The October jobs report essentially agrees with the rest of the current data on the economy—the economy is growing slowly, too slowly to bring down unemployment rapidly. In fact, the unemployment rate rose to 7.9 percent in October and the economy created about 171,000 jobs, roughly equal to the usual number of new workers in the labor force.
The October report partly reversed the mysterious drop in the unemployment rate in the September jobs report. At the time, J.D. Foster, Heritage’s Norman B. Ture Senior Fellow in the Economics of Fiscal Policy, predicted that September’s jobs report would be sorted out later:
The September household survey is one to set aside to wait for a more reliable report next month, which will almost certainly reverse the odd results from September. If it does, then we have both confirmation of the power of statistics and of the weakness in the economy.
With the jump back up in the unemployment rate in October to nearly 8 percent, we have at least the beginnings of an answer to the mystery.
In addition to possible quirks in the way the government collects information on unemployment, the Administration is playing some more overt games with the economy, holding new regulations and even layoff notices until later in the year.
As research fellow Diane Katz described yesterday, the Obama Administration has missed two legally mandated deadlines to let them know about new regulations that are coming, adding to the overwhelming uncertainty they are facing.
Meanwhile, to keep too many pink slips from going out immediately, the Obama Administration has been encouraging federal contractors to break a law that requires them to notify employees of impending layoffs. The Administration has offered to pay the penalties for the companies if they will just hold off. As Heritage’s Hans von Spakovsky explained:
Massive defense spending cuts under sequestration are scheduled to hit on January 2, 2013. Defense contractors affected by the budget cuts would have to issue notice letters to employees by November 2 (four days before the election) to meet the January 2 start date for the spending cuts.
With businesses in such a holding pattern, it’s no wonder the recovery is sluggish. And the anticipation of Taxmageddon hitting January 1 is only adding to the crisis.
Not only will Taxmageddon mean individual tax increases—if you’re a middle-class family, your taxes will go up around $4,100—but the whole economy will also suffer. The Congressional Budget Office has said that unless Congress and the President act, we will be plunged into a new recession extending through 2013—when we haven’t even recovered from the previous one.
When the new Congress takes office on January 3, reversing Taxmageddon should be at the top of its to-do list. The congressional leadership and the successful presidential candidate should make clear right after the election that reversing Taxmageddon will be their top priority, to reassure businesses and employees as soon as possible. The economy cannot recover while businesses are hamstrung by government interference, looming regulations, and tax increases.