Last week: Last week’s job report – the third consecutive weak report -- reflects the slow pace of the recovery. Firms are reluctant to hire, which would add to their cost structure, primarily because they don’t see the return on human capital investment in a weak economic environment. Consumers have been nervous about the prospect of sustained weakness in the labor market. Most have been cautious about spending, especially financed purchasing. This third consecutive poor jobs report only reinforces these sentiments and decisions.

THE SITUATION ABROAD

The recovery in the value of the euro is the big story on the other side of the Atlantic. Fear of debt default drove the euro down to almost 1.2=1 dollar. And market sentiment suggested it might fall further to 1.1 or even lower. Instead, within weeks, it rose to about 1.3. What happened? Instead, the real question is “what did not happen?” There has been no default on debt. Greece remains the weak economy. But fears that Italy or Spain could be next were greatly reduced as banks generally passed their stress tests. To be sure, austerity measures remain in place, causing economic pain. The road could be long, but it does lead back to growth.

FACT OF THE WEEK

267 versus 108. The Population Reference Bureau estimates that there are 267 births in the world every minute. That contrasts with an estimated 108 deaths per minute. At these rates, the global population may reach 7 billion by 2011. However, where these births and deaths occur matters more than how many. Specifically, many developed economies are experiencing far fewer births than some of the developing economies. These industrial economies are not only experiencing aging populations, but slow population growth (Japan and Germany are already experiencing declines). In the developing world, population growth has slowed as the average family size has declined (from roughly 6 children per family in 1950 to about 2.5 today). And yet their population growth rates remain higher, in general, than growth rates in the developed economies. The number of young wage earners relative to the older population (receiving pension and health benefits) matters a great deal to the finances of a particular economy.

QUESTION OF THE WEEK

How big is the public sector in the United States compared with other countries?

Comparisons across countries are difficult, because some economic activity carried out in the private sector (like health care) may be carried out in the public sector in another country. This is one reason why the euro-zone and Canada show a higher ratio of government spending to GDP than in the U.S. It does not necessarily explain why the ratio increased more in those two areas over the past decade. Meanwhile, two developing economies – China and Mexico – not only have lower ratios, but these ratios have declined over the past decade. This is a result of their overall economies developing faster than their public spending.

Ultimately, whether it is a local property tax or a national income or sales levy, governments only spend the money they can collect from taxing citizens. Yes, they can float a bond issue and use those revenues, but eventually the bonds have to be paid off, with interest. The point is that the U.S. tax burden represented in these numbers is in line with what citizens of other countries pay. The more important question is whether citizens feel they’re getting their money’s worth. That is a question for a politician.