'The Monthly Employment and Unemployment Numbers Can be Volatile'

Statement on the Employment Situation in February

  

WASHINGTON, DC – Alan B. Krueger, Chairman of the Council of Economic Advisers, issued the following statement today on the employment situation in February. 

   

Today’s employment report provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression. It is critical that we continue the economic policies that are helping us dig our way out of the deep hole that was caused by the recession that began at the end of 2007, including measures to help the sectors that were most severely harmed by the bubble economy that misdirected investment and created too few durable jobs.

After losing millions of good manufacturing jobs in the years before and during the recession, the economy has added 429,000 manufacturing jobs in the past two years. For the first time since the 1990s, the manufacturing sector is adding jobs. To support a revival in manufacturing jobs and output, the President has proposed tax incentives for manufacturers, enhanced training for the workforce, and measures to create manufacturing hubs.

Private sector payrolls increased by 233,000 jobs and overall payroll employment rose by 227,000 jobs in February. The unemployment rate was unchanged at 8.3%. The unemployment rate has fallen by 0.8 percentage point over the last 6 months.

There was an increase in the size of the labor force last month of 476,000. Importantly, the increase in the labor force last month was due in large part to a reduction in the number of workers who exited the labor force between January and February.

Despite adverse shocks that have created headwinds for economic growth, the economy has added private sector jobs for 24 straight months, for a total of more than 3.9 million payroll jobs over that period. In the last 12 months, 2.2 million private sector jobs were added on net. In the last 6 months, 1.3 million private sector jobs were added, the most of any 6 month period in nearly 6 years.

Sectors with net job increases included health care and social assistance (+61,100), temporary help services (+45,200), leisure and hospitality (+44,000), and manufacturing (+31,000). Construction lost 13,000 jobs, reflecting a loss of 15,400 specialty trade contractor jobs. Employment in the Federal government fell by 7,000 jobs.

The monthly employment and unemployment numbers can be volatile, and employment estimates can be subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report; nevertheless, the trend in job market indicators over recent months is an encouraging sign.

Administration Releases Framework for Business Tax Reform

Says Plan Would Simplify Tax Code, Eliminate Tax Loop Holes and Subsidies, Among Other Things

WASHINGTON – The U.S. Department of the Treasury today released the President’s framework for reforming the U.S. business tax system, which would enhance American competitiveness by simplifying the tax code and eliminating dozens of tax loopholes and subsidies, incentivizing job creation and investment here at home and lowering the business rate while broadening the tax base.

“In order to make us more competitive and create jobs here at home, we must reform our corporate tax code,” said Treasury Secretary Tim Geithner.

“The President’s framework would boost growth and provide American companies with incentives to invest in the U.S. while simplifying and cutting taxes for our small businesses.”

According to the Administration, under the current tax system, the United States will soon have the highest statutory corporate tax rate among developed countries, within a system that features a large number of tax expenditures for special interests.

This puts American businesses—especially those in areas like manufacturing that are subject to more intense international competition—at a disadvantage. And this system is also unnecessarily complicated for America’s small businesses.

For these reasons, the current business tax system is uncompetitive, unfair, and inefficient—distorting choices about where to produce, what to invest in, how to finance a business, and how to incorporate.

As a result, the U.S. business tax system does too little to encourage job creation and investment in the United States and creates too many opportunities that encourage shifting production and profits overseas.

The President’s framework for reform seeks to address those deficiencies in a way that is fiscally responsible.

The details put forward today also make clear that the Administration is committed to working with experts, stakeholders and lawmakers on a bipartisan basis to enact tax reform, including business tax reform that improves the tax treatment of a range of businesses from large corporations to small businesses and does so with fewer tax expenditures, less complexity and lower rates without adding to the deficit.

This report describes the current state of the U.S. business tax system and lays out a framework for reform that includes five major elements:

Eliminate dozens of tax loopholes and subsidies, broaden the base and cut the corporate tax rate to spur growth in America: The framework eliminates dozens of different tax expenditures and fundamentally reforms the business tax base to reduce distortions that hurt productivity and growth. It reinvests these savings to lower the corporate tax rate to 28 percent, putting the United States in line with major competitor countries and encouraging greater investment.

Strengthen American manufacturing and innovation: The framework would refocus the manufacturing deduction and use the savings to reduce the effective rate on manufacturing to no more than 25 percent, while encouraging greater research and development and the production of clean energy.

Strengthen the international tax system, including establishing a new minimum tax on foreign earnings, to encourage domestic investment: Our tax system should not give companies an incentive to locate production overseas or engage in accounting games to shift profits abroad, eroding the U.S. tax base. Introducing the principle of a minimum tax on foreign earnings would help address these problems and discourage a global race to the bottom in tax rates. 

Simplify and cut taxes for America’s small businesses: Tax reform should make tax filing simpler for small businesses and entrepreneurs so that they can focus on growing their businesses rather than filling out tax returns.

Restore fiscal responsibility and not add a dime to the deficit: Business tax reform should be fully paid for and lead to greater fiscal responsibility than our current business tax system by either eliminating or making permanent and fully paying for temporary tax provisions now in the tax code.

To view the President’s framework for reforming business taxation, please visit this link.

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President Speaks on an Economy Built to Last in Iowa

President Obama visits Conveyor Engineering and Manufacturing in Cedar Rapids, Iowa and speaks about strengthening our economy and building an American that’s built to last.

We Can't Wait: President Obama Takes Action

President Obama is not letting congressional gridlock slow economic growth. Here are the actions he has taken to support the middle class.

President Obama Speaks on Middle Class Tax Cuts

President Obama urges Congress to get to work on extending and expanding the payroll tax cut, which will help put more money in the pockets of middle class families.

New York State DOB Releases Mid-Year Update

Update Revises Budgetary Projections for the Current Year Through Fiscal 2015

The State Division of the Budget today released the Midyear Update to its FY 2012 Financial Plan. This update revises the state's budgetary projections for the current year through FY 2015 based on a review of current financial data and operations.

Weak and unsettled economic conditions around the world -- illustrated by the Eurozone financial crisis, volatility in the financial markets, and persistently disappointing data on employment, consumer confidence, and income -- have darkened the State's fiscal outlook.

The significant positive receipts results early in the fiscal year have been largely eroded as the economy weakened in the summer months. With the prospect of a weak bonus season on Wall Street, even more negative pressure is being placed on the State's receipts outlook.

Based on comprehensive review of these factors, as well as actual operating results, updated program data, and other factors, the Division of the Budget (DOB) estimates that the General Fund has a budget shortfall of $350 million in the current fiscal year.

In order to eliminate the shortfall, DOB will immediately institute a fiscal management plan. If it appears that the savings from the management plan will be insufficient to eliminate the shortfall, the Governor is expected to call the Legislature into session to consider additional actions to achieve a balanced budget in the current fiscal year.

The same adverse economic factors have increased the size of the projected budget gap that must be closed in FY 2013. DOB now estimates that the gap for FY 2013 is in the range of $3.0 billion to $3.5 billion.

Governor Cuomo will propose an Executive Budget for FY 2013 that will eliminate the gap.

DOB will have a better sense in coming weeks of the magnitude of the receipts decline as more data becomes available.

A copy of the full report is available at www.budget.ny.gov.