Relevant and even prescient commentary on news, politics and the economy.

Thinking about Research

Chris Blattman highlights the latest version of Janet Currie and Reed Walker’s research on a positive externality of the shift to E-Z Pass (PDF link). From the Abstract:

We find that reductions in traffic congestion generated by E-ZPass reduced the incidence of prematurity and low birth weight among mothers within 2km of a toll plaza by 6.7-9.1% and 8.5-11.3% respectively, with larger effects for African-Americans, smokers, and those very close to toll plazas. There were no immediate changes in the characteristics of mothers or in housing prices in the vicinity of toll plazas that could explain these changes, and the results are robust to many changes in specification. The results suggest that traffic congestion is a significant contributor to poor health in affected infants. Estimates of the costs of traffic congestion should account for these important health externalities.

The interesting thing is that I read this paper a while ago—earlier this year, or even late last.  Well, maybe not this version of  the paper, but an earlier version of it which also showed significant positive results.  And it gets me thinking about how we deal with research.

Because the past six months or so—since the previous version—are six months in which this information apparently didn’t get disseminated to the Chris Blattmans and Kevin Drums of this world, six months during which uninformed people have bought houses near non-EZ-Pass toll plazas, six months during which every Republican candidate for the House or Senate not named Mark Kirk has spoken as if since climate change is not real, and therefore there are no possible reasons to reduce emissions. (As an aside, that the glorious liberal days of IN-9 are when Lee Hamilton seat for as long as he wanted it is an indicator of discourse shift, as this blog’s pretense to being “left of center” makes clear.)

In a limited sense, that’s probably as it should be.  People who knew about the paper read it, sent comments to the authors, asked questions, suggested changes and the refinements.  I’m certain the current version is a better paper than the one I read, with better details.

But there is likely someone who, in the past six months, bought a house near a toll plaza that doesn’t have E-Z Pass exits, thinking she was going to raise her soon-to-be-born child in a better environment than an apartment who would have liked to have known about this study, instead of ending up with “Buyer’s Remorse” in a real—not just an economic or psychological—sense.

As long as research is delayed by details and false narratives remain information-free, markets will remain inefficient. And people will have what economists gracefully call “suboptimal outcomes.”  Such as “prematurity and low birth weight,” neither of which is a positive indicator for future success and earnings.

"Run Government Like a Business" = Deficit Spending

We’re used to that line by now. Ross Perot—one of the more prominent people who got rich due to government contracts—used it, Carly Fiorina and Meg Whitman are using it (while desperately hoping you don’t pay attention to how they ran Lucent/HP or eBay), and Aaron Sorkin even had Charles Grodin say it in Dave, if only to establish his Sensible Centrist cred.

So how are businesses running their debt-laden firms? Ask the WSJ and ye shall receive:

U.S. corporations have taken full advantage of low interest rates, going on a bond-issuing binge that has left them with tons of cash, which they appear to be holding largely as insurance against a new bout of financial turmoil, rather than spending on new hires. Nonfinancial companies were sitting on about $8.4 trillion in cash as of the end of March, or about 7% of all company assets, the highest level since 1963. Even before its [$1.5 billion at the bargain-basement interest rate of only 1%] bond issue, IBM had $12.3 billion in cash and short-term investments, which accounted for about 12% of all its assets.

The WSJ is, of course, worried about The Savers:

Meanwhile, though, savers are seeing some of the worst nominal returns in decades. As of June, the weighted average interest rate on deposits, money-market funds and other highly liquid investments stood at only 0.29%. Returns on riskier investments aren’t great, either: The average yield on near-junk bonds with maturities close to 30 years stood at about 5.9% this week.

As Brad DeLong said recently, in a slightly different context, “I share [the] belief that these numbers ought to be higher. But I also think that I don’t have very good reasons to claim that I am right that they should be higher.”

Neither does the market.

