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Friday, May 03, 2013

On @mattyglesias

How is it that everyone is expecting NFP to undershoot expectations?

Somehow everyone managed to be wrong about the direction in which everyone would be wrong.

Biggest growth sector was food service and drinking establishments. It’s a sector we need to take seriously:

Nobody works there anymore -- it's too busy. -- Yoghi Bera on the jobs report.

OK so I have a confession to make. When Yglesias wrote that he thought the 2013Q1 flash GDP estimate showed that QE3 and/or QE4 were effectively offsetting the sequestration and the end of the payroll tax partial holiday, I made a private reputational bet.

My view was and is that not only is it premature to base an argument on a flash estimate (as Yglesias reminded himself and his readers) but also Q1 is too soon to judge even QEIII which was announced at the very end of 2012QIII. Given the typical average 6 month lag between a monetary policy shift and the peak of the effect on output and employment, we had to wait even for the flash estimates of the relevant numbers.

So, I thought, the first really useful information will be in the April jobs report -- released today. I was pleasantly surprised -- ok I gasped with relief. This is definitely evidence that I underestimated the effectiveness of monetary policy at the zero lower bound.

I hasten to add that it is weak evidence and a lot else is going on and look at interest rates and blah blah blah ... the usual. But I made a private pessimistic bet and I lost the bet.

As Yglesias noted right now, the more striking news is the +114k to job growth in February plus March. They make currently estimated February through April job growth actually good.

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