Final Pre-election Jobs Reports

This week has seen the final jobs reports that will be available to make a possibly measurable impact prior to November 6. Wednesday's report from ADP had 162K new private sector jobs. Yesterday's (Thursday, October 4) Jobless claims report had a slight increase to 367K new jobless claims and 4 week rolling average of 375K new claims. Finally, today's (Friday, October 5) Bureau of Labor Statistics report has an increase of 114,000 jobs for September and the jobless rate falling to 7.8%.

It seems the fall in the overall unemployment rate has some folks on the right, led by Neutron Jack Welch, claiming the numbers have been cooked. David Dayen at FDL News puts it this way:

Because data is just fungible to the political leanings of whoever confronts it, we predictably saw a number of conservatives question today’s jobs report, suggesting that the Bureau of Labor Statistics fudged the data to help the President’s re-election campaign. Leading this charge was former GE CEO Jack Welch on Twitter. I think the government should make a deal with Welch – they’ll admit to massaging the data if he cleans up all the PCBs in the Hudson River personally.

On a more serious note, this is really pretty outrageous, and Labor Secretary Hilda Solis, whose department includes the BLS, is right to be insulted. The BLS is a civil service agency that until recently was still run by a Bush appointee. It now has a career bureaucrat in charge. The political team plays no role whatsoever in the derivation of or announcement of the jobs data. And if, despite all this, BLS cooked the books, they’re terrible at it, because they shifted the data in the household survey without corresponding in the establishment survey.

My WAG on this is that the adjustment of the number of jobs for July and August probably had as much affect on the September jobless rate as the actual numbers for September. As far as I can see, this opinion piece from Jay Schalin at Fox News pretty much covers the basic point of the "unemployment" figures:

One thing the current economic slump has made painfully clear is that the unemployment rate is an imperfect tool for gauging the health of the economy. Washington should replace it with a more meaningful and useful benchmark: the labor-force participation rate.

The widely publicized unemployment rate, eagerly awaited each month by pundits and policy wonks, has become little more than a shell game in which officials keep the public guessing about the real state of the economy.

Please do go and read the entire piece, he makes some excellent points.

One item that I find still glaringly obvious is that for the most part, most of the people in charge or talking about jobs and the economy have no more clue about what is happening than they do about what the surface of the moon feels like. Just the past few days, I have seen these headlines as I have surfed the toobz (links embedded in headlines):

"Fiscal cliff" fears may impede faster job growth (Reuters October 2)

'Discouraged' workers face tough road back to employment (NBC News, October 4)

S&P 500 on verge of 5-year high day ahead of jobs data (Reuters October 4)

S&P 500 dips after four days of gains; earnings eyed (Reuters October 5)

I think the bottom line point here is any attempt to tie jobs reports, favorable or unfavorable, to the stock market is attempting so much witch craft. There IS no connection or the stock market would not be trading. As Reuters reported back in August, the market is up for the Obama administration by 74% since he took office January 2009:

At 1,400, the S&P 500 on Friday was closing in on a four-year high and was up 74 percent since January 20, 2009, the day Obama took office. Not since Dwight Eisenhower's first term has a president had such a strong run for their first term.

As most folks reading this know, I am and have been among the long term un/underemployed. The reality for me and many millions of others is, we want to work in decent paying jobs, preferably in our chosen career fields. The dithering in DeeCee from both sides of the aisle, the constant calls for cuts to the budget, "Grand Bargains" to "save" Social Security, Medicare, and Medicaid (especially the non-existent "Bowles-Simpson" plan since there was no formal report and plan adopted by their namesake committee) personally drives me nuckin' futz. As Mr Pierce often says, "Fck the deficit. People got no jobs. People got no money."

It really is a simple concept. People want to work. We want to work at decent paying jobs with half way decent benefits and contribute to the overall commonweal of the nation. Working two or three part time barely above minimum wage jobs does NOT fit this definition.

And because I can:

Where has the Federal Reserve been?

As many folks know, I spend a bit of time each day perusing various news sites. My postings have been light the past few weeks and months as I've been working through issues after my sister's death. More recently in the last week I've gotten a small piece of good news in my personal life (and not saying anything further as I try to nurture this news and make it grow - but it's not a job) as well as further bad news for my extended family, so the roller coaster ride does continue.

But then I go and see a headline like this at NBCNews.com:

Fed ready to help economy 'fairly soon,' minutes show

Turns out, the article was from Reuters though their headline wasn't much better:

Fed looks set to ease fairly soon barring swift rebound

Earth to Fed! Earth to Fed! Where in the holy hell have you been for these past few years?

(Reuters) - The Federal Reserve is likely to deliver another round of monetary stimulus "fairly soon" unless the economy improves considerably, minutes released on Wednesday from the U.S. central bank's August meeting suggested.

While the meeting was held before a recent improvement in economic data, including a stronger-than-expected July reading for U.S. employment, policymakers were pretty categorical about their dissatisfaction with the current outlook.

...snip...