And it’s not as if those companies were all saving during the Good Times. Indeed, they were arguably more poorly managed than the government. As Floyd Norris noted almost two years ago:

Over the last four years, since the buyback boom began, from the fourth quarter of 2004 through the third quarter of 2008, companies in the S&P500 showed:

Reported earnings: $2.42 trillion
Stock buybacks: $1.73 trillion
Dividends: $0.91 trillion

The net flows there is -$220B, give or take a billion. It’s spending roughly $1.10 for every dollar you earn. And, to make matters worse, nearly twice as much was spent to make people go away (buybacks) than to reward loyalty (dividends).

If the government really were to be run like a successful business—the way the S&P500 are run, the way IBM is run—they would be borrowing long-term right now at that 2.82% 10-year or even than 4.00% 30-year rate.

If it’s good enough for IBM, it should be good enough for the U.S. Government. The Mitt Romneys and Ross Perots have been telling us that for years; many we should listen?

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You Are A Carrot


Look at this lovely old drawing. Fernlike leaves, flower heads like old fashioned crochet embroidery. This is Daucus carota ssp sativa, originally native to temperate regions of Europe and southwest Asia. Now print this picture out and go to the supermarket and try to find it in the produce section.

If you are lucky, you might spot some by their leaves. But mostly you will find only the bare, leafless root, or even stubby vegetable batons identifiable only by their colour.

Carrots themselves don’t want to be stubby batons of pure edibility. In fact, that kind of carrot can’t exist as a living thing – it’s just what’s left when most of the living parts of the carrot are shaved and chopped away.

Now, no grocery shopper would choose the whole carrot (leaves, stems, flowers, taproot, feeder roots and a bit of dirt) over the bagged orange cudgels when planning to make a stew. But would a sane grocery shopper deny that all those bits need to exist? Would they demand to pay “only for the carrot” and not pay for the other bits?

And how long would carrots last if they were “paid” only by root-weight, not on a whole-life basis? As a wholly domesticated species, they wouldn’t. They’d be gone in a generation, if they even came to exist in the first place. Only the wild ones would still live, of a low quality from the shopper’s viewpoint, but surviving.

This is why business, worldwide, needs to pay fairly, and provide benefits and pensions.

Woah! Where did THAT unsignaled left turn come from?

I’m a carrot too. So are you. We need our lacy finery, our crocheted flowers. We need to set seed and droop into a shabby graceful old age. We need our feeder roots. And our taproot is not there for some shopper to chomp – it’s there to nourish the plant while it engenders seed, and dower those seeds with enough stored food to get their own proper start.

Business only exists because we exist, yet like other critters it tries its best to get all the candy and none of the wrappers. It isn’t intelligent enough, overall, to realize that if it slices out the taproot and starves the rest of the plant, carrots will disappear, immediately followed by the businesses who depend on them.

At present, business has managed to interpose itself between many of us carrots and our sustenance, collecting a toll each time something of value crosses through the toll gate. This can work very well for us and for them, provided the toll is low enough and enough of the profit is returned to nourish the carrots. But over the past couple decades less and less has been returned to the carrots. The taproots have been tapped out.

Luckily for business, people aren’t like carrots, are not fully domesticated. In the poorest nations you see this in a pure form. We’re still a wild species, we continue to raise our kids, save and build and flower and set seed even in the bleakest situations. People don’t stop living, and the reason for living is living.

Business flourishes when people flourish, but many businesses don’t know this, or are content to get most of a shrunken root rather than part of a plump one. Will they ever grasp this? The incentives seem to go the other way, with the short-term spoils going to the greediest..

That’s why someone besides business needs to regulate business, and why great profitability in business should be viewed with suspicion, not placid satisfaction.

