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:

It Still Sux to be Correct

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Well, today's Jobs Report from the BLS for June 2011 is out and the news is not good. In this post from Tuesday (July 6), I had predicted:

My guess is that the private sector jobs (the ADP number) will be in the 50K range while the overall economy will be 20K to 25K max.

As I admitted in this post from yesterday (July 7), I was off fairly badly on my prediction for the ADP number. Unfortunately for the economy, I was a hell of a lot more accurate on the BLS number than the supposed expert economists (via Reuters):

U.S. employment growth ground to a halt in June, with employers hiring the fewest number of workers in nine months, dampening hopes the economy was on the cusp of regaining momentum after stumbling in recent months.

Nonfarm payrolls rose only 18,000, the weakest reading since September, the Labor Department said on Friday, well below economists' expectations for a 90,000 rise.

Many economists raised their forecasts on Thursday after a stronger-than-expected reading on U.S. private hiring from payrolls processor ADP, and they expected gains of anywhere between 125,000 and 175,000.

The unemployment rate climbed to 9.2 percent, the highest since December, from 9.1 percent in May.

Sluggish Economy Stubbornly Resists Lack Of Effort To Stimulate It.

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This past week, President Obama was in Pittsburgh to tout a government/industry/academia initiative for technology. CNN had this to say:

President Barack Obama -- whose poll numbers have dipped in recent weeks amid a stubbornly sluggish economic recovery -- touted the hard-hit manufacturing sector Friday, saying the country's best production days may well lie ahead.

"We are inventors, we are makers, and we are doers. If we want a robust growing economy, we need a robust manufacturing sector," Obama told a crowd at Carnegie Mellon University, the school founded by steel industrialist Andrew Carnegie nearly 100 years ago.

The NY Times:

President Obama visited a university research center in Pittsburgh on Friday to announce a new partnership between the government, industries and leading universities to speed the movement of technological advances to commercial users. The trip was the latest of his increasingly frequent travels to battleground states to showcase administration efforts to create manufacturing jobs.

After touring the National Robotics Engineering Center at Carnegie Mellon University, a high-technology facility adjacent to a rusted factory symbolic of the area’s industrial past, Mr. Obama said federal agencies would invest more than $500 million to seed the initiative. Of that, $70 million is to go to robotics projects like one he viewed at the center: a boom-box-size robot that inspects sewer pipelines, made by a company started by a Carnegie Mellon professor.

Now, I am all for technological advances. My professional field is Software Quality Assurance and Testing and I have worked in every phase of software development projects. I remember all the "world of the future" type stories that Disney and other film makers would do, showing their visions of how robots would affect the world of the 21st century, making life so much easier for everyone from the assembly line worker to the housewife in her kitchen. Yet for all the potential this initiative may have for the long term future, it does nothing for the "stubbornly sluggish economic recovery." The US economy needs something along the lines of $500B investment (and that is probably no where near enough) in initiatives that bring jobs now, not five or ten or twenty years from now.

"Are Ya Gonna Believe Me or Yer Own Lyin' Eyes?"

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So what makes today any different from any other day? Not a thing. It's a day ending in "y" so that means we are treated with a mix of articles and opinions where the headline doesn't actually match the story or the lede is buried or the cheerleaders try for the misdirection.

One of the first articles I saw this morning in my surfing of the news sites was this one from CNN on jobs returning to the US from overseas:

It's still only a trickle compared to the flood of jobs that America lost to overseas outsourcing in recent decades. But some American businesses are bringing jobs home again.

...snip...

This trend of reshoring or insourcing is likely to grow in the coming years, as the cost gap between building overseas and building at home narrows. It's an encouraging sign in a job market where hiring has stalled in recent months.

...snip...

According to BCG, Chinese labor costs are rising about 15% to 20% a year. That makes producing goods in China not nearly as cheap as it used to be. For many manufacturers, that narrowing is enough to tip the balance back to U.S. plants.

...snip...

What's more, countries such as China and India that have profited from U.S. offshoring won't stand pat and lose the potential jobs without a fight.

"It's not as if the Chinese government is helpless is to offset this rising wage trend," Tonelson said.

Anyone else find it interesting that the Chinese government isn't helpless on jobs but the US government is? Apparently, repression is good for business in all ways.