The Fed held policy steady at that gathering, but signaled a renewed readiness to act amid lingering softness in the economy. The minutes showed the central bank is actively considering a "flexible" bond-buying program, which could suggest that no upfront amount will be announced.

Let's see. The "official" time frame for the Great Recession had a start in December 2007 and ended officially in June 2009. Last June I wrote a blog post where I predicted a double-dip recession. Officially, I was mistaken as the economy has managed to maintain just enough headway to avoid the term "recession." But also last summer, I wrote a blog post asking Mr Bernanke just where the hell he has been these past few years. I and all the other people in long term un and underemployed situations have the same concerns. We want jobs. The Fed still has a "Mission Statement" that begins with direction for "...pursuit of maximum employment..." So we sit here with the official unemployment rate at 8.3% and the rate of un and underemployeds at 15%. These number still translate to nearly 13 million unemployed and another 10 to 15 million underemployed. And again, these numbers do NOT include new college grads trying to find their first full time jobs in their chosen fields. The numbers do NOT include all the millions who have been forced to become "self-employed, independent contractors. Add these groups into the official numbers and we are probably looking at (as a guesstimate) another 10 to 15 million people. Labor force participation was at 63.7%.

But have no fear! All is not lost. Why just today, one of Willard Mitt Romney's top economic advisers proclaimed that The Benbernank is doing a smash up job as Fed chair and deserves to remain in the position while the Republican Party has added a plank calling for an annual audit of the Fed. My guess is this is the sop to Ron Paul. And to be honest, I can see this is a good plank. Of course, we still have the Todd Akin Memorial Anti-Abortion Plank Human Life Amendment so some things never change. After all, one of the reasons the Republicans re-took the US House in 2010 was because of the lack of jobs. Yet from the very start, the House concentrated on anti-abortion legislation that included "re-defining rape."

Todd Akin isn't an aberration in today's Republican Party. He is the epitome of today's Republican Party and Paul Ryan is right there with him. Meanwhile, the denizens of the Beltway wonder what all the fuss is about with jobs and millions of un and underemployed people wonder how they will survive.

And because I can:

I really do want to believe in the economy...

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In the coming up on two years that I have been writing about the economy, jobs, un and underemployment at this little corner of the Intertoobz, I've tried to admit when my predictions have been a bit off. Like here and here where last summer I predicted we would be in a double-dip recession by the end of 2011. While we didn't fall back into recession on the time frame I envisioned, I still see it as quite possible.

I do hope I get to admit being wrong on that. I so very much want to believe the economy is really improving and the jobs picture will brighten but I just can't shake the feeling that it is all smoke and mirrors.

Today, (Thursday, January 19), the report of Initial Jobless Claims for last week came out and once again, the economists are surprised. Via Bloomberg:

Claims plunged by 50,000 to 352,000 in the week ended Jan. 14, the lowest level since April 2008, Labor Department figures showed today in Washington. The median forecast of 41 economists in a Bloomberg News survey projected 384,000. A Labor Department spokesman said the decrease reflected volatility seen during this time of year. The four-week average, which smoothes out fluctuations, decreased to 379,000 last week from 382,500.

...snip...

Jobless claims were projected to decrease from 399,000 initially reported for the prior week, according to the Bloomberg survey. Estimates ranged from 363,000 to 405,000. The Labor Department revised the previous week’s figure up to 402,000.

I am not at all surprised that last week's figures were revised upwards as that is the pattern over hte last few months at least. I did not make an official prediction but will admit that I thought this week's number would be back well above 400K. Once again, I do prefer to be wrong on these.

But then I see articles across the Toobz like this from Tuesday from US News (via Yahoo) with the headline "Are We Entering a Jobless Recovery?" and I just want to weep at the incredible combination of stoopid and duplicity to that gives us such a headline. The Great Recession/Lesser Depression is supposed to have ended in June 2009 so we are 2 1/2 years into a "recovery" and US News is just now questioning that it may be jobless?

But there is a downside to the Fed's favorable report and the good news on Wall Street. While the economy is growing, few new jobs are being created. The unemployment rate fell from 9.4 percent in December 2010 to 8.5 percent in December 2011. But without more dramatic job growth, low-skilled workers and the long-term unemployed will continue to have a hard time finding a job.

Economists now fear that the United States is entering what is known as a "jobless recovery," an economic recovery in which few new jobs are created. If economic expansion continues without adding a significant number of jobs, many unemployed workers will simply be left behind with few job prospects.

Unfortunately, the article doesn't get much better as it goes on to lay out standard "Gee, all you need is new training and education for the miracle to occur" when in fact, one of the groups hardest hit has been new college graduates from '08 - '11. Of course, if all we needed were training and skills to take all these jobs that are available, sure seems as if salaries would be rising in those areas with the needed new skills but that has not been happening.

Also from Tuesday was this piece from Reuters:

More than four years after the United States fell into recession, many Americans have resorted to raiding their savings to get them through the stop-start economic recovery.

In an ominous sign for America's economic growth prospects, workers are paring back contributions to college funds and growing numbers are borrowing from their retirement accounts.