A Sentence Worthy of the WSJ Editorial Page

We can only hope that the special Infrastructure supplement in today’s edition of The Pink One was written and/or edited by a PwC, not an FT, employee.  Otherwise, how are we to explain Michael Peel’s curious declaration in “Unweaving a Tangled Web” that:

…[there is a] continued prevalence of corruption around the complex, lucrative, and transnational global infrastructure industry, despite limited efforts in the past few years to root it out. [emphasis mine]

Let’s see: complex (difficult to understand and therefore regulate), lucrative, transnational (easier to create transactions and translational exposures), and facing “limited efforts” at control.  Would anyone—even William Easterly—even consider the possibility that this is not an area more subject than most to regulatory capture at best, and corruption as the norm?

Other sentences we should expect from Mr. Peel:

SEC enforcement officials remain overburdened and behind despite Christopher (“Uh, two plus two?  Pass me a calculator.”) Cox having been replaced as its Chair.

BP leadership still want their lives back despite their recent ability to capture almost 10% of the oil escaping from their Deep Horizon drilling site.

Chernobyl-area lumber sales continue to be made primarily in the grey market to unsuspecting customers despite the leak that irradiated those trees being almost twenty years old.

Feel free to add your own in  the comments section.

The Effects of Airline Deregulation: What’s The Counterfactual?

by Tom Bozzo

Crossposted with Marginal Utility.

Matt Welch at the Reason blog takes credit for airline deregulation on behalf of libertarianism:

The “worldview” of libertarianism suggested, back in the early 1970s, that if you got the government out of the business of setting all airline ticket prices and composing all in-flight menus, then just maybe Americans who were not rich could soon enjoy air travel. At the time, people with much more imagination and pull than Gabriel Winant has now dismissed the idea as unrealistic, out-of-touch fantasia. They were wrong then, they continue to be wrong now about a thousand similar things, and history does not judge them harsh enough.

Mark Kleiman observes that transportation deregulation was more directly the progeny of 1970s Brookings-esque neoliberalism (though I’d grant Welch that libertarians got there first), though Kleiman doesn’t take issue with the basic claim that deregulating prices and service offerings “was, on balance, a good thing.” This argument ultimately rests on the declines in airfares and resulting democratization of air travel that Welch cites; indeed that’s what the Brookings-esque neoliberals I know cite when they’re defending the deregulatory record.

The catch is that all such economic comparisons must be counterfactual: they must show an improvement not with respect to CAB-set fares of the late-1970s, but rather with respect to what reasonably competent regulation could have produced under the other circumstances of the deregulated era. (This, FWIW, is one of Robert W. Fogel’s central insights into what makes economic history economic history.) If the comparison exercise is tough by the (inappropriate) historical yardstick thanks to declines in (average) service quality and the airline industry’s trail of fleeced stakeholders, then the counterfactual comparison is going to be tougher still thanks to a couple of factors that should have produced large declines in airline costs and hence fares even in the absence of deregulation.

The factors of note are a pair of technological advancements — the development of high bypass ratio turbofans suitable for shorter-haul airliners and the demise of the flight engineer’s job thanks to cockpit automation, both of which have origins predating deregulation — and the long secular decline in oil prices through the deregulated era’s zenith prior the crash of the 1990s stock market bubble. Since a regulator could have promoted adoption of the cost-saving technologies and passed the resulting productivity improvements and input cost decreases through to fare-payers using elementary regulatory technologies, deregulation must have produced substantial fare reductions relative to the late CAB era to have a claim to constituting a true improvement.

One of the airline industry’s problems is that it isn’t “revenue adequate” or able to recover its total costs including a normal return to investors. If you thought airlines were incurring costs efficiently, then moving towards revenue adequacy would require more revenues and hence higher average fares. On the face of things, that wouldn’t look good for a regulated alternative providing more secure revenues to the industry. However, there are dynamic efficiency counterbalances to the apparent static inefficiency under regulation: revenue adequacy implies having money for efficiency-improving investments. For instance, U.S. legacy airlines have somewhat notoriously kept relatively aged fleets in the air. Partly, that was a deliberate strategy that blew up when the Goldilocks conditions of the late-90s ended, and partly they don’t have the money to turn over their fleets as fast as they arguably should.