It Is Impossible to Keep Up With All the Economic Cluelessness

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I noticed yesterday that Reuters had an announcement of a Larry Summers editorial on "The Jobs Crisis." Turns out, Summers had mostly the same editorial published at the Washington Post this morning as well. Scarecrow over at Firedoglake deconstructs the piece quite nicely, especially Summers own complicity with how we have reached this point of a probable "lost decade."

Yet for every good article on the economy such as this one from Reuters that points out the disconnect of economists wanting people to cut down on debt yet increase spending or this opinion piece, also from Reuters, we have something like this opinion piece from the Washington Post yesterday where the author calls for "signing bonuses for people instead of Unemployment Compensation.

From the first Reuters piece:

Talk about getting it from all sides. Economists want Americans to cut down on debt and boost spending all at once, even as home values tumble and gasoline prices soar.

It may all be a bit too much for the average U.S. household, particularly with an already sluggish labor market stuttering again.

From the second Reuters piece:

The big mystery in the United States today is why the job crisis is not at the center of the political and economic debate. After all, the numbers — and the human tragedies they reflect — could not be bleaker.

Nearly 14 million Americans — 9.1 percent of the working population — are unemployed. That’s just a couple of a million shy of the populations of Greece and Ireland, Europe’s two problem children, combined. Another 8.5 million would like to work full time, but can only find part-time jobs. A further 2.2 million have been so discouraged by the grim labor market that they have given up looking for jobs altogether.

It is hard to blame them — those still actively looking for work have been unemployed for an average of 39.7 weeks. These are cruel numbers, and they depict an unemployment crisis that is deeper and more sustained than at any time since 1948, when records first started to be kept.

Meanwhile from the Washington Post piece:

Washington politicians are flailing for job-creation ideas like a drowning man lunging for a life preserver. President Obama probably remembers Ronald Reagan’s setup and punch line: “A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his.”

So it’s no surprise that rumors of new payroll-tax cuts and dreams of a new infrastructure bankhave followed the miserable jobs report released June 3. New York Times columnist Paul Krugman seems to be scavenging Grandma’s attic for old Works Progress Administration signs to put up again.

Here’s a simple idea to cut unemployment that won’t cost the government any more money and won’t require devaluing our currency: Turn unemployment benefits into a signing bonus.

...snip...

After 26 weeks of receiving benefits, a job-seeker would be eligible for a “signing bonus” equal to three additional months of benefits if he or she took a full-time job. It wouldn’t matter whether the job paid more, less or the same as the worker’s old one. We don’t want the logistics mess of a “cash for clunkers” type of program, in which the government had to figure out which clunkers really clunked.

The author of the Post piece was an economic adviser to the Bush I White House. Of course, he fails to explain just how his "bonus" idea would help folks to get jobs when there are still four to five applicants for each and every job opening out there today. He must have missed that McDonald's had over a million applicants during their "McJobs Fair" back in April.

Today, we also have President Obama meeting with his "Jobs Council" in North Carolina. Once again from Reuters this morning before the meeting:

Washington should streamline permitting for construction projects and make it easier for tourists to visit the United States to help boost hiring and spur the economy, a top adviser to President Barack Obama said.

Jeff Immelt, chief executive of General Electric and head of Obama's jobs and competitiveness council, said his panel's "progress report" outlined ways to increase hiring in manufacturing, construction, healthcare, and tourism sectors.

Somehow, I don't think we will find much support with DHS in easing the way for tourists to come to the US. And as I and others have also noted, minimum wage tourism jobs are not really going to go very far in building a long term sustainable economy.

Bloomberg has a couple of articles this afternoon that seem to fall on the same side as the Washington Post piece above - mainly in the "are you kidding me with this" style. First up is this one on the Jobs Council meeting:

The president is seeking to convince the business community as well as voters that his economic policies will help restore long-term growth even as data indicate the recovery is slowing.

...snip...

Immelt said in an op-ed article in today’s Wall Street Journal that the panel is recommending five “fast-action” steps to create more than 1 million jobs in five specific areas.

...snip...

Obama has spent this year seeking to repair relations with the business community, and the administration is still working to overcome criticism from Republicans and some executives that its regulatory policies are creating uncertainty for companies.

The Immelt-led board was formed in January to build a bridge to the country’s major employers. The same month Obama appointed former JPMorgan Chase & Co. executive William Daley as his chief of staff. Last month, the White House proposed revising and trimming regulations to reduce reporting requirements and cut compliance costs.

