Mike and Co.,
Welcome to FY 2016. The deficit for this year is expected to be about 70 percent lower than it was in FY 2009.
The week saw a CR approved with major leadership consequences but nothing resolved on the policy front.
It also saw House Financial Services Committee Democrats split on a bill to change the governance structure of the CFPB, helping it clear the Committee.
Below, some go-to data points for when we get the September jobs report tomorrow and a review of the sudden Warren-Brookings-Litan brawl that’s almost as notorious here as the Papelbon-Harper set-to the day before at Nationals Park.
For tomorrow, updates available on any of the above, except the last.
The top line number always gets the most attention when BLS monthly jobs report is issued, followed by the number of jobs created or lost. But an easy way to get a grasp of its meaning of the figures and a fuller picture on the labor market quickly is by looking first at three indicators you can watch for intomorrow’s report:
- Labor force participation: There are still potential workers on the sidelines who want to work and would be working in a stronger labor market but are not yet confident that jobs are available. While the unemployment rate has fallen this year, labor force participation has been stuck at a level last seen in the late 1970s. Any hint of a revival intomorrow’s report would be a welcome sign.
- The number of people who have a job but aren’t working as many hours as they would like: The Labor Department’s broadest measure of unemployment and underemployment (the U-6 rate), which includes people who would like to be working but aren’t in the labor force and people working part-time who want more hours, has come down substantially but isn’t back to normal historical levels.
- Sluggish wages: Wages continue to rise slowly at a 2 percent annual rate (before adjusting for inflation). Low gasoline prices and low inflation are temporarily allowing workers to stretch their paychecks. But until labor markets tighten further, there will continue to be more willing jobseekers than there are jobs and little reason for employers to start raising wages faster. Look at the change in the average hourly earnings since a year ago intomorrow’sjobs report to see if there is any evidence that this is changing.
The report is published at 8:30 a.m.
Meanwhile, pundits and politicos have spilled copious ink in the local trades over a blitzkrieg of an attack launched Monday by Sen. Elizabeth Warren on a Brookings scholar who the next day was gone from the institution he had been affiliated with for 40 years. Before the week is over it, may written up as a case study for the Kennedy School, or for Chris Matthew’s next edition of Hardball.
At the center of the conflict is the Department of Labor’s long-awaited Fiduciary Rule mandated by Dodd-Frank. Brookings economist Robert Litan published a study in July on the costs of the upcoming Labor Department fiduciary rule. According to Litan, an unpaid, nonresident fellow at Brookings, the drama started when Warren started asking questions about his July testimony before a Senate panel criticizing the Labor Department’s proposal to make investment advisers act in their clients’ financial best interest.
The plan — opposed by the financial industry and supported by the left — has been at the center of a long-fought lobbying battle as the Labor Department moves to implement it.
In a footnote to his written testimony, Litan noted that his research on the issue was funded by Capital Group, a large mutual fund company based in Los Angeles. He also noted that he was a nonresident senior fellow at Brookings.
It turned out that Brookings had a relatively new policy banning nonresident scholars from using their affiliation with the think tank in conjunction with congressional testimony when they’re discussing their independent consulting work. Litan said that he discovered, also in July, that he had unwittingly violated the policy and apologized to Brookings officials. Nothing happened.
But then Warren started asking him questions about how much he had been paid to produce the report. In August, he disclosed that Capital Group paid his firm $85,000. Several weeks of silence followed.
Then, on Monday, he heard from Warren’s staff, he said. They told him they were sending a letter to Brookings President Strobe Talbott complaining about what they perceived as a conflict of interest. On Monday afternoon, Litan called top officials at Brookings to advise them of the letter and apologize again for what seemed to him like a minor incident. Litan said the think tank’s leadership told him Monday night it would all blow over.
Again, in another conversation early Tuesday morning, Litan was given the impression his affiliation with Brookings was safe. That was before Warren’s broadside went public. The media and Twitter swept it up immediately.
“To me this is a minor technical infraction,” he said. “I got the death penalty for it.”
“Bob Litan has the highest reputation for integrity, knowledge, and insight on financial services issues, developed over decades of involvement. Whether you agree with him or not, he is always worth reading. I think that Brookings will miss Litan more than he will miss Brookings. We all are damaged by this assault on public debate of important issues.” Industry source.
“this is McCarthyism of the Left.” Hal Singer, a senior fellow at the Progressive Policy Institute and co-author of the research Warren criticized.
“What Warren is doing is suppressing scholars [who] speak independently through her threats.'” … The view that Warren went too far ‘is shared by a lot of people.” Everett Ehrlich, Clinton Administration as undersecretary of Commerce for economic affairs.
“Big oil companies shouldn’t be able to peddle phony research on climate change, and the financial industry shouldn’t be able to support phony economics hiding behind a think tank.” Sen. Warren’s spokesperson.