A Snow Job
White house economic advisor Larry Summers said in an interview with CNBC that the recent blizzards probably distorted the unemployment numbers due to be released on Friday morning. According to Summers, the mountain of accumulated snow halted construction projects and also temporarily closed many stores plus restaurants.
The White House reasoning quickly melts in the face of economic logic. Businesses make hiring or firing decisions based on the benefit that an employee brings to the table versus their cost. No doubt the weather kept people from eating out or shopping for a few days. But the dress that was not bought on Saturday because of the weather more than likely will be purchased after the roads have been plowed. The lobster whose life was saved by little snowflakes on Friday night will be boiled a week later for a delayed celebration.
The fact is that construction has hemorrhaged jobs for over a year. In a report authored by the Bureau of Labor Statistics and released at the beginning of February, the construction industry shed another 75,000 jobs, which was about the average monthly loss for the preceding 12 months. Currently, one out of four unemployed people came from construction.
Despite the rosier picture painted by the unemployment rate dipping under 10% the last three months, raw numbers show net additions to the jobless rolls. The White house has used the magical decline in the unemployment rate as proof of a successful economic plan.
Is Summers’ statement a preview of a disappointing jobs report? Many believe the actual unemployment rate hovers above 15% when individuals no longer actively looking for work are included. A bad jobs report could chill financial markets running on hope and stifle White House claims of success.