Yeah. There are nearly 14M unemployed and 25M to 30M un and underemployed and the MOTU on this jobs council can come with ideas for 1M jobs. I've got an idea - why don't they bring a few million jobs back to the US that they've sent overseas?

The second Bloomberg article is fairly standard cheerleading on how "surging profits" will lead to new jobs:

Profits at American companies are poised to be one of the few bright spots in the U.S., helping to steady the faltering recovery.

Earnings will climb an average 10 percent a year through 2013, more than three times quicker than the economy, after what has already been the fastest rebound since the late 1940s, JPMorgan Chase & Co. projects.

...snip...

The recent spate of weak economic data, capped by news that payrolls grew in May at the slowest pace in eight months, is sparking concern about the expansion’s sustainability. Even so, private employers have added 2.14 million workers since job creation resumed in March 2010, nine months after the recession ended. That’s about a quarter of the 8.8 million positions lost during the 18-month slump.

Once again they present numbers without context. 2.14M private sector jobs since March 2010 works out to be 142.6K jobs per month on average. In an economy that needs to create roughly 100K to 150K jobs per month just to maintain the status quo. And the numbers do not include all the lost public sector jobs in the same period.

I'm going to end this post with a link to an AP (via Yahoo) article on a "survey" taken of economists by the AP. Best I can tell, the economists surveyed are telling us all to click our heels three times and wait for the miracle to happen. I wonder how Scarecrows feel about that.

And because I can:

Officially, It Will Be a Double-Dip

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When I was a kid, I used to love double-dips. I'd go to the doctor and afterwards, we'd stop by the drug store soda fountain for my free ice cream. Summers, there would be all the ice cream suppers at the churches with fresh home made ice cream and cake. Double-dips of chocolate ice cream and cake!

Unfortunately however, today's double-dip will be a recession. Yes, there it is; I'm predicting that we will officially fall back into a recession in the very near future even though for the 25M to 30M long term un and underemployed, we've never, ever left the recession that began officially back in December '07 and ended officially in June '09. I do so very much hope that I am wrong on this but will even go so far as to act like an economist and claim to be surprised if I am wrong.

What makes me think this will happen? Well, to start with, too many folks like The Benbernank in his speech last Tuesday in Atlanta and the presidents of the Philadelphia and New York Federal Reserve Banks all saying the economy will improve in the second half of 2011. In addition, Bloomberg has a survey of economists claiming this as well:

After growing at a 2.3 percent annual pace this quarter, the world’s largest economy will expand at a 3.2 percent rate from July through December, according to the median forecast of 67 economists polled from June 1 to June 8.

Rising exports, stable fuel prices, record levels of cash in company coffers and easier lending rules will be enough to overcome the damage done by one-time events like poor weather and the disaster in Japan, economists said. Nonetheless, the current slackening means Federal Reserve policy makers will wait even longer to raise interest rates next year, the survey shows.

Austan Goolsbee Is Almost Correct, Just Not in the Fashion He Thinks

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Austan Goolsbee, head of President Obama's Council of Economic Advisers was making the rounds of various political shows this past weekend. HuffPo quotes him telling Christianne Amanpour of ABC:

“It's not a jobless recovery. That is an incorrect phrase," he told Amanpour.

Goolsbee is correct in one fashion. It can't be a recovery if it is jobless. But he is way wrong on a couple of points (also from the HuffPo link):

Austan Goolsbee, who heads the president's Council of Economic Advisers, says the addition of a million new jobs over the past six months shows "we have improved a long way from when the economy was in rescue mode."

My bold. Now a million new jobs over the last six months sounds good, right? Not so fast there Bucky. In an economy that needs to add roughly 125K jobs every month just to maintain status quo (that would be 750K jobs for a six month period), then a million jobs in six months doesn't begin to put a dent in the 14 or so millions of unemployed, much less the un and underemployed numbers sitting somewhere between 25M and 30M.

But wait, it gets worse for Mr Goolsbee and his figures. Being the somewhat anal retentive person that I am, I went back and looked at the blog posts I had done starting in December 2010 based on the BLS report on the first Friday of each month for the month just past. Other than the report for February 2011, I have a post that covers the jobs number for each month going back to November 2010's figures and for February 2011, I found a link to a site that includes a PDF with the appropriate numbers:

Is There a Possibility of a Glimmer of a Clue?

