NY Times Lead Story Warns That Overblown Sequestration 'Could Put a Stop' to Job Growth
The sequestration may have fizzled out as a national crisis, but it's still hard at work killing jobs, apparently. Saturday's New York Times lead story by Nelson Schwartz and Binyamin Appelbaum strongly insisted that last Friday's surprisingly good job numbers from the Labor Department are endangered by the 2.4% federal spending cuts known as sequestration, "Jobless Rate Dips to Four-Year Low – 236,000 Jobs Added – Unemployment Level Down to 7.7%, but Analysts Fear U.S. Spending Cuts."
Appelbaum (pictured) said in an August 2011 Times podcast that "the real problem is that there's this tremendous political pressure to get smaller, and everything we know about economics tells us that they should be doing the opposite, they should be getting bigger right now....it's as cheap as it's ever been to borrow money, invest it in infrastructure, invest it in things that will pay off in the long run, and help out the economy." On Saturday he and Schwartz (who also likes government stimulus) argued:
The economy picked up speed in February, creating jobs at a pace that would substantially lower the unemployment rate. But Washington could put a stop to that.
Even as analysts hailed a better-than-expected jobs report on Friday that pointed to an acceleration in growth, they warned that stronger employment gains are being put at risk by sequestration, the automatic spending cuts being imposed by the federal government.
“They’re doing their best to get in the way,” Nigel Gault, chief United States economist at IHS Global Insight, said of lawmakers and other officials. “But the good news is that the economy is carrying plenty of momentum going into sequestration.”
The Labor Department reported that the economy added 236,000 jobs in February as the unemployment rate sank to 7.7 percent, down from 7.9 percent in January and the lowest level since December 2008.
But many experts said if it were not for political gridlock in Washington, which led to the automatic spending reductions on March 1, the performance of the job market and the broader economy would be even more robust in the months ahead.
“It does suggest a bit more cushion heading into the spring, when we will see the bulk of the impact from the sequester and fiscal pullback,” said Michelle Meyer, senior United States economist at Bank of America Merrill Lynch. “This was a good report. It’s hard to poke holes in it. But we think we’ll see some slowdown in April and May because of the sequester.”
Mr. Gault estimated that the economy would achieve a 1.5 percent growth rate in the first half of 2013. Without the spending cuts and a rise in Social Security taxes that went into effect in January, he said, the economy would probably advance at double that pace.
As a result, he and other economists expected that the pace of job creation would slow, leaving the unemployment rate not much lower than where it is now. If jobs were added at February’s pace for the rest of 2013, the unemployment rate would crack the closely watched 7 percent level by the end of the year. Instead, Ms. Meyer predicted that unemployment would remain near 7.5 percent.
Later the Times leaned on its "austerity" trope, hyping the sequester's 2.4% across-the-board reduction in federal spending: "In some respects, the rest of the year is shaping up as a tug of war between a strengthening private sector and federal austerity." Not until paragraph 25 did the Times cite an alternative view from House Speaker John Boehner, who "said that the government’s large budget deficits posed economic risks of their own."