Some policymakers worry that a recent spike in credit card usage could mean that people, many of whom are struggling on incomes that have lagged inflation, are taking out new debt just to meet the costs of day-to-day living.

American households "have been spending recently in a way that did not seem in line with income growth. So somehow they've been doing that through perhaps additional credit card usage," Chicago Federal Reserve President Charles Evans said on Friday.

With all due respect to Reuters and the author(s) of this "Insight" piece, this should not be a surprise. We have record people on Unemployment for long term, unemployment that averages $330 per week across the country, people who have exhausted all levels of unemployment compensation yet still have rent or mortgages, utilities bills, and the need to keep themselves and their families alive. Do you have a better option?

Today, Alison Lin at MSNBC was a little closer to reality with this:

The sudden loss of a job has become, if not commonplace over the last years, at least not very surprising.

And yet, many Americans remain unprepared for not having an income. A new survey from Country Financial finds that one-third of Americans would immediately fall behind on their bills if they lost a job and were left with no income.

That’s virtually the same result that Country Financial got the last time they asked the same question, in July of 2009.

But the banksters are at least mostly hitting their Wall Street predictions so it is all good I guess.

Which group lives in the bigger bubble, Wall Street or Beltway Villagers?

And because I can:

Re-arranging the Deck Chairs Is Not a Net Positive

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So here we are. It is the middle of December 2011. The US (and global) economies still suck. The Federal Reserve continues to wring its hands and do pretty much nothing about maximizing employment (which means they are not doing their jobs).

These past few weeks, I've seen a number of articles in various news sites about various states offering "tax incentives" to businesses trying to get them to stay where they are or to move to another state. One of the first was when I saw reports in early October that the governor of the state in which I reside claimed that the Chicago Mercantile Exchange could be moving to Florida. Then at the end of November, I noticed that Cincinnati and Ohio had "lost" Chiquita Brands to North Carolina:

Chiquita Brands International Inc. decided to leave Cincinnati for many reasons, but the biggest one is undeniable: Money.

Lured by the promise of big savings, better air service to Europe and Latin America and a more diverse workforce, Chiquita announced Tuesday that it plans to leave Cincinnati, site of its home office of 24 years, for Charlotte, N.C.

North Carolina offered a package of grants and tax incentives potentially worth $22.7 million over 11 years, enticing the relocation of the world's largest banana seller.

The counter offer from the state of Ohio and Cincinnati to keep the company downtown amounted to $6 million to $6.5 million, Chiquita chairman and CEO Fernando Aguirre told The Enquirer late Tuesday.

A couple of days later, I see where Ohio, having offered a fraction of what North Carolina had offered for Chiquita had turned around and offered Sears hundreds of millions to move from Chicago to Columbus. At the end of the article on the Sears offer, I found this telling little nugget of information:

The largest incentive package in Cincinnati - a 2003 deal worth up to $52 million to keep Convergys Corp. downtown - was hotly debated for months before being approved. The deal kept Convergys downtown, but the company hasn't grown here, and instead has cut its city workforce from 1,500 to 1,000.

Tax incentives are a quick, short-term strategy to boost job numbers, but they don't always work in the long-term, said Wendy Patton, a former Ohio Department of Development official.

Just last week (December 7), the NY Times had an article on Fortune 500 companies being able to avoid paying any state taxes for years at a time, no matter how profitable they might be:

As states have struggled to balance their budgets by cutting services, laying off workers and raising taxes, a study to be released on Wednesday suggests that many profitable Fortune 500 companies have not been paying as much in state corporate income taxes as the average levied on American companies, with some big firms paying none at all in recent years.

A few companies, including DuPont, reported paying no state corporate income taxes from 2008 to 2010 even as they reported profits, according to the study, which was conducted by Citizens for Tax Justice and the Institute on Taxation and Economic Policy, nonprofit research organizations in Washington that advocate a more progressive tax code. (A spokeswoman for DuPont said that she had not seen the study, but that “DuPont complies with all tax laws and regulations” wherever it operates.)

...snip...

To gauge how much Fortune 500 companies are paying in corporate income taxes, the study looked at the 265 of them that are both profitable and disclose their state tax payments. It found that 68 reported paying no state corporate taxes in at least one year between 2008 and 2010. All together, the study found that the companies reported $1.33 trillion in domestic profits from 2008 to 2010, but paid states only about half of what they would have if they had paid at the average corporate income tax rate of all states — reducing their state taxes by some $42.7 billion.

Today, the NY Times had a related article on the battle between states for corporate business:

As the unemployment crisis grinds on, states are trying to both lure and retain businesses by offering tax breaks, grants, cheap loans — just about anything (short of candy and foot massages) they can think of. But how many jobs do these expensive incentives actually create?

And are the jobs any good?

Economic development programs cost states and cities billions of dollars a year, but many programs require little if any job creation, fewer than half call for wage standards, and fewer than a quarter require the companies to provide health care for their workers, according to a study of program requirements scheduled to be released Wednesday by Good Jobs First, a nonprofit research organization that tracks corporate subsidies. Some merely require companies to invest in plants or new equipment, which could actually enable them to reduce their head counts.