The formerly regulated transportation industries shared, to one extent or another, cost structures under which an efficient carrier would go broke under econ 101 perfect competition with prices driven down to marginal costs. So the question isn’t so much whether carriers will exercise such market power as they have in order to survive, but how. Real firms might or might not do that better than a real regulator. I do think there’s a good case to be made for some degree of pricing and service liberalization with regulatory policing of “excessive” use of market power; that’s a one-sentence version of the Staggers Act’s approach to the (very successful) freight rail industry.

Added: Good comments at Economist’s View, too, particularly a long one from Bruce Wilder expanding on the cost structure issue, discussing pricing strategies, and opining on the sources of apparent gains from deregulation.

The Capitalist & The Entrepreneur

One of the nice things about going to the Kauffman Foundation this year was meeting up again with Peter Klein of Organizations and Markets, who was my first economics professor.* (I liked him as soon as I found out one of his first publications dealt with “moral hazard” and the Designated Hitter.)

Peter has a book out from the Mises Institute, The Capitalist & The Entrepreneur. Subtitled Essays on Organizations and Markets and carrying blurs from Business and Law people as well as the obligatory G-Mu professor (Adam Smith Award winner Peter Boettke), the book, as with Klein himself, is likely well-conceived, sharply written, and worth arguing with and about.

Not to mention that, at $12 from Mises, it’s very reasonably priced.

I’m certain I’ll have more later, after I get a chance to read it. But it seems exactly the type of book that should be getting more discussion here.

*On hearing this, Andrew Samwick said, “But you two are at opposite ends of the spectrum.” What I Should Have Said then I say now: “I said he was a good teacher. I never said I was a good student.”

Price elasticity, taxes and wages: Or, why I don’t take wingnut economics seriously

by Bruce Webb

It is I think a truism that in any economic enterprise all costs ultimately have to come out of price, that in the end ‘the customer pays’. But what is not true is that price is infinitely elastic, at some point price in and of itself will restrain demand, and while you can prop up demand through some things like advertising and marketing (the ‘gotta have it factor’), at some point the ancient principle ‘what the market can bear’ will kick in. This principle is so obvious as to hardly be worth stating yet many on the Right simply turn it off and on as needed.

This was highlighted in what Kevin Drum aptly called a checkbo9ok tax:

The Democrats supporting the current legislation have assured an anxious electorate that whatever funds are used to create whatever regulatory scheme created will come from the banks, not the taxpayers. Let me emphasize that so that even casual readers will catch it: the Democrats promise that you won’t pay for their legislation, banks will.

Really?

Since when have corporations ever paid taxes, fees or penalties? Employees end up paying in the form of lower salaries and benefits. Customers end up paying in the form of higher costs.

And in this case, every account holder will be forced to pay higher fees on their checking account and savings account. That’s you, my friendly reader. Can you say “checkbook tax”? I can, and I think lots of candidates will be saying it come November.

Yes, just as the entire Republican membership of the Senate is repeating Luntz’s last gem: “Taxpayer funded bailout”. But it is crap economics.

In wingnuttia, prices are entirely elastic in regards to taxes, they just flow through to customers. Yet they are sticky in regards to anything else, for example increases in minimum wage just cost jobs. Nowhere in the argument is the real claim revealed, that taxes squeeze profits, and that managers and owners are simply looking out for their own interests.

The argument that corporate taxes somehow are just double taxation because ultimately all cost has to come out of price is just bullshit, it is the internal division of the proceeds from that sale that make all the difference, and ultimately the sales price is disconnected from simple cost. Yet the Frank Luntz’s of this world trot this same ‘elastic for thee but not for me’ argument time and time again. And it WORKS! They can always sell just about anything by pretending that the main concern of the commercial operation is jobs on the one hand and low prices on the other when the reality is that the suits could give a crap about either, if they can boost profits by closing a plant here and boosting a price there they will. Everyone knows this yet somehow the Frank Luntz’s of this world can still sell this message with a straight face.

I just don’t get it.

