Morning Briefing: Mar. 11

...a quick look at the headlines

Paul Brandus (Mar. 11, 2013)

President's GOP Outreach Picks Up Steam

Last week, Obama had dinner with a dozen Republican Senators, and lunch with Paul Ryan, Mitt Romney's former running mate This week he heads to Capitol Hill twice to meet Senate and House Republicans. The President is making nice in the hopes of rolling back the sequester, and (don't hold your breath) a possible "grand bargain" with the GOP on spending, the deficit and taxes. The White House still thinks it can wring more taxes out of Republicans - but after agreeing to $620 billion in tax revenue last December, the GOP message to the President, so far is: that's all you get.

Polls show most Americans - including most Republicans - continue to favor Obama's "balanced approach" to reduce the deficit: a combination of cuts and taxes.

The Sequester: Big Deal or Drop in the Bucket?  

From a numerical standpoint, the sequester isn't such a big deal: $85 billion in cuts between now and September 30, and - unless our let's-blame-the-other-guy politicians can figure a way out - $1.1 trillion more over the next decade.

Big money? In absolute terms, you betcha. In relative terms? Not at all.

Even if all 10 years of sequester cuts were to go through, it would be about one-seventh of what Americans lost when the housing bubble burst in 2006. It's also a fraction of the trillions lost when the stock market crashed 57 percent from 2007 to 2009, crushing tens of millions of retirement accounts. 

So compared with that one-two punch we took during the Great Recession - arguably the worst three years we have endured since the Great Depression - the sequester doesn't seem nearly as bad. And that's why cries that the sky is falling are landing on deaf ears. $85 billion? $1.1 trillion more over a decade? We can do that standing on our head.

Gasoline Prices

Heading back down:  AAA says the avg. price of regular nationwide is $3.69. That's down a nickel from last week, up 12 cents in a month, and down a dime from a year ago.

Jobs and Unemployment

Friday's jobs and reports caught just about everyone by surprise: 246,000 private sector jobs were created in February, and the unemployment rate fell to 7.7% - the lowest level since December 2008. Since 10,000 government jobs were cut, total job growth was 236,000.

A deeper dive into the data:

* February unemployment: Men 7.1%; Women: 7.0%; Whites: 6.8%; Blacks: 13.8%; Hispanics: 9.6%; Asians: 6.1%; Teens 25.1%

* Total unemployed: 12.0 million; number of long-term unemployed (27 weeks+) 4.8 million

* Employment-population ratio (the % of total working age of the work force employed to the total working age population): 58.6% - no change

* The labor force participation rate (the % of workforce that has a job or is looking for one) dropped to 63.5% in Feb. from 63.6% in Jan.

* Two key data points show an improving economy: people worked longer hours for more pay (avg. hourly earnings up 4 cents)

* The broader unemployment rate declined to 14.3% in Feb. govt. says. Definition

* As usual, a strong link between education & jobs: Unemployment for ages 25+ with no HS degree: 11.2%. Those w/BA or higher: 3.8% (Feb.)

* Unemployment rate for those with no high school diploma fell to 11.2% from 12.0% - a big drop for that hard-hit group. Year ago: 14.8%

Finally, this bit of context: in Feb. 2009, the economy lost 681,000 jobs. In Feb. 2013: it gained 236,000. That's a four-year swing to the upside of 917,000 jobs.

-Paul Brandus

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Lincoln's Civil War goal: preserving the Union - not abolishing slavery....