In doing some quick checks of der Google for this post, I noticed that Indiana had also made a play for the Chicago Mercantile Exchange. Fortunately for the good folks of Indiana, Ohio, and Florida, the Illinois legislature has bowed to the corporate blackmail:

While a tax-break package aimed at keeping Sears Holdings Corp. and Chicago's financial exchanges from exiting the state cleared the General Assembly on Tuesday, Illinois' business tax policies will continue to be a hot-button issue in the coming year.

Lawmakers from both sides of the aisle said they expect the parade of companies seeking special relief to continue, creating pressure to further examine how the state taxes business.

At this point in our national economic crisis the image that keeps coming to mind with all of these tax incentives for companies to stay or go is so much re-arranging of the deck chairs. These jobs are not net new jobs for the nation and wind up costing jobs IMNSVHO because of the lost jobs and services in both the losing state and gaining state. The losing state winds up offering larger incentives to try to save jobs and for the folks in the losing state who have lost their jobs, here's the struggle to make ends meet with unemployment so more bankruptcies and foreclosures. For the gaining states, there are all the costs associated in providing the sweetheart deals to the corporations to get them to move means non-reimbursed expenditures for infra-structure and more wear and tear on existing systems. If the state manages to "save" the jobs by bowing to the blackmail, it is that much less revenue coming in that cannot be recovered. Lose-lose-lose for all but a few folks in corporate management (Bonuses!)

And because I can:

Sorry, but these numbers do not add up

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So, you may have noticed that the November jobs report from the Bureau of Labor Statistics is out today (via CNN):

Hiring accelerated in November, and the unemployment rate unexpectedly plummeted to its lowest rate in nearly three years.

Employers added 120,000 jobs in November, the Labor Department reported Friday, marking a pick-up in hiring from October.

Meanwhile, the unemployment rate fell to 8.6%, the lowest rate since March 2009 and a significant decline from 9% just a month before.

Sounds great, right? Well not so fast there Bunky (from the NY Times):

Still, serious concerns remain about the economy’s ability to weather a potential meltdown in Europe.

American governments at all levels continued to bleed workers, for one. And the decline in the unemployment rate had a down side: It fell partly because more workers got jobs, but also because about 315,000 workers dropped out of the labor force. That left the share of Americans actively participating in the work force at a historically depressed 64 percent, down from 64.2 percent in October.

Even excluding these hundreds of thousands of dropouts, the country still had a backlog of more than 13 million unemployed workers, whose spells of unemployment averaged an all-time high of 40.9 weeks.

Think about that for a moment. There were 120K new jobs for November while 315K left the workforce because they had given up on finding a job. It takes nearly 100K new jobs each month just to maintain the status quo. 120K new jobs for the month, while positive, is still a pittance of what is needed. And more than 2 1/2 times the numbers of folks who got jobs left the workforce discouraged.

MSNBC notes that even the "good news" needs to be tempered as:

The average number of hours worked remained flat in November, while wages fell by 0.1 percent.

More than half the new jobs November were added by retailers, restaurants and bars. Retailers added 50,000 jobs, the sector's biggest gain since April. Restaurants and bars hired 33,000 new workers. The health care industry added 17,000.

"The quality of jobs is not as great as you would like to see," said Mark Vitner, a senior economist at Wells Fargo Securities. "A lot of the jobs were probably part-time positions and that is one of the reasons average hourly earnings fell."

Besides the fall in the official unemployment rate from 9% to 8.6%, the U6 number as reported has also fallen for November from October's 16.2 to November's 15.6. I'm not at all sure how this can be unless the U6 has been undercounting folks (which is my supposition). Without having been undercounting people for both the U3 (official unemployment number) and U6 (un and underemployment along with 'marginally attached' i.e., those who have given up looking), it just does not seem like both U3 and U6 could fall for November when so many have left the workforce.

Wednesday (November 30), the LA Times had this opinion piece that seems to have a clearer perspective than the official number.

Yesterday's weekly Initial Unemployment Claims report was back above 400K.

While my prediction of a double-dip recession by the end of the year (made back in June) may not happen quite as soon as I thought, the overall economy is still struggling and there are still millions of people wanting to work, without work available.

Meanwhile, Newt Gingrich apparently wants to make children the primary wage earners for their families.

And because I can:

Corruption or Incompetence; the Economic Effects Seem the Same

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One of the on-going arguments across the blogosphere and even the entire world is whether the economic problems of the last ten years are more related to incompetence or basic corruption. I must say, just the last week has offered plenty of evidence for both views. For example, we had this article from Bloomberg yesterday (Tuesday, November 29) about how then Treasury Secretary Hank Paulson met with his hedge fund buddies and gave them the first class insider information on his plans to place Fannie Mae and Freddie Mac into "conservatorship."

Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.

The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.

...snip...

And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.

...snip...