John McWhorter on James Patterson and Some Odd Numbers on Black Childhood Poverty

by cactus

John McWhorter on James Patterson and Some Odd Numbers on Black Childhood Poverty

I’m kinda in the home stretch for the fact checking on my book – we’ve revised and rewritten and rechecked so many times I’m ready to plotz, but even so, I’m willing to bet some mistakes will creep in. Its inevitable in a book as data driven as this one. But I don’t like mistakes, so I recheck again…

Which brings me to this review of James Patterson’s new book by John McWhorter in the New Republic. The point of the book seems to be that welfare was bad for Black families. The review cites some interesting, er, facts, which presumably come from the book being reviewed.

For instance, after a few paragraphs about how welfare destroyed the Black American family, we’re told this:

As such, the refashioning of AFDC in 1996 into a five-year program with required job training was the most important event in black American history between the Voting Rights Act of 1965 and the election of Barack Obama. In that light, Patterson is too saturnine about the Moynihan’s report’s legacy. By 2004 the welfare rolls had gone down by two-thirds, and contrary to fears that people off the rolls would starve or languish in squalor (Moynihan was among those who thought they would), black childhood poverty went down to 30 percent from 41 percent, and ex-recipients have regularly reported greater self-esteem and are thankful for the new regime.

Well, if the 1996 refashioning yada yada yada “was the most important event in black American history between the Voting Rights Act of 1965 and the election of Barack Obama,” its something worth a look. Since I don’t have a clue where to find data on self-esteem and thankfulness, let’s have us a look at the bit about how, by 2004, “black childhood poverty went down to 30 percent from 41 percent.” We can check out data on Black childhood poverty from this table at the Census.

First, an aside – as of 2002, the Census started differentiating between two definitions of “Black” which is self-evident from the key to the graph above. Other things evident from the graph…. if something in ’96 caused a big drop in Black childhood poverty, it was powerful enough for its effect to work its way back in time all the way to ’93, which is the year Black childhood poverty began its decline. That drop did reach a bottom of 30.2%, but in 2001, not in 2004. In fact, unfortunately, the rate of Black children in poverty rose since then. And when the real facts are placed on a simple graph, its extremely difficult for a rational person to reach so and so’s conclusion.

Now, if this seems like someone was trying to bamboozle, there’s all sorts of “facts” like this in the review. Perhaps the one that is most frighteningly wrong is this one:

That momentous factor is this: After the 1960s, the percentage of black children with one parent exploded from a quarter to—by the 1990s—nearly three-fourths, vastly out of step with the availability of work, the prevalence of racism, or equivalent single-parentage figures for any other race.

Now, I should graph this, but I’m in kinda a hurry, so I’ll just let you know… data on the percentage of Black children’s living arrangements can be found at yet another table at the Census. One of the columns in that table gives you the total number of Black children, and another gives you the total number of Black children living with one parent. Using some of that fancy learnin’, I divide one column by the other and discover that….

1. 54.7% of Black children lived with a single parent in 1990.
2. That rate peaked (for the 90s) in ’96, at 57.4%, and then dropped to 53.3% in 2000.

Now, the ’96 peak might help make Patterson’s point… but if he made that point, its not in the review. (Of course, ignoring the ludicrous “three quarters” number isn’t an outright invention, giving Patterson the benefit of the doubt, what we would conclude is that he might be right about Black children living with one parent, but clearly not about Black children in poverty.)

Anyway, if McWhorter’s review is remotely accurate, call this an “unrecommendation” for Patterson’s book. And a suggestion to McWhorter – if the book cites facts that seem obviously false, check those facts. Because if the key points in a book are ludicrously inaccurate, that’s a big problem that should be mentioned in a book review. And agreeing with stuff that is just plain wrong makes no sense at all.

