Another (Seasonally Adjusted) Slowdown
The disappointing jobs report for June will increase pressure on the Federal Reserve to do more. It will add to hopes (among Republicans) or fears (among Democrats) that a slowing economy could damage President Obama’s re-election prospects.
May I suggest an alternative explanation? The recovery has been chugging along slowly for a couple of years, and while it may have slowed a little in the last few months, that change has been minor.
The reason that few doubt that the jobs picture is getting worse is that they look at the Labor Department’s seasonally adjusted figures. But those adjustments most likely overstate reality these days. Employers are acting more cautiously than they did in previous cycles. They add fewer seasonal jobs than they used to, and they therefore get rid of fewer seasonal workers when the season is over.
The result is that the seasonal adjustments make things look better than they are in the winter, when fewer workers are being let go than the government expects, and worse in the spring and summer, when the workers who were not let go cannot be rehired. There is, of course, more than seasonal adjustment going on, but I suspect that the underlying swings are far more modest than the monthly figures seem to indicate.
http://economix.blogs.nytimes.com/2012/07/06/another-seasonally-adjusted-slowdown/?hp
June is the month when the seasonal adjustments call for the largest upward adjustment in private sector jobs, as students find summer work. If there are fewer summer jobs than there used to be, we would expect the June seasonally adjusted numbers to be disappointing. They have been so in each of the last three years.
If that analysis is correct, the job numbers are likely to seem poor for the next two months, but to pick up with the September report on Oct. 5, and then to look impressive in the October report, which will appear on Nov. 2, four days before the election.
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