At the time Paulson privately addressed the fund managers at Eton Park, he had given the market some positive signals -- and the GSEs’ shares were rallying, with Fannie Mae’s nearly doubling in four days.

William Black, associate professor of economics and law at the University of Missouri-Kansas City, can’t understand why Paulson felt impelled to share the Treasury Department’s plan with the fund managers.

“You just never ever do that as a government regulator -- transmit nonpublic market information to market participants,” says Black, who’s a former general counsel at the Federal Home Loan Bank of San Francisco. “There were no legitimate reasons for those disclosures.”

So, apparently what Paulson did was not illegal, yet there were and are no controls on Paulson or anyone else receiving this information. But it does smell of corruption. Or maybe Paulson was so incompetent as to believe that he was just sharing gossip with his friends that would harm no one.

Wait! I thought the South was where all the jobs are!

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Jobs.

Although the official time frame for "The Great Recession" was December 2007 through June 2009, for the millions of long term un and underemployed, the daily reality is that not only has the recession never ended, it is more applicable to The Great Depression than it is to any of the various acknowledged recessions since the end of WWII. One of the articles of faith from the always surprised Economists is that job creation lags other indicators, yet here we are, over two years since the "end" of the last recession and the official unemployment rate is still at 9.1% with the underemployed figure at 16.2% for August 2011.

Each week on Thursday, there's a report of the Initial Jobless Claims for the week before. Like many of the earlier weeks, last week's report forced the headline writers to find the lone tidbit of almost good news to concentrate on in their ledes. From Reuters:

(Reuters) - Americans filed fewer new claims for jobless benefits last week but the decline was not enough to dispel worries the economy was dangerously close to falling into a new recession.

Applications for unemployment benefits dropped 9,000 to 423,000 in the week ended September17, the Labor Department said on Thursday. That was roughly in line with expectations.l

Of course, once again, the earlier report had been revised upwards (from 428K reported on September 15). It is not going too far out on a limb to predict that the 423K reported for September 22 will be revised upwards on September 29.

I did not go too far out on a limb back in June when I first predicted a "double-dip" and it still was a short limb when I reiterated the prediction in July. Nouriel Roubini has made the same prediction last Thursday documented from his tweets (via Business Insider). A few days earlier (September 19), Roubini had written this op-ed on how to keep the coming Recession from being a Depression.

Economists Who Are Always 'Surprised' Should Re-Think Their Models and Assumptions

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Today's report of Initial Unemployment Claims from last week is out and once again, the economists are "surprised" at the figures reported (via Reuters):

The number of Americans filing new claims for state unemployment aid rose unexpectedly to 428,000 in the week ended September 10 from a revised 417,000 in the prior week, the Labor Department said.

It was the second straight weekly increase and took initial claims to their highest level since the week ended June 25. Wall Street analysts expected a modest dip in new claims.

Once again, that is an upwards revision from the previously reported figure. I'm feeling a tad too lazy to go back through all my blog posts to find the last week when there wasn't an upwards revision from the previous week's report but I know that it has been months since there has been anything but upward revisions. At best there might have been a week when the numbers reported were not revised at all a couple of months ago but that's it.

Realistically, I have to admit that the continual 'surprise' by the economists is just a continuation of the overall cluelessness shown by the financial elites as evidenced by this yesterday from the World Bank head (also via Reuters):

Keep the Expectations Low - While Expecting To Be Disappointed

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So, here we are, waiting for President Obama to give his long awaited "Jobs" speech tonight. However, from the news reports and "analyses" in the TradMed speculating on the content and potential proposals I will not be holding my breath on there being much if anything worthwhile coming out of the speech. The cliche of "too little, too late" most comes to mind. While CNN had this report today on the stimulus from February 2009 having created jobs, it was nowhere near large enough. This article from Center for Economic and Policy Research from October '10, points out that there was a need for a stimulus nearly three times the size of the $787B from February '09.

We are and have been in an employment/jobs crisis for years now. Even while the official unemployment figure stays above 9%, even optimistic projections have unemployment to stay high through 2012, some projections have the high unemployment continuing as far out as 2020. Unfortunately, the current White House seems to be more willing to pretend to do something for show rather than actually doing something that will be effective.

As always, there are just some things that I do not understand. A large part of President's Obama's plan is further tax cuts (or rather, extending existing tax cuts such as the payroll tax cut). We have fairly strong evidence starting with the initial Bush tax cuts in 2001, that tax cuts have created few if any jobs over the past ten years yet we continue to be presented with tax cuts as a job creating panacea.