More Detail on Working the Refs

So there are several comments to my previous post. Ignoring the a good one from Dr. DeLong, several people are taking umbrage at my unsubtle suggestion that the effect on employment being suggested is, to be polite about it, rather creative.

kharris begins, “So let me see if I have this right. If anybody tries to figure out what the impact of snow on economic data might be, they are big fat liars? But those who know that the economy is in bad shape, without reference to actual events, is a stand-up kind of hack?”

Following is an expansion of my comment in that thread, with data:

To the second question, well, I may be a hack, but my stand-up days are in the past. But given the choice between believing that the recovery is in full swing and that long-term unemployment is getting worse and jobs are not and will not be created, well, I’ll take the CBO projection as the baseline:

CBO expects the unemployment rate to average a little over 10 percent for the first half of 2010, and it will probably not dip below 9 percent until 2012.

and note that if we’re calling that a recovery, our definitions have become Very Generous. So bold claims of recovery need to be tempered by the prospect of worse headline unemployment (U-3) for the next five months (including February) and no significant recovery for the eighteen after all.

Sorry I’m not doing handstands that GDP might be slightly positive for a few quarters of sub-replacement level employment increases, but I didn’t cheer the “recovery” of 2002 either, so at least I’m a consistent hack.

To the first: Not at all; trying to figure out the effect is fair game and perfectly reasonable. But the declarations so far are all running in one direction: we believe the economy is better than the data will be, so we need to wait if it looks bad. (See Ms. Caldwell as quoted by CR or Catherine Rampell, for example.) Rampell:

That report will probably be very, very ugly. I have seen some forecasters project job losses as high as 100,000.

The main culprit behind the expected jobs plunge is the blizzard, which closed businesses and kept people from going to work or even seeking work for days and sometimes weeks. These work stoppages probably occurred precisely when the government was collecting data for its February jobs report.

So the current estimates are all that (1) demand was down and (2) employment was down.

And (3) deliveries were down: see the ISM data.

Put it all together, and you can tell a story of heavy snow snarling shipments to and from manufacturers, slowing down production growth.

But at least in this case, we have a clear indicator: the increase in backlogged orders.

Finally, (4)savings.

The reasons for the stall are twofold: For one, rebounding wealth since the recession’s depths has helped provide some support for consumer spending. Secondly, weak income growth has left other consumers with little choice but to spend proportionally more of their incomes, particularly in light of [5] still-tight credit conditions.

So demand, supply, savings, credit, and employment are all down. The first and second are aberrations of snow (and equilibrium), the second and third abide.

Which leaves employment, which is discussed in more detail than most sane people would want below the fold.


Now, it is clear that people who are employed did not work in the week. But they are not likely to have reported themselves as “unemployed” or (except in a very literal sense) “out of work.” True, they did not produce—but what they would have produced was not bought, and hence there is a backlog of orders.

But companies that now have backlogs of orders know that this was because they did not have their current workforce. Accept an order to produce, say, 200 units (which takes a month to produce) and lose five to eight business days and you’ll be 50-80 units behind.

But you’re not going to go out and hire a new person to fill the backlog.

Yes, there was an effect on production and sales. But the idea that 100-200K jobs went unfulfilled solely because of weather conditions that were aberrant primarily in the mid-Continent is either (1) rather optimistic or (2) ignoring that the excess snow effect was mostly in the areas that are least underemployed. (See this nice map from Catherine Rampell)

So in the best case scenario, the recovery was muted because things were not delivered or sold—though money (savings) was (were) spent. And the only reason firms didn’t hire was the snowstorm that closed D.C. and delayed Philadelphia. (Though there was no snow in NYC and, as noted, nothing unusual about the fallings in the Midwest.)

The worst case scenario is that demand wasn’t filled solely because supply wasn’t available because existing workers could not produce. Working on the “nine women pregnant for a month don’t produce a baby and you have a real problem eight months thereafter” rule, employers will (generally correctly) view their February backlog as a result of existing labor not working, not as a need to hire new workers.

If you’re balancing the effects of those two—standard Slutsky analysis, as it were—there is a high likelihood that hiring will be dampened going forward by the snowstorm as firms underestimate actual demand. It is less likely that actual hiring was significantly reduced by it.

