John Ransom

In the latest surpirse regarding the economy, Wednesday's job report from ADP showed that private employers added only 38,000 jobs in May.

Surprise!

Economist expected private companies to add about 175,000 jobs for the month.

The report is the next in a series of disappointments on the economic front.

Home sales have continued to lag, GDP has been revised sharply downward, and inflation has taken a larger bite out of corporate and family budgets.

When economists are this far off, one has to start looking at their underlying assumptions.

Perhaps it's because they all went to the same schools and continue to use the same stimulus-addled math.  

On Friday, the Bureau of Labor Statistics will release its nonfarm payroll report which includes government jobs in addition to private job data. With state and local governments juggling to balance their budgets, government employment is expected to shrink as they lay off workers.

The public has become increasingly skeptical of public stimulus spending, which means that the government is, mercifully, running out of its preferred policy means of spurring the economy.

From here on out, Obama has only two options left to address the job creation crisis:

  1. Cut taxes across the board
  2. Suspended regulations that stifle business

Of course Obama will do neither of those things. His party would go nuclear if he did. So, instead he'll go play golf.  

The most relevant question you can ask the president today is: "How's that back swing?"   

As I observed last week in This is What Stagflation Looks Like, even as world equity markets move down with signs pointing to slowing global economic growth, a European Central Bank member is warning about inflation, caused in large part by monetary policy in the US .

"We have to take seriously the April rise in long-term inflation expectations and take it as a sign of increasing price perspectives when monetary policy is expansive," said Jens Weidmann, the head of Germany's Bundesbank.

Translation: We need to tighten up money to combat inflation because the Americans won't face their own fiscal crisis.

Tighter money supply means slower growth, fewer jobs.


John Ransom

John Ransom is the Finance Editor for Townhall Finance.