We also keep hearing about how businesses will create so many new jobs if they can only bring back the trillions in cash they have stashed overseas. Andrew Ross Sorkin of all people points out the fallacy of the tax holiday in this piece from the NY Times DealBook from this past Monday:

Once a Year Speeches Do Not Mean Support for Workers

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Today is Monday, September 5, 2011. Since it is the first Monday of September, it is the national holiday known as Labor Day. Supposedly, it is the day when our politicians and pundits proclaim their unrelenting love for all things worker related - even as they spend the other 364 days a year doing all in their power to destroy the lives of workers by cutting salaries, limiting benefits. Just today, the Washington Post's Robert Samuelson had a column decrying the state of labor in the US:

On this Labor Day, there is little good news about labor. We have entered a long period of crushing unemployment and downward pressure on wages that may well transform the nation’s economic and political landscape. There was no job growth in August, and the overall numbers are stupefying: 14 million unemployed; nearly 9 million part-time workers wanting full-time jobs; 6.5 million who want jobs but have given up looking and are, therefore, not counted in the official labor force. People are only gradually recognizing the magnitude of the problem.

...snip...

It’s not only the jobless who will be affected. No one has yet repealed the law of supply and demand. At last count, there were 4.5 unemployed workers for every job opening. Bargaining power has shifted from labor to capital. Sure, some workers will get promotions and seniority raises. Otherwise, gains will be slim. Since September 2008, annual wage and salary increases have averaged 1.6 percent, the slowest pace in 30 years, reports EPI’s Lawrence Mishel.

...snip...

Still, the harshest effects of joblessness fall on the jobless. “We’re creating a bifurcated society,” worries Harvard economist Lawrence Katz. “We’re talking about a lost generation of younger workers and displaced workers.” Younger workers have a harder time starting careers. Because many skills are developed on the job, long unemployment spells can lower lifetime earnings. The same is true of older workers. Even when those who lose stable jobs get new work, they often suffer a 20 percent earnings loss for 15 years or more, reports economist Till von Wachter of Columbia University.

If Beltway Pols Were 1st Responders, No Foundations Would Be Saved

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So here we are, coming to the end of another month with limited economic growth. Friday (August 26), the Commerce Department downgraded the second quarter US Gross Domestic Product (GDP) from 1.3% as initially reported to 1%. Via Reuters:

The rate of growth between April and June was cut from the government's first reading of 1.3 percent and followed a lethargic 0.4 percent pace in the first three months of 2011.

This means the economy grew only 0.7 percent in the first half of the year. Nonetheless, and despite a sharp fall in consumer confidence this month, economists do not believe the economy will fall back into recession.

Note for those with short memories - the first quarter GDP was initially reported at 1.8%, upped to 1.9% with some fanfare before being downgraded to .4%. That seems to be a bit of a trend these past few weeks and months where the various economic indicators get revised in a negative direction (negative that is in relation to what would be good news). For example, when the Initial Unemployment Claims for last week came out on Thursday, the previous week's claims were revised upwards (via CNN):

The number of first-time filers for unemployment benefits rose to 417,000 in the week ending Aug. 20, the Labor Department said Thursday. That's up 5,000 from a revised 412,000 the prior week.

The original report for the previous week was at 408K so the upwards revision was 4K. Since the business reporters like to latch onto a factoid or two to try to explain things, they've all seemingly latched onto the point that some striking Verizon workers had filed claims. But the number provided was 8.5K which means even without the Verizon worker claims (which will most likely be denied as strikers are rarely allowed to collect unemployment), it would still have the initial claims at 408.5K. From the previously linked CNN article:

Trickle Down Exists, Just Not as Commonly Supposed

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Trickle down economics is the phrase that has often been supplied to describe whatever current flavor of economics theory being propounded that says cutting taxes for the well-to-do is the quickest path to an economic nirvana. Supply-side is just one of the variants of this from over the years.

While what I just described is the most commonly used version of "trickle-down," we are now seeing examples of true trickle-down, i.e., the trickle-down of pain through the economy from all the various budget cuts at all levels of government. The past two days the Tampa Tribune has had articles showing the affects of cuts. First up is this one from yesterday on cuts for caregivers of the disabled:

The state Agency for Persons with Disabilities needs to slash about $90 million in services this year to meet its budget. The cuts not only affect contract workers like Davison, but employees in group homes who coordinate training programs, community outings and other activities for the disabled.

About 33,000 people in Florida with developmental disabilities like Cherta go through the agency to find companions who will not only care for them but also find ways to make them a part of their communities.

The agency serves about 50,000 people with autism, cerebral palsy, spina bifida and intellectual disabilities.

So where exactly is that good economic news?

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Well, here we go again. As usual, the past couple of weeks there have been a few articles on how the economy really isn't THAT bad. In fact, that was a large part of the title of this article from McClatchy while USA Today offered up this from a Maria Bartiromo interview with the head of AIG, Robert Benosche (with a McCainesque "There's a core of strength to the economy"). However once again, the reality on the ground rears up to refute the cheerleaders. Today's (Thursday, August 18) Initial Unemployment Claims report for last week is out and the numbers are back over the dreaded 400k line once again (via Reuters):

Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 408,000, the Labor Department said.

Economists polled by Reuters had forecast claims rising to 400,000. The prior week's figure was revised up to 399,000 from the previously reported 395,000.

Given that the trend the last few weeks has been for an upwards revision of the previous week's numbers, I am not at all surprised at the upward revision from 395K initially reported to the 399K (although since I did not write a post on last week's report, I can't claim to have officially predicted the revision.)

