Jobs preview: Get ready for an ugly report

(MoneyWatch) Superstorm Sandy and the so-called "fiscal cliff" are likely to make Friday's November jobs report an ugly one. Early readings suggest that the economy may have produced no more than 80,000 new jobs last month, according to economic forecasts. That would be less than half of the 171,000 jobs generated in October. But before you get too worried, the good news is that these are short-term trends that are likely to reverse course in January.

To gauge the Sandy effect, it's useful to review the data after Hurricane Katrina. According to Calculated Risk, while "Katrina was a much larger storm, and large areas were devastated, Sandy struck an area with a much larger population - so the impact on employment might be similar." It took three months after Katrina to return to the previous trend job growth, which means that by January, things should settle down.

Additionally, uncertainty over the fiscal cliff negotiations has put a wrinkle in corporate planning and future initiatives. Many companies are waiting to see the final deal on taxes and government spending cuts before allocating capital to new projects or embarking on more robust hiring levels.

The ISM manufacturing index indicated contraction in November, with the Purchasing Managers Index declining to 49.5 percent, its lowest level since July 2009 (below 50 is contraction). The ISM's measure of factory employment shrank for the first time in more than three years, suggesting that businesses are putting off hiring. While the fiscal cliff may be impacting this report, it's more likely that a general slowdown in global growth is the culprit. The ISM Non-Manufacturing Report painted a rosier picture, with the service side of the economy expanding in November for the 35th consecutive month, increasing by 0.5 percent to 54.7 percent.

It's clear that some businesses may be putting off investing and hiring until Congress and the Obama administration finish wrangling over the fiscal cliff. And Sandy definitely has put a damper on job creation.

The good news? The impact of these man-made and natural disasters on the economy is likely to be fleeting. "It still looks as though annualized GDP growth in the fourth quarter will be close to 1 percent," said Paul Dales, U.S. senior economist with Capital Economics, in a research note. "But this survey supports our view that conditions should look a bit better in a few months' time when all the distortions have unwound."

Of course, even if the dip is temporary, the U.S. economy looks likely to remain in slow-growth mode well into 2013, a condition that has persisted for almost two years. And as long annual growth is stuck well below 3 percent, the economy will struggle to create the hundreds of thousands of jobs per month required to dramatically lower unemployment.

[askagain]

Obama gets reelected with 1 to 2 per cent growth. Amazing!!!

[Galactus909]

We could create millions of jobs in the United States, if the Federal Government just did its job and enforced immigration laws. Deport all illegal aliens, secure the border and fine anyone who hires an illegal alien.

[credibility2]

Those in the Ssandy area will not be back on track by January....for one thing, these victims are being ignored by the president and FEMA, unlike the aid that was poured into the Katrina area...remember, the president at that time was a Republican and the majority of victims were minorities and the president was charged with being a racist...interesting that the current president isn't being pressured or charged like Bush was for his appallig failures and laxity...

[wfw3536]

Amazing now all of sudden there are fewer jobs and a lot of excuses. Maybe the national media should try to figure out where those 700,000 plua jobs came from before the election that lowered the unemployment rate from 8.2% to 7.9%. It sure was great for Obama and his campaign and it happened just at the right time. But with a national media in the tank for Obama they will continue to carry his water for him.

[chevyhotrod]

spinner-or-winner replies: The Founders cared.While the Founders accepted outcome inequality, they emphasized -- over and over -- that its legitimacy hinged on subjecting everyone to the law's mandates on an equal basis.
__________________________

Are you advocating a "FairTax Plan" or "Flat Tax", no loopholes no deductions.

It is the only equal basis tax plan.

Why should 10% pay for 70% of the taxes?

Is that an "equal basis"?

[filmguy107]

This is the problem of looking for "simple" solutions. What appears to be linear and, therefore in the simplest terms "fair", is, in reality, a much more complicated and convoluted thing. The simpleton's logic is that, quite logically, the earth is flat. To all appearances, this is intuitively obvious, but upon further study, and a more accurate perspective, it turns out to be an oblate spheroid. Taxes are a similar thing.

As a direct answer to your question about the 10% paying more, they also make a disproportionate amount of money...which this system allows. But, remember, to whom much is given, much is expected. And by 'given', I mean "given the ability to earn, because their skillset, genetics, connections...whatever, allow them to earn."

Plus, how much does one need??

[MidRoadAlone]

Normally, we get "seasonally adjusted" numbers, which accout for construction and holiday hiring (which should be pushing the numbers higher). This year, we also got "politaclly adjusted" numbers, and anyone who believes otherwise is nuts. The economy is still in the tank and going deeper. We may as well go over the "fiscal cliff", or down the "fiscal stairs" whichever sounds nicer, and get it over with. That way everyone gets to pay for the spending and everyone gets to share in the cuts, just like a democracy. Not a socialist dictatorship looking to equalize the wealth.

[tsigili]

The election is over, and there is no need to manipulate the numbers anymore, for re-election. Now we are much more likely to see the truth.

[vsmit]

spinner, when are you going to quit blaming everyting on Obama's skin color and just accept that the economy is a reflection of Obama's policies. Nothing more.

[MidRoadAlone]

spinner-or-winner - Why don't you worry about your money, and let everyone else worry about theirs. These people EARNED THEIR money, it's not yours and it's not Obamas to decide where and how it gets spent or invested.

One thing you need to wake up to is that this is now a WORLD economy. If someone else can do the job for less, they get the work - I would imagine you do the same with any contractors or services you hire.

An intelligent investor knows that now is not the time to take chances with expansion or hiring - and it will not be until Obama gets HIS act together and learns to lead.