US Employment Growth Shows Fiscal Policy Matters

February 3, 2012 by

US Q4 2011 GDP growth was slightly disappointing, and the mix was terrible as the growth was mostly due to inventories. I took issue with that report, arguing that the weakness was due to statistical distortions in the government spending data and the PCE services data. With that disappointing Q4 GDP report, expectations for quite weak economic growth in this year’s first half were encouraged. But today’s employment data blows the weak consensus outlook out of the water.