Less Good News than Meets the Eye

Wall Street is delighted that the April jobs report shows fewer jobs lost than anticipated and fewer than previous months. On closer inspection, though, we see the usual pattern of earlier months being adjusted downward. The revised figures show more than a quarter million jobs lost in the first four months of the year. There's a good chance that April will be worse than 20,000 when the dust settles in another 60 days.

Worse than that is that the nearly neutral effect of April was achieved by offsetting huge loses in manufacturing and construction with gains in services and government. Generally, a service job is probably worth half one of the first two, so from an economic standpoint, this wasn't neutral at all.

And government jobs are rising. One wonders how this could be. Except for the feds, who simply print whatever amount of money they need, governments are limited roughly by tax receipts, which are falling short of expectations. Apparently they haven't yet adjusted payrolls but it's just a matter of time.

Here in Oregon, the process will be distressing. The annual budget cycle for most less-than-statewide units is intense in May. The figures everyone is using assumes that whatever money has been coming from the state, which is most important for schools and community colleges, will stay at the level promised a year ago. A new state tax projection should be coming out within a few days. When it shows another sharp decline, a lot of those budgets, and hence hiring expectations, are going to need revisions.