. Added together that's a $34 billion monthly hit to the economy split between retail sales (mostly discretionary I hope) and government purchases of goods and services from the private sector.

    There will be direct government jobs lost due to the sequester but there's no way you can cover any significant fraction of the costs by dumping employees. You have to close entire operating facilities and eliminate all associated costs.

    We've been experiencing an inventory build in the economy coming out of the 4th qtr and that led to a lot of early year hiring, same as has occurred in the last 3 years or so, but that's mostly over for now. The danger right now is if we start losing jobs going forward. That would be a major blow to confidence with potential contagion effects.

    The President stated that we could lose as many as 750k jobs due to the sequester. The Fed chairman said the sequester would cut 1.5 percentage points from GDP. I think we should consider these forecasts to be more accurate than what is coming out of wall street given that wall street's incentive for accuracy is dubious.

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