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No. It probably isn't. Probably just some more wishful thinking on my part. Nevertheless, I was quite surprised this morning to see a few pieces around the web pointing out that a "new Republican Jobs bill" was just another tired rehash of the same failed policies of the last thirty years. Ezra Klein at the Washington Post, Paul Krugman at the NY Times, Steve Benen at Washington Monthly all pounded on the Republican "Plan" and for good reason. From the Klein link:

The best evidence that Washington has forgotten about the jobs crisis is to look at the plans emerging to address it. Yesterday's House GOP plan was a perfect example. It was, as MIT economist David Autor told me, a classic case of "now-more-than-everism": Everything on the agenda was also on the GOP's agenda in 2006, in 2002, in 1987, etc. It's lower taxes, less spending, fewer regulations, more trade agreements, more domestic oil production. You can argue about whether these proposals are good for the economy. But as Autor says, there's "no original thinking here directed at addressing the employment problem."

Actually, you can argue whether those "proposals" are good for the economy as we have thirty years of evidence that they are not good for the economy.

Budget Cuts Equal Job Cuts

As we see more and more information about the Republican plans for "austerity" and the budget cuts, we see more and more that all they are offering is the same one-trick pony that they have proposed to solve economic problems since the days of St Ronnie of Raygunz.

Now why would I put the term "austerity" in quotes? Because every time the Republicans make a proposal to cut spending, they also demand a tax cut. From Reuters:

(Reuters) - Republicans in the House of Representatives united on Friday behind a 2012 budget plan slashing trillions of dollars in government spending while cutting taxes -- two achievements conservatives say are necessary ingredients for a deal to raise the U.S. debt limit.

In fact, we have quite abundant objective, verifiable evidence from the last thirty years that cutting taxes does not increase revenues nor does cutting taxes cause businesses to create jobs. Yet for some strange reason, the people who continually propose cutting taxes because "it increases revenues and creates jobs" are considered "very serious people" by the Beltway Village Idiots Pundits. However, if tax cuts created jobs and increased government revenues, the past decade would have been a decade with some of the greatest job growth in the history of the US as well as shown a continued decrease to the national debt instead of the exact opposite.

The Rush to Declare "Recovery" and Move On

There are times that I begin to despair a bit about all the crap going on all over. I can't do anything about earthquakes, tsunamis, and nuclear disasters (all in one) but I can address some of the reporting I've seen in the TradMed the last couple of days.

Apparently the Beltway Village Idiots Pundits are anxious to stop writing all those bummer articles about the un and underemployed and the destruction of the global economy. I guess it's just too Debbie Downer for them. So they've started the "Everything's Getting Better" articles. The NY Times and Floyd Norris started with this headline:

Crisis Is Over, but Where’s the Fix?

Of course, without anything being fixed, it's rather difficult for the "crisis" to be over. And to be fair, Norris does address some of this in the article:

When the financial system began to crumble more than three years ago, the world rushed to rescue it. Country after country went deeply into debt to keep banks afloat and prevent a deep recession from turning into something worse.

...snip...

But the world has changed since then. The economic recovery in most developed countries is stuttering at best, and governments are struggling with their own finances. It is time for remorse and second-guessing.

A surprising citadel of that second-guessing is at the International Monetary Fund, where researchers this week concluded that the rescues “only treated the symptoms of the global financial meltdown.”

The researchers, Stijn Claessens and Ceyla Pazarbasioglu, warned that “a rare opportunity is being thrown away to tackle the underlying causes. Without restructuring financial institutions’ balance sheets and their operations, as well as their assets — loans to over-indebted households and enterprises — the economic recovery will suffer, and the seeds will be sown for the next crisis.”

...snip...

In retrospect, it is clear that the bailouts came with too little pain for those responsible. Bondholders who financed banks that failed largely escaped pain. That was true even in Ireland, where the bailout would have led to a default of government debt had Europe not stepped in. It is still not clear how Ireland will pay its national debt, but the bank bondholders did fine.

Norris goes on to point out that one of the problems is the lack of accountability. Imagine that?

President Obama's Jobs Commission - Outsourcers and Masters of the Universe

President Obama has named the members of his "Council on Jobs and Competitiveness" headed by GE CEO Jeffrey Immelt. Emptywheel took a whack at Immelt and his outsourcing to China last month here. Obviously Immelt knows how to create jobs, just not so sure he knows how to create jobs in the USA that can allow the US unemployed to earn a living wage.