Grasping at Straws on the Economy

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So, I guess it has been a rather eventful week in the world economy and the lives of the Beltway Village Idiots Politicians, Pundits, and Courtiers. I'll let Paul Krugman and Jane Hamsher do the honors of eviscerating the Standard & Poor downgrade of the US credit rating but do want to add my 2¢ in agreement that supposed neutral arbiters who sold their souls and "independent analysis" for the banksters crappy mortgage based securities should be well advised to STFU rather than interject themselves politically.

To the non-surprise of most folks living in the reality based world, the passage of the debt ceiling increase did absolutely nothing towards improving the overall economy and the budget slashing accompanying the increase is likely to push the economy back into recession (at least that's my prediction here, here, and here). Reuters had this on the "small blessings" of the debt deal:

"So be it"

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Yesterday, I wrote about my prediction for an "official" double-dip recession. One of the points I covered was the release by the Commerce Department of the second quarter GDP figures (along with the downward revision of the figures for the first quarter 2011 back to before the start of the Great Recession/Lesser Depression.)

Today, I have seen a couple of articles pointing out that the (lack of) government spending at all levels has been a large factor in the "disappointing" GDP figures. First up is this blog post from yesterday's Washington Post with the title "GDP Shocker: ‘Much of the drag was government’:

So what was the problem?

Government, according to Faucher. “The major drag came from government, on both the federal and state and local sides. Government subtracted 1.2 percentage points from growth in the first quarter, with the federal government accounting for about two-thirds of that,” he said.

Hoocoudanode, right?

Bloomberg reported it this way:

Spending and investment by state and local governments shrank at a 3.4 percent annual rate in the second quarter, matching the decline in the first three months of 2011, the U.S. Commerce Department said today. The fourth consecutive drop is the longest such slump since the government began compiling quarterly data in 1947.

The U.S. economy expanded at a less-than-forecast 1.3 percent annual rate, the Commerce Department said. State and local governments accounted for a 0.41 percentage point drag, the same as the first quarter, as governors and mayors adjusted to lower revenue by cutting employees and services.

Peterr over at Firedoglake has this post today pointing out the problems of folks at all levels when they have too much month left at the end of the money compounded by worry that Social Security checks may not be forthcoming in August. But this little nugget really says it all for me:

When even the Chamber of Commerce is telling Congress to worry about the economy, you know that the GOP has gone way off the deep end. OSK-Deutsche Bank economists concur, as do the folks at Macroeconomic Advisors

Now I do have to ask how many folks remember the response of Speaker of the House Boehner way back in February when it was pointed out to him that cutting jobs could hurt the economy:

So be it.

You really should be careful of what you ask for Mr Speaker.

And because I can:

The (Official) Double Dip Moves Closer

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Back about six weeks ago, I predicted that the economy was headed for an official "double-dip" recession. Today's Commerce Department report on the economy showed the second quarter of 2011 GDP growth at 1.3% but also reported a downward revision to the 1st quarter GDP from 1.9% to .4%. This is after the original 1st quarter numbers had been revised upwards slightly from 1.8% back in June.

The economy grew at a 1.3 percent annual pace in the second quarter after expanding just 0.4 percent in the first three months of the year. First-quarter growth was revised from the previously reported 1.9 percent increase.

While the recovery stepped-up in the second quarter, economists had expected a stronger 1.9 percent reading.

Fourth-quarter [2010] growth was revised to a 2.3 percent rate from 3.1 percent.

Now, I have been using the phrase "officially a double-dip" because for the millions of people among the long term un and underemployed, we've never left the Great Recession/Lesser Depression. It has been all one long scene of watching our unemployment run out, our savings and retirement plans get cashed in and spent while trying to survive and keep a roof over our heads. And this is not just limited to those folks covered by the official un and underemployment lists but includes the new college graduates from the last few years trying to find employment in their fields. It also includes the folks who gave up and filed for Social Security if they were eligible, just to have some money coming in. It includes all the folks who are now considered "independent contractors" or "self-employed."

Dispatches From the Economic War Frontlines

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The weekly report of Initial Unemployment Claims is out today (via Reuters):

Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 398,000, the Labor Department said.

Economists polled by Reuters had forecast claims falling to 415,000. The prior week's figure was revised up to 422,000 from the previously reported 418,000.

I do hope the Beltway Village Idiots Pundits, Politicians, and Courtiers don't make too much of this news however. The 400K figure does seem to be a magic line for most but my guess/prediction is that after revision (which may or may not be reported), it will wind up back over 400K for the week. The upward revision of the numbers from the week before has seemingly become a staple on the reporting of this metric.

While the DeeCee folks do their Debt Ceiling/Deficit/Austerity Danse Macabre, there have been a few reports in the TradMed to remind the clueless of the realities being faced by millions of people who are not cocooned within the fog of life in the Beltway. Not that these articles penetrate the consciousness of most Villagers, given how they seem to always like to double down on the policy while "improving the messaging," but we can still hope they might see the light at some point, if only to protect their careers.

