Unemployment rate dropped to 4.7% in January - 193,000 New Jobs

February 3, 2006

[new yorker 77]

Unemployment Falls to 4.7%

January +193,000 Jobs

December +140,000 Jobs - A 32,000 Upward Revision

[1rudeboy]

Some dude who disguises opinion as fact, and posts it in a fashion as to be unverifiable.

[eraser2005]

Ahh... so you've found your mirror... At least I can tell you the government website to find the budget numbers on (there is no single spreadsheet to link to that I have found, otherwise I would have).... You keep posting numbers that have NO basis in reality... You're even off by 2 years on when Engler left office. Sure, things look great if you forget how they tanked at the end.

[1rudeboy]

You keep posting numbers that have NO basis in reality....

Please direct me to where I have done so. Thanks in advance.

[Angry_White_Man_Syndrome]

I was in the same boat coming out of the Navy. I have spent the last 5 years going to college at nights for a BSME (Mechanical Engineer). The job I got is as an Engineer and they are going to pay for me to finish my degree. You should go back to school and get a degree. I did it working full time with a wife and three kids. I also have a very mild form of dyslexia. I get 'd' and 'b', 'p' and 'q' wrong 90 % of the time and transpose numbers all the time. Trust me doing homework and tests was no walk in the park. I basically had to do every problem twice.

Good luck to you.

[eraser2005]

Let's look at when the tax hikes and cuts took effect. The hikes weren't at the beginning of Clinton's term. They were in Q3. That changes the numbers considerably. So in the first year after raising taxes, GDP grew 4.29%. Year 2 - 2.46%. Year 3 - 3.99%. Year 4 - 4.79%.

After the 2001 cut - year 1 growth 1.26%. Year 2 - 1.99%. Year 3 - 4.64%. Year 4 - 3.60%

After the 2003 cut - year 1 growth 4.64%. Year 2 - 3.60%. Year 3 - ?

It would appear that 2003 was much more effective than 2001. That could also be a result of the portion of the business cycle in which it took effect (it took until 2003 for jobs to start growing). Once again, at about the same point into a recovery, the tax hike and tax cuts are showing almost identical rates of GDP growth. Perhaps the laffer curve is much flatter than we thought?

[roaddog727]

Calling Willie Green, calling Willie Green - Our economy is about to tank, over.

[eraser2005]

Posts 103 and 137. You've presented the wrong year for Engler leaving office and the wrong number for the state of the Michigan budget when he left.

The one overwhelming factor which determines the health of the State of Michigan is the health of the Big 3. When Engler took office, the Big 3 were a financial mess. Then they started making a fortune, and the state started pulling a large surplus (it helps when overpaid union workers are all working overtime and all the plants are running 3 shifts). Then the Big 3 started falling apart financially again, and the state budget fell apart (2002 being the start of a rapid fall). Granholm then took over the mess in 2003, and the state budget is only marginally better, and employment is worse. Have you noticed how many people have been laid off in Detroit lately?

[expat_panama]

The question is how flat is the laffer curve and where are we on it?

Agreed-- and we also evidently agree that the model is a valid simplification.  It's only when we get off on picking this or that tax-cut/hike that we end up in the kind of quarrel that only makes pundits rich.

If tax cuts really resulted in growth, you should see a higher slope than average shortly after each drop in the tax rates, whereas a tax hike should see the opposite effect. You don't see either effect....

Part of the problem is alternate causes, and part is the fact that people can see whatever they want to see.  This is why I like to actually look at the numbers.  Here's the plot-- if we still don't have a consensus we can even calculate an index of correlation to prove just how weak or strong it is.  Any correlation between tax rates and revenue supports the Laffer model.   A positive correlation says were at Point A, and a negative correlation puts us at Point B.   

Off hand, I see a weak to moderate statistical inverse correlation between tax rates and gdp growth within two years.

