Slow growth in private employment as home prices continue to fall

Application for unemployment benefits

JEREMY HOBSON: Now let's get to jobs. The payroll company ADP said this morning private employers added just 38,000 jobs last month. That's well below what economists were expecting and it comes ahead of Friday's big jobs report from the Labor Department.

Let's bring in our regular Wednesday guest. Richard DeKaser, chief economist with the Parthenon Group, who's with us live from Boston. Good morning Richard.

RICHARD DEKASER: Good morning.

HOBSON: Well what's going on with the job market, Richard? Why this bad number?

DEKASER: Well, I think it's some basic arithmetic. The economy slowed down. In the first quarter we saw real GDP growth -- just up about 1.8 percent. That is about what we can accomplish in terms of rising output just through productivity growth. So if we're actually going to grow jobs in a meaningful way we've got to do something more than that and we didn't. Now there's two schools of thought on this. One school says it's persistent. We're seeing waning stimulus and as a result it's going to last for a time. The other school of thought says it's due to temporary factors -- the tsunami in Japan, and high energy prices coming out of North Africa and the Middle East. So, it'll take a couple of months to clear up which exactly these two stories fits best.

HOBSON: And Richard, what about housing? We got this bad news yesterday about home price which are still falling. How is that impacting the job market?

DEKASER: Well, it's not helping. Housing is critically important. It's most people's biggest asset, it encourages spending when prices rise and it also encourages banks to lend when they don't have to worry about losing equity on new bank loans. So it's very important and it's also important because it's part of this whole stimulus story. You know, we've had these recurring resurgences in the housing market whenever the government gives very generous stimulus measures and then as soon as they've pulled away things fall back down.

HOBSON: Richard DeKaser, economist with the Parthenon Group, thanks so much as always.

DEKASER: My pleasure.

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