Jobs Numbers Continue to Stagnate While DeeCee Fiddles

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Well today's (Thursday, July 21) report of Initial Unemployment Claims from last week is out and once again, the numbers show little improvement (via Reuters):

Separately, initial claims for state unemployment benefits increased 10,000 to 418,000, the Labor Department said, above economists' expectations for a rise to 410,000.

The Reuters article is a revision of their initial report which had noted that last week's number had once again been revised upwards, from the originally reported 405K to 408K. At least they didn't say the "economists are surprised" for once.

Buried way down at the bottom of the Reuters article are these little nuggets of information:

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 50,000 to 3.70 million in the week ended July 9.

The number of Americans on emergency unemployment benefits declined 80,133 to 3.15 million in the week ended July 2, the latest week for which data is available.

A total of 7.33 million people were claiming unemployment benefits during that period under all programs, down 159,000 from the prior week.

My bold. My guess is that the "decline" in folks receiving extended (emergency) benefits is most likely due to people aging out of the system. The so-called "99ers." And please note that bolded piece once again. "A total of 7.33 million people were claiming unemployment benefits during that period..." The government officially recognizes at least 14M unemployed and 25M to 30M un and underemployed so this means that roughly half the people who are officially acknowledged as unemployed are not collecting any Unemployment compensation at this time.

Meanwhile, all the elected Neros in the Beltway Village continue to fiddle about with the "Grand Bargain" even when the DFHs at place like Bloomberg point out that whatever the results of massive budget cuts may be, creating jobs will not be one of them:

Advocates of reduced federal spending say shrinking the U.S. government would boost the economy and create jobs. They are wrong, according to Wall Street economists -- at least for the short term.

House Republican leaders, including Speaker John Boehner, urge spending cuts to lift employer confidence and increase investment and hiring. President Barack Obama, who signed into law a stimulus program now valued at $830 billion, has echoed the Republican assertions in recent comments, even as he has resisted cuts as deep and fast as they want.

Professional forecasters beg to differ. Fiscal retrenchment could subtract 1.5 percentage points to 2 percentage points from growth in 2012, a drag that will make it difficult to reduce 9.2 percent unemployment, say economists at Bank of America Merrill Lynch, JPMorgan Chase & Co. and Deutsche Bank AG.

I'm usually not one to take the predictions of Wall St economists as some form of gospel but the only group of people with a worse record than Wall St economists on getting things correct on the economy do happen to be the Beltway Village Idiots Politicians, Pundits, and Courtiers.

There is one small piece of a bit of Good News/Bad News. It seems the K Street lobbyists are having to actually work a bit these days. That's the good news. The bad news? We have to hear them whine about it now. Outside of the Banksters and the executives of the Sirius Cybernetics Corp, I can't think of any group who has less cause to whine which probably means we will now see dozens of articles on how the poor misunderstood lobbyists are just really trying to help all the poor widows and orphans honest.

And because I can:

Mr Bernanke, Just What the Hell Are You Waiting For?

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Yesterday (Wednesday July 13), Federal Reserve Chair Ben Bernanke was once again before Congress, testifying on the economy. Buried way down in the Reuters coverage of the hearing was this little nugget:

After recovering from the steepest recession in generations beginning in the summer of 2009, the U.S. economy has lost momentum in recent months. Gross domestic product expanded just 1.9 percent in the first three months of the year, and the second quarter does not look to have been much better.

Bernanke held to the view that recent weakness was due in part to temporary factors like energy costs and the effects on global industry from Japan's earthquake and tsunami.

But he acknowledged the labor market remains weaker than the Fed would like.

The labor market also remains weaker than the 14M unemployed and the 25M - 30M un and underemployed would like as well. While part of the stated Fed mission is "pursuit of maximum employment," the actions of the Fed over these last few years seem to have been more along the lines of "we'll pretend to do something and maybe the miracle will occur." As far as Bernanke's "...view that recent weakness was due in part to temporary factors...," as I've stated before, there are always "temporary factors" that are going to have an effect on life. It is part of life and should be part of his work to be anticipating and dealing with those "temporary factors" as they occur rather than using them as an excuse.

Economically, 'Good for Business' Is Usually Bad for People

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"Business Friendly Climate" is one of the buzz phrases we see and hear a bit more frequently these days. I guess it is a phrase that may have always been around to some extent but is not just limited to the business press. But what exactly does "Business Friendly Climate" actually mean? Googling the phrase brings up millions of pages of hits with apparently every state, city, and town in the country making the claim for themselves. President Obama says the US must become Business Friendly to create jobs. But to me, the more often I see and hear the phrases "business friendly" or "good for businesses," the more I become convinced that the end result will be something that is bad for humans and bad for living, breathing entities.

In case you are curious as to what precipitated this, it was a few articles the last week or so on both sides of the "it's good for business" divide. First up is this article from CNN on Tuesday, July 12 on businesses "fleeing" California: