Turning good economic news into bad news

Economist Dave Swenson explains why “a tight labor market is good for workers and good for families,” contrary to what you may have read in the newspaper. -promoted by desmoinesdem

Iowa’s enviously low unemployment rate of 3.1 percent is distressing many in the business community and, by proxy, business news. In recent months more and more people are declaring that Iowa is at full employment, and that, they say, is a problem.

It’s not. Iowa’s economy bumping up against full employment, if in fact that is happening, is a good thing. It is the stated goal of every politician’s overweening job creation rhetoric. It is what we hope for as our economy moves through the wrenching disruptions to firms and households caused by recessions. It is precisely what we want to happen: as many people are working as our economy can support.

Unless it creates discomfort in the business community. Then low unemployment is a problem. Let me explain.

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Expect more downward revisions in Iowa revenue estimates

Jon Muller examines factors contributing to Iowa’s budget crunch. What do you want first: the bad news or the “quite disturbing” news? -promoted by desmoinesdem

The Iowa Revenue Estimating Conference (REC) reduced its FY 2017 estimate for General Fund Revenues by $106 million. That’s on top of the $96 million downward revision in December 2016. Since the original estimate used for FY 2017 appropriations (December 2015), cumulative downward revisions total $243 million on a $7.3 billion budget.

This has led to all the gnashing of teeth that comes every time revenues begin to slow. The REC has never been particularly prescient when it comes to predicting the turn in receipts, either on the way down or the way up. I have some insight into this phenomenon because I used to be a revenue estimator for the Iowa General Assembly, and wasn’t any better than they are now. Indeed, economic models in general are not very good at predicting turns in the business cycle until after they happen. They are very good at generating consensus forecasts that tend to magically predict the next year will look a lot like the current year, at least during stable periods.

What’s new this time around is, according to policy makers expressing concern about the downgrade, is the reduction in revenues during what is considered a reasonably healthy economy. In my view, the stress on the General Fund is actually due to two primary factors. The economy is perhaps not quite as robust as consensus opinion suggests. Secondly, it appears the cost of House File 2433 passed during the 2016 legislative session, a bill providing a sales tax exemption for items consumed in manufacturing processes, was dramatically understated.

I suspect those looking to blame the sluggishness on a downturn in the farm sector will be disappointed as farm income growth begins to turn positive. Those who believed hundreds of millions of dollars of tax cuts and credits would spur state revenue growth should be equally disappointed. It’s just not happening.

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Trump's bait and switch on manufacturing jobs

Thanks to Democratic activist Paul Deaton, “a low wage worker, husband, father and gardener trying to sustain a life in a turbulent world,” for cross-posting this opinion column that first appeared in the Cedar Rapids Gazette. -promoted by desmoinesdem

Since the general election I’ve been laying low, listening to people talk — in person — about the new administration and what President Donald J. Trump means to them.

It was about jobs.

Most supporters found a lot of what the president said and stands for to be objectionable, yet voted for him because of the hope for jobs — a central campaign theme. Manufacturing jobs specifically.

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Iowa Senate district 42: Nothing to see here--unless Trump has big coattails

Iowa is blessed with an unusually large number of competitive state legislative districts, thanks to our non-partisan redistricting process. Most election years, at least half a dozen Iowa Senate seats and twice as many House seats are in play. Campaign finance reports showing where candidates and party leaders are spending the most money provide the best clue on which legislative races are worth watching.

That said, most years at least one little-noticed candidate pulls off a big upset in an Iowa House or Senate district neither party was targeting. Now-disgraced Kent Sorenson won his first race in 2008, taking a House seat that had been considered safe for Democrats. Two years later, Kim Pearson got no help from GOP leaders en route to winning a House seat where the Democratic incumbent had been unopposed the previous election. Republican Mark Chelgren won an Ottumwa-based Senate district for the first time by ten votes. That seat had been considered so safe that the Democratic incumbent was knocking doors for a colleague in another district during the final weekend. I learned later that internal GOP polling had Chelgren almost 20 points down a couple of seeks before the election.

I can’t shake the feeling that in this strange campaign with two unpopular presidential nominees, something weird will happen in a down-ballot race no one is watching. So before I get back to Bleeding Heartland’s last few battleground Senate and House race profiles, a few words on why I feel a race in Iowa’s southeast corner could produce a shocking result.

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Sorting Through the Job Creation Shenanigans of Politicians and Special Interests

Dave Swenson

Elected officials are keen to flash their job creation scorecard even though local and state government officials don’t really create many jobs. The economy in the aggregate creates the overwhelming majority of jobs, and some of those jobs locate in our cities, counties, and state. For elected officials, though, if it happened on their watch, ipso facto, they’ve created jobs. Credit is always claimed.

When job “creation” (see above) becomes the measure of public service performance, however lacking in substance or result, we inevitably get phony statistics, misleading inferences, or dubious claims. Sometimes politicians cherry-pick the numbers to make the best case possible. And sometimes politicians or their willing accomplices create brand new statistics.

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