And really, that is my biggest complaint over all with the "Council" appointed by President Obama. There are two, count'em, two, persons representing workers on this council, Richard Trumka, president of the AFL-CIO and Joseph T. Hansen, president of the United Food and Commercial Workers Union. Besides Trumka and Hansen, the other non-CEOs on the Council are Laura D'Andrea Tyson, President Clinton's Economic Adviser and John Doerr, senior partner with Kleiner Perkins Caufield & Byers, a Silicon Valley venture capital firm. Neither Tyson nor Doerr can be said to be particularly sympathetic or empathetic to workers, much less the 25 to 30 million un and underemployed.

The rest of the members represent the CEOs of the world:

More Mixed Jobs Messages

In the last few days since the release of the official employment number for January, there have been a variety of jobs related articles I've found as I surf through various news sites and the articles have been all over the map in conclusions. Some of the articles have even recognized that things really aren't getting better for the long term un and under employed while others keep trying to provide more spin at things getting better.

Saturday's (Feb 4, 2011) NY Times had Floyd Norris attempting to reconcile the weak job creation numbers withe the drop in the official Unemployment Rate. His conclusion shows just how ef'fed up the numbers are:

Over all, from January 1979 through March 2010, the first estimate was off — either higher or lower — from the final figure by a median of 74,000 jobs. If that holds true now, there is a 50 percent chance that the final number for January will be somewhere between a loss of 38,000 and a gain of 110,000. And there is an equal chance that it will be outside that range.

None of that reduces the importance of jobs data, particularly in the months after a recession ends. But it does serve as a reminder that the first attempt at estimating employment is far from authoritative.

Of course, there's Catherine Rampell in today's (Tuesday Feb 8) Economix blog from the NY Times showing there are still nearly five applicants for each job:

Smart Cities, DeeCee, and Kitchen Table Conversations

Last night as I was channel surfing between snaps of the Patriots-Jets bash in Foxboro, I was momentarily distracted when I reached one of the local, Tampa area stations. They had a graphic up and were talking about the "Smartest Cities" as determined by Portfolio dot com. Boulder, CO was number one, Ann Arbor, MI at two and Washington, DC was third. I can't say I found any of these all that surprising given the criteria Portfolio used:

Portfolio.com followed Census Bureau guidelines in designing an educational ladder. The following are the five rungs, with average annual earnings for all workers, both full-time and part-time, at each level (as of 2007) in parentheses:

* Advanced degree ($61,287), including professional, doctoral, or master's degree
* Bachelor's degree ($46,805)
* Associate degree or attended college without any degree ($32,874)
* High-school graduate ($26,894)
* High-school dropout ($19,405)

Portfolio has a pdf download available that lists the top 200 in case you're interested.

However, I would contest the declaration of Washington, DC as the "third smartest city" even though it probably does fit the description based on the stated criteria. Educated? Yes. Smartest? Not hardly.

They Really Think We Are Stupid

Whew! A bit dusty over here. I hadn't realized it had been over three months since I last posted something here but with all the news this week I guess I figure it's time to throw out my 2¢ once again.

The official unemployment rate is now at 9.8%. Nine point eight per cent. And this is just the "official rate" reported by Labor is the "U3." The truer rate is probably contained in the U6 which is over 17%.

It is December 2010 and this is the longest sustained stretch of unemployment over 9% since the Great Depression. While ADP in their monthly reporting of jobs added for November showed an estimated 93,000 new private sector jobs for November 2010, the official Department of Labor report showed only 39,000 jobs added in total for November 2010. This is in an economy that needs to add 100k - 150k jobs per month just to maintain status quo. Now we add in that two million people currently collecting unemployment will be losing their unemployment insurance benefits during December 2010 and another uptick in initial jobless claims for the last week of November and it is going to be a horrendous Christmas season for a lot of people in the United States.

Cluelessness or Cognitive Dissonance?

My apologies for not writing any posts for a while but I do get tired of having to repeat myself so frequently.

Once again we see the cluelessness of the financial reporters in a couple of articles from the past few days. First up was an AP story (via MSNBC) which reported on an analysis from Fidelity Investments on people raiding their 401Ks due to "hardships." This came on top of the Weekly New Unemployment claims report showing (Reuters via CNBC):

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday's report.

But today's (Sunday, August 22) NY Times really steps in it.

Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.

Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.

If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked.

Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.