[1rudeboy]

I'm posting verifiable information from Michigan's own website responding to your opinion that "things were just as bad" with Engler in office. Please clarify what corresponds to your "no basis in reality" comment. You've been blathering about tax cuts vs. tax revenue all morning. I have provided information on Engler's tax cuts, and how the budget deficit he inherited swung to a surplus during this period. Pointing out that Michigan's budget has swung back into deficit is meaningless without context, or an explanation as to why you think it happened. Moreover, Michigan's 6% unemployment rate now is still better than the worst it was then, despite your best efforts to ignore the fact that during his stewardship, Michigan's unemployment rate fell to its lowest level in history. Just as bad my a**.

[Toddsterpatriot]

So in the first year after raising taxes, GDP grew 4.29%. Year 2 - 2.46%. Year 3 - 3.99%. Year 4 - 4.79%.

So, the year before Clinton took office, 4.15%, the 4 years after he hiked rates, 3.883%.

The year before the 2003 cuts, 1.63%, the years after, +4.65 and +3.60.

I guess a slower growth rate after a hike and a faster growth rate after a cut doesn't work for you?

[driftless]

There are hundreds of thousands or even millions of people who now work at home thanks to the computer. But if they lost their job at an office, factory, etc, before starting work at home, they would be considered unemployed. 4.7 is a rough estimate, but believe me if Bush were a Dem, the donkey party stooges would be hailing this news as proof that God favors the U.S.

[VRWCmember]

Let's look at when the tax hikes and cuts took effect. The hikes weren't at the beginning of Clinton's term. They were in Q3.

But, he made them retroactive to the beginning of the year, i.e. before he even took office. Also, recall that the economic growth began over a year before he took office (recovery began in 1991). So therefore a growing economy was already going to produce more revenue. It can be reasonably argued that the tech boom growth prevented the clinton tax hike from tanking the economy as much as it normally would have.

[driftless]

"where there are jobs"

That is the history of mankind. People for milleniums have migrated to where the jobs were. America is no exception. We not only had people come to our country to find work, we've had millions migrate internally to find work. It happens all the time. And you're right, people have to go to the job, because like as not, the job won't come to them.

[eraser2005]

Agreed-- and we also evidently agree that the model is a valid simplification. It's only when we get off on picking this or that tax-cut/hike that we end up in the kind of quarrel that only makes pundits rich. VERY good points. :) I would be interested in seeing the correlation data. I see several short term spots where there is a positive as well as a negative correlation, so in all I would say it looks weak. But then another problem is when you look at years like the early 80s. The top tax rate then dropped, but the real beauty was in the simplification of the tax code, which can skew the results (ie, does the drop in tax rates equate a drop in taxes, or do the elimination of deductions mean people pay what looks like a lower marginal rate, but is actually about the same effective tax rate). The one thing I do see a stronger correlation in is the volatility of GDP growth and tax rates. Once top rates get below 50%, volatility seems much less pronounced.

[Zeppelin]

So almost 2 million new jobs were created last year and the unemployment rate went down as well. BUT, since economists had "forecast" a little better, what really "happened" is not all that good?

I see. So if a bunch of sportswriters "forecast" the Steelers by 7 and they win by only 4 - the Steelers didn't play as well as they should have.

Do you remember in the '90s under good ole Bubba, when the Republican Congress proposed an increase in funding for education, and the Democrats proposed a larger increase? (I don't remember the exact numbers...) When the larger increase was shot down in favor of the more modest increase, the Democrats protested and spewed accusations all over the media that the Republicans were proposing to CUT funding.

That's the mindset of the left. If you're not liberal, then you're reactionary and backwards-thinking.

[cinives]

paging Willie Green...

[eraser2005]

They were retroactive - but you can't retroactively lower GDP growth. They can only have an influence in quarters going forward. The argument of a growing economy producing more revenue is the same we see when analyzing the effect of a tax cut. The economy was growing when the 2003 cuts took effect, as well, mind you...

[Moonman62]

If we use this framework, then we've decided that wages are the prices of one part of the economy --labor. If the price of labor goes up, this increase calculates out to a higher price average (sum of items divided by the number of items). If the average is up then the calculated price index number is greater, and that's inflation.

It's a market increase, unless the increase is due to currency devaluation.

I would still appreciate your help explaining the largest inflationary periods in our economy's history. Why, why, why?