click here for original article<\/a><\/p>\nStill in Europe, arguing the sagacity of austerity measures. As usual, the typical European economist is much more aware of what\u2019s going on in the U.S. than we are re Europe (and, even more impressively, they can usually talk to you about it in English). So, I wasn\u2019t surprised that they knew the details of the automatic budget cuts known as sequestration. But I was taken aback when some of the austerity supporters used the American economy\u2019s experience with sequestration so far to defend their case: It doesn\u2019t seem to be hurting your economy, so keep your Keynesianism to yourself.<\/p>\n
First, \u201cnot hurting\u201d isn\u2019t the same as \u201chelping.\u201d But more important, it is hurting. Real GDP growth was only 1.8 percent in the first quarter of this year, with the government sector subtracting 0.9 percent (that\u2019s percentage points) from the growth rate. That\u2019s not all sequestration, of course, but it is implicated.<\/p>\n
Catherine Rampell also has a very useful bit of\u00a0analysis<\/a>\u00a0over at the NYT, showing job impacts. As many have, she notes that while public sector jobs have been declining for years now, federal government job losses accelerated in March when the sequester hit; they\u2019re down 40,000 since then.<\/p>\nBut Rampell adds two important data points. First, she notes a spike in involuntary part-time work in government that looks to be related to the sequester cuts. Second, looks at private sector employment growth in sectors that depend at least in part on government contracts:<\/p>\n
[She] calculated which industries were most reliant on federal defense money, based on Labor Department data showing where the Defense Department spends its money, and how money spent in any one sector affects employment in all the others (for example, employment of metal workers might rise when the government orders a new jet). The top five defense-sensitive industries are ship and boat building, facilities support services, aerospace product and parts manufacturing, scientific research and development services and electronic instruments manufacturing (which includes companies that make navigational instruments, for example).<\/p><\/blockquote>\n
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