Saturday, July 9, 2011

Elections Have Consequences

In November, the Republicans gained control over the U.S. House of Representatives, a handful of governors' mansions and quite a few state legislatures (ok, I'm being lazy today about precise numbers. Deal with it.)

Notice an inflection in the job gain/loss trend around that time? There is certainly the early spring hiring binge that is visible across the last three years (one of the reasons that economists use seasonally adjusted time-series to evaluate employment statistics). Subtracting that pattern out (i.e. normalizing the jobs added/lost numbers relative to the extra noise), there is a clear inflection point at about November 2010. Businesses slowed their increase in job offerings, state budgets became a punitive tool against the poor and working class, and the jobs recovery began to reverse itself.

We should place a large amount of faith in what the market tells us. Millions of economic actors operating on disparate sets of information provides a more important signal(and one informed more by facts than theory) than economic modeling, political ideology, or theory alone. The market is clearly telling us that the promised Republican policies are going to shrink the job growth at the firm level across the nation, including their rush to "repeal and replace" the Affordable Care Act and their plan to take trillions of dollars out of the economy during a recession. The market has spoken.

No comments:

Post a Comment