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Gov’t Lingo: ‘Better-Than-Expected’ Doesn’t Mean ‘Good’
After a week with some surprises — “upside” surprises, as economic apologists describe them — the stage is set for more numbers that might exceed expectations as the new week unfolds.
It’s rather easy to create the mood: just paint a dour picture — perhaps dourer than evidence would support — then announce and let investors react when economic data are better than expected.
Writing an inaugural vocabulary column in the New York Times, Ben Schott described the phenomenon as “pessimism porn,” which Schott said refers to “titillatingly bleak media reports on the state of the economic collapse.”
We’ll get our fill of such “porn” this upcoming week with forecasts of Friday’s employment situation report for March when even cautious economists are anticipating the numbers to be worse than they were for February when the unemployment rate jumped to 8.1% from 7.6% one month earlier and job losses for the month topped 600,000 for the third straight month. The worse the forecasts, the greater the chance for a better-than-expected outcome.
The economy though is more than just numbers of job losses or an unemployment rate: it encompasses the impact of those data points, in the near-term and the long-term. Indeed, in the week just ended, Spectrem Group, a Chicago-based consulting firm reported 34% of U.S. employers have reduced or eliminate matching contributions to retirement plans.
The survey was released the same day the U.S. Chamber of Commerce reported businesses of all sizes have seen the cost of providing certain benefits to employees rise dramatically. The Chamber study said in 2007, the cost of providing health insurance rose 15%, averaging $4,559 per employee, up from $3,961 in 2006. The cost of retirement and savings benefits increased 14%, from $2,356 per employee to $2,694 per employee.
The Chamber study also showed employers of all sizes began scaling back on employee benefits in 2007. The average dollar amount that employees received in benefits decreased from $21,527 in 2006 to $18,496 in 2007.
All the cuts will have an impact not only on current family expenses, but retirement planning as well, exacerbating the tight labor market as new, less experienced entrants to the labor force compete with higher-salaried, more experienced workers. Data from the Bureau of Labor Statistics shows a steady increase in the number of older Americans still working. Since the recession began in December 2007, the number of workers 55 and over has increased by more than 3%, about 830,000 — faster than the population.
It is just that number that makes the Spectrem findings a concern as Americans struggle with retirement spending, and indeed the findings suggested the situation might deteriorate. Over the next 12 months, 29% of plan sponsors intend to reduce or eliminate matching contributions, the Spectrem survey said.
Even if Friday’s employment report is “better-than-expected” it will still represent absolutely bad news, with the Chamber and Spectrem reports putting flesh behind the numbers.
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Article by Mark Liebernam
Mark Lieberman is the senior economist for the Fox Business Network. Prior to joining FOX, he served as first vice president and manager of economic analysis and research at Washington Mutual in New York. Before that, he served as senior vice president at Dime Savings Bank of New York (which was later acquired by Washington Mutual), where he specialized in credit and risk management. He is a member of the Executive Committee of the New York Association for Business Economics. He has a degree in Economics from the Wharton School of the University of Pennsylvania.
‘Better-Than-Expected’ Doesn’t Mean ‘Good’ – FOXBusiness.com.
