For a man-on-the-street reaction, IM-Fve slightly altered a remark by Dick, a butcher:
M-tThe first thing we do, letM-Fs kill all the economists.M-v
Dick, a character in ShakespeareM-Fs King Henry VI, actually said M-tlawyers.M-v But donM-Ft think the other idea didnM-Ft occur to people in the White House on Friday morning, after the latest disappointing jobs data blew away more optimistic forecasts by leading economists on whom the Bush administration relied.
For the sixth time in the past seven months, the closely watched report on non-farm payroll growth was outside the range of economistsM-F estimates, according to economist David Resler at Nomura Securities International.
This time the Labor Department reported just 32,000 jobs were created last month, vs. a forecast range of 170,000 to 300,000.
In previous months, experts offered confident explanations for the errors that somehow eluded them a day earlier. But on Friday, reactions were subdued, not to say apologetic.
M-tWe will certainly be a lot more humble, thatM-Fs for sure,M-v said Ray Stone of Stone & Mc- Carthy Research Associates. Stone had forecast a 200,000-job gain. M-tIM-Fm looking for another relatively soft August report,M-v he said.
Politicians and investors seem to have been led astray by a dependence on the dismal science (economics).
ItM-Fs time for investors to step outside the data expectations casino for a fresh look.
Here are two viewpoints, from a Bush supporter and a Kerry supporter.
Think of two companies, mega retailer Wal-Mart Stores Inc. and online auctioneer eBay Inc., says Kevin A. Hassett of the American Enterprise Institute, a Bush supporter.
What is the balance between Wal-Mart snuffing out suppliers that canM-Ft meet its demands for low prices and eBay stimulating the creation of new businesses that use its platform to sell?
The employment effects of the death and birth of businesses M-ttake years to discern,M-v he said.
Meanwhile M-tthe normal relationship between economic growth and employment growth has been violated,M-v Hassett said.
Management consultant Peter S. Cohan, author of Value Leadership and a Kerry supporter, said it helps to think in terms of three M-ttaxes.M-v
Sharply higher fuel costs represent a tax increase that forces business to cut back on hiring and consumers to cut back on spending, he said.
Terrorism fears prompt businesses to increase cash reserves to protect against catastrophe, he said.
The prospect of higher interest rates represents a form of tax increase on consumer borrowers as well as on the government itself, which is faced with record deficits. M-tThe real issue is the economy,M-v not the ability of economists to forecast accurately, Cohan said.
M-tIt would be nice if we could do that and lend an illusion of control over the situation,M-v he said. M-tBut the real issue is we are supposedly in a recovery and it sure doesnM-Ft feel like a recovery.M-v
Nonetheless, the illusion of control is vital to investor confidence. For that, we need to keep economists alive and doing a better job.
Bill Barnhart is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. E-mail him at yourmoneytribune. com.