CHICAGO, Feb. 10, 2011 /PRNewswire/ -- Double the usual snowfall in great swathes of the country upended the closely watched government jobs data produced for January, and caused flurries over the outlook for the rest of the year.
View a video featuring Diane Swonk explaining these issues and others shaping the labor market. For more detail and to put the economy in perspective, read this month's issue of her Themes on the Economy.
Diane Swonk, Chief Economist for Mesirow Financial, immediately realized that the weather had skewed the early 2011 figures. In a television interview, she said, "The January data had to be taken with a grain of salt, given the weather disruptions. Then, I quickly amended it by saying, 'Make that a truckload of salt.'"
But it wasn't just the weather. Benchmark revisions in the January employment report contributed to a sudden drop in the unemployment rate, to 9.0%, despite apparently weak job growth. Swonk warns that the government's survey of large employers (called the establishment survey) is often slow to include turning points in the economy. Based on improving sentiment, she says, "My take is that the labor market is clearly improving, more than the data is capturing."
In a related discovery, new research shows that young, growing firms - rather than small, established companies - create the most new jobs. Some government policies, which favor small businesses over larger companies, may need to be fine-tuned. Swonk says, "Large, established firms still play an extremely important role in generating jobs ... particularly when credit market conditions are more hostile to start-ups."
Large companies now have stacks of cash on hand, which they could use to hire more workers. How to entice them? Swonk agrees with Federal Reserve Chairman Ben Bernanke on tax simplification. "Many manufacturers have told me that they would happily accept a simpler tax code, with fewer deductions, over the current system, because it would save them time and money filing their tax forms," she says.
Mesirow Financial is a diversified financial services firm headquartered in Chicago. Founded in 1937, it is an independent, employee-owned firm with more than $43 billion in assets under management and 1,200 employees in locations across the country and in London. With expertise in Investment Management, Global Markets, Insurance Services and Consulting, Mesirow Financial strives to meet the financial needs of institutions, public sector entities, corporations and individuals. For more information about Mesirow Financial, visit its Web site at mesirowfinancial.com.
SOURCE Mesirow Financial