A Few Minutes with Dr. Irwin Kellner
January 22, 2014
By Eric Altstadter
Dr. Irwin Kellner is the chief economist for MarketWatch, where he writes a weekly column on the economy and the financial markets. He has been a leading economist for more than 40 years, having previously served as chief economist for North Fork Bank, Chase, Chemical and Manufacturers Hanover. Widely quoted by the media in the U.S. and abroad, Dr. Kellner regularly addresses groups of business people and community leaders and appears on Cablevision's News 12 Long Island. I sat down with Dr. Kellner after the U.S. Bureau of Labor Statistics reported that that nonfarm payroll employment moved up 74,000 in December 2013. This was significantly below the consensus estimate of 192,000. I asked Dr. Kellner what these numbers meant for our region.
Dr. Kellner believed the jobs report showed a complicated labor picture. “On one hand, you had a very weak gain in hiring, which is surprising considering two other surveys that came out a day or two before show much bigger numbers.” (ADP and Trim Tabs had estimated the increase would be close to the consensus estimate discussed above.)
According to Dr. Kellner “What we have to focus on is not the hole but the donut. And the donut here is the employment side. What happened was that over 350,000 people dropped out of the workforce. They stopped looking for work. That was a key reason why unemployment rates fell. They did not fall because new jobs were created. If you’re not looking for work, you are not included in labor force, and therefore, you are not part of the unemployment calculation.”
Dr. Kellner sees our economy growing close to 2% this year for a number of reasons. One, the Federal Reserve is not actively pushing the economy as it had been. The Federal Reserve is still cutting bond purchases, and is aiming to end them altogether. Additionally, the lingering effects of the government shutdown, the flap concerning the debt ceiling, and the possibility that the U.S. could default for the first time in history, still exist. “Partisan politics are still around. They may be hiding behind a bush right now, but they can easily surface. The fact is that the House and a third of the Senate are up for re-elections this year. Politics, fiscal drag from cutbacks in government spending, and the restoration of taxes leads me to conclude that the government is not pushing the economy ahead as much as it had in the past.”
Dr. Kellner does believe Long island is seeing a change. “We have a lower unemployment rate than the national rate. In November, it was 5.4% while the state and country were higher,” said Dr. Kellner. Long Island did have a good gain in jobs led by professional and business services, and health and education. “Long Island’s strength, now that certain industries such as aerospace are not as strong as they had been, is in its proximity to Wall Street. We have a lot of financial services, business services, health and education and technology, all of which are strong in the economy, and less of what’s weak in the economy” concluded Dr. Kellner.
More of my conversation with Dr. Kellner, as well as new conversations, will appear in future editions.