But that’s not the way the discussion is going. So a bad (negative) number has excuses, a poor number (positive, but less than replacement rate) has excuses and should be seen as “good,” and a good number (replacement rate or better) will mean “all ahead full.”

So I tried looking at ancillary data. Looking at power usage, for instance, indicates a major decline that would correspond to less activity(Table 1.6.b; Commercial usage YOY down 3.6%; Industrial usage YOY down 5.6% with declines in all areas; total usage down 4.3% YOY [Table 1.1])—but that’s only through November.

Maybe the past three months have been part of a miraculous recovery. But it’s not in employment, its not in the available energy usage data, and it doesn’t follow from the ISM data, which indicates slow growth at best.

Those who want to claim the economy is recovered have been, as noted, “working the refs.” So a bad number (by Rampell’s apparent reasoning) will kill health care reform, but not mean that we need a second stimulus—even though the states are hemorrhaging money and, soon, jobs. (Teachers, police and fire–you know, all the nonessential personnel.)

It’s a heads-we-win-tails-we-win-more situation being set up.

If we pretend that all of the argument are true: that the snowstorm was a once-in-a-lifetime event and that it really did produce a major skew though, we might want to look at what happened the last time a “once-in-a-lifetime event” occurred near the end of a recession.

The vertical lines are at September and December of 2001. For a week in September, everyone—and this time I mean everyone, not just the bottom third of the Bos-Wash corridor—stopped shopping for a week. As predicted above, the employment effects abided for at least the next few months. (Recall, after all, that that recession officially ended in November.)

Given the choice between (1) assuming that there will be a one-off decline in employment due to the snow and that everything will return to recovery next month or (2) that there will be a lingering, negative employment effect from the snowstorm and attendant business slowdowns, there appears to be only one way to bet, given the data and the history.

Yet the calls right now—absent evidence—are going the other way.

If we’re working from anecdotal evidence, then certainly there is a recovery. It’s the extant data that doesn’t support any recovery that is not also described as “jobless and uncertain.” That may change on Friday. But it’s not the way to bet, no matter how much the refs are worked.

Working the Refs

So there was this big snowstorm that hit the East Coast a couple of weeks ago. (Not the one this weekend, that dumped about 2′ of snow on Upstate New York and a little more than a foot here in suburban New Jersey; the one that wiped out D.C. and gave the Party of No an excuse to do nothing.)

Snow in February. What a surprise! Clearly, not something that happens every year.

My high school classmates and others in the Midwest see the notice and say, “Yeah, gosh, sounds like January and February here.”

But This One is Different. Maybe because it gave the U.S. press an excuse to pay no attention to Haiti. Maybe because closing down D.C. meant that all the pundits got to whine and reveal their suffering.

And, just maybe, because it has become the all-purpose excuse for the February Employment Report. Or any other hint that the world is not perfect, and those “green shoots” haven’t been eaten by starving deer who were then shot by Big Bank Hunters.

The Usual Suspects are already out in force.* And the hedging (not in the risk management sense) has begun:

“We will have to wait until March to see if February is an aberration or a fundamental sign that the recovery in sales will be more subdued than hoped,” [Jessica Caldwell, Edmunds’ director of industry analysis said].

So anything that can be marginally interpreted as positive will be The Crest of a Wave, while anything that makes those legendary shoots look as if they were artificial flowers will get the rousing “Wait Until March!” cry.

All we really know is that—thanks to Senator Bunning and a pliant Democratic “leadership”—March, not April, is the Cruelest Month for about 1.2 million normally-working Americans.

But, gosh, the job gains for February might be understated by 5-8% of that total. So let’s not do anything hasty.

*Yes, it’s “pick on Brad DeLong day.” Didn’t you get the memo? (Also, I can’t find discussion of the topic at any of the Other Usual Suspects, though I haven’t checked The Big Picture.)