Commentary by Bill Dunkelberg

The September employment report was pretty much as expected, 114,000 new jobs in the payroll survey. That was consistent with the NFIB survey findings (the job loss of -.25 workers per firm, 10 percent increasing employment but 13 percent reducing staff, job openings and job creation plans falling, indicating a higher unemployment rate) and most, if not all, reports on the health of the economy. The Household Survey, however, was a shocker, finding over 870,000 new jobs and a lower unemployment rate (still not good), the biggest gain recorded since June 1983 when GDP was growing at an 8% rate, January 2000 at the peak of the Y2K/DotCom expansion when we employed a record 64.5% of the adult population and January, 2003, the start of the housing boom. GDP growth was consistent with the Household job numbers then, but not this time, as GDP growth would appear to be in the 2% range for the third quarter.

Payroll revisions did add 86,000 jobs for July and August, but virtually all were government jobs, not jobs produced by a healthy private sector where numbers were revised down a bit. And 580,000 of the new jobs in the Household survey were part-time workers, a rather hollow way to reduce the unemployment rate. The U6 measure of unemployment remained at 14.7%, again, not consistent with substantial improvement in labor markets.

All in all, a strange report from the volatile Household survey (apparently one “large” state did not get most of its data reported in time for inclusion). Giving us advice about our doctoral research at the Survey Research Center at Michigan, one of my professors posited a theorem: “nature never jumps” and the corollary was “if it’s interesting, it’s wrong”. The Household survey is volatile, and averaging its job number over the year produces a more reasonable figure. As more data come in, we’ll assess the credibility of these latest numbers.

Uncertainty continues to cast a cloud over the future for small business owners, making it difficult to make commitments to new spending and hiring.  In a recently released NFIB Problems and Priorities survey (available at nfib.org/research), owners rated the severity of 75 business issues.  Uncertainty about the economy ranked second while uncertainty about government policy ranked fourth.  For perspective, securing long term funding was 56^th and finding qualified workers 32^nd.   With a 50/50 election (according to the polls) and very different sets of policies that might be put in place, owners are unwilling to put their own capital on the line until the future path of the economy and economic policy becomes clearer.

MOST IMPORTANT PROBLEM: 2012

1  Rising Cost of Health Care Insurance

2   Uncertainty over Economic Conditions

3  Energy Costs

4   Uncertainty over Government Actions

5   Unreasonable Government Regulations

6  Federal Taxes on Business Income

7  Tax Complexity

8   Frequent Changes in Federal Tax Laws and Rules

9   Property Taxes

10  State Taxes on Business Income

Speaker / Author

Bill Dunkelberg, Ph.D.

Chief Economist, National Federation of Independent Business (NFIB)

William Dunkelberg is professor emeritus of economics in the College of Liberal Arts, Temple University, where he served as dean of the School of Business and Management from 1987 through 1994 and as director of the Center for the Advancement and Study of Entrepreneurship. He served as the Global Interdependence Center’s Chairman for 20 years. He currently serves as chief economist for the National Federation of Independent Business (300,000 member firms; since 1971). His prior appointments were at the Krannert Graduate School of Management, Purdue University, the Graduate School of Business, Stanford University and the Survey Research Center at the ... Read More