Though May was an improvement over April, it was still by no means acceptable, and was also marred by several troubling factors:
- May’s raw additions included 204,000 jobs added in BLS’s “Birth/Death Adjustment,” which represents an estimate of jobs added at new firms (net of those lost at those which went out of business) which BLS somehow knows is out there but can’t locate. The track record of this attempted adjustment is already pretty spotty; given the degree of pervasive economic uncertainty, it’s even more questionable now.
- May’s raw additions also included 73,000 temps, an area where job growth continues to occur about five times faster than in the rest of the economy.
- As to those 400,000-plus jobs added per the unemployment-rate report mentioned above, they occurred while the ranks of those employed full-time shrunk by over a quarter-million, and the number of part-timers ominously swelled.
Looking forward, May is likely as good as we’ll see during the rest of the year. Recovery Summer Flameout Part Three appears to be on track to be worse than last year. Europe is a mess, most of the rest of the world’s economy is slowing down, and whatever we may see in energy price reductions won’t have much positive influence.
Far more important, “Taxmageddon” looms, and no one seems inclined to prevent it. As long as this is the case, employers will be extremely reluctant to hire or expand, and we’ll be extremely fortunate to avoid another recession.
Taxmageddon promises tax increases for nearly every taxpayer on January 1, 2013. Unless Congress and President Obama head it off before the end of the year, the tax system largely in place during the past nine years (still known to most as “the Bush tax cuts”) will essentially go back to the tax system as it previously existed. The “temporary” cuts in the payroll tax in place this year and last will also expire, while a plethora of ObamaCare-related taxes will kick in if the Supreme Court allows the law to partially or fully survive.
Everyone in Washington seems to believe that they can wait until after the election to deal with Taxmageddon. But what if Obama loses? Especially if Democrats hold the Senate, it would be completely in form for a soon to be former Punk President to turn spiteful, do nothing, stick Mitt Romney with a horrific problem he can’t address until January 20, and skip town — the country be damned. We simply cannot afford to risk that.