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.

Running Out Of Adjectives for the Economy

I've always had a pretty good vocabulary. I read above grade level pretty much from the beginning. In high school, we had to learn vocabulary words every week, increasing from fifteen to fifty words a week and I usually did well on the tests. I didn't score all that well on the SAT (though I did on the ACT) so I chalk the SAT score up to a bit of cultural bias (as a proud son of the South, sometimes the word usage might not have been as pristine as the educators who write the tests might have wanted.)

But I am running out of ways to describe the levels of idiocy associated with the economy and jobs situation today. From the reports themselves to the "surprise" expressed by the pundits to the "analysis" done by reporters there are so many mis-statements, specious reasonings, and outright cluelessness that I'm beyond dumbfounded.

First off was this article from Wednesday, 8/4, on ADP's monthly report of private sector jobs combined with a report from Challenger, Gray, and Christmas, Inc on planned job cuts from both private and public sources. ADP reported 42K jobs created for July while Challenger, Gray's report showed an equal number of planned cuts for July.

ADP Jobs Report for July

Yesterday, I wrote about the idiocy of the cheerleaders who keep making speeches about how wonderful everything is in the economy so they're not going to do anything different. Then today, ADP released their Jobs Report on private sector job creation for July 2010.

Private-sector employers added jobs for the sixth month in a row in July, according to a report by payroll processing firm Automatic Data Processing (ADP). ADP said private-sector employers added 42,000 jobs to their payrolls during the month, following an upwardly revised 19,000 increase in June.

Forty-two thousand jobs sounds good right?. Well, when you consider the economy needs to add 100K to 150K jobs each month just to absorb all the new folks coming in, no it doesn't sound all that good.

Then you combine this with a second report out early today (from the same CNN story linked above)

In a separate report, planned job cuts rose for a third straight month in July, fueled by continued weakness in the government and non-profit sector, according to outplacement firm Challenger, Gray & Christmas Inc. Employers announced plans to eliminate about 42,000 jobs last month, Challenger said. That was up 6% from June, when job cuts rose to 39,000.

They Really Are Insane, Part II

It gets somewhat frustrating to read the cheerleader stories on the economy, or from the supposed economic experts on the same day and in the same paper where there are other stories plumbing the economic problems of average, everyday, yes, real Americans.

First off, we have the somewhat ludicrous cheerleader opinion piece from Treasury Secretary Tim Geithner in today's (Tuesday August 3) NY Times titled Welcome to the Recovery. It's impossible for me to pull out a couple of points of idiocy from this piece as almost every line of it is a misdirection, strawman, or flat out untruth.

From there, we go to this piece discussing a speech Monday by Fed Chair Ben Bernanke:

While the United States has “a considerable way to go” for a full recovery, “rising demand from households and businesses should help sustain growth,” Mr. Bernanke said on Monday in a speech in Charleston, S.C. “We are maintaining strong monetary policy support for the recovery,” he said in response to an audience question, without discussing any further action the Fed could take to aid growth.

The remarks signal that Mr. Bernanke and his colleagues, when they meet in Washington next week, will stop short of making major changes in their policy statement or taking new steps to lower interest rates and reduce unemployment, said John Ryding, a former Fed researcher. Consumer spending, which accounts for about 70 percent of the economy, “seems likely to pick up in coming quarters from its recent modest pace,” Mr. Bernanke said.

Yeah, who cares about nearly 10% official Unemployment and the Un/Underemployment nearly double that? David Dayen had a post at FireDogLake yesterday on a Krugman column on how this is the "New Normal" for employment. Looks like Krugman is correct (not that that is a shock mind you.)

Re-Claiming "American Made"

I haven't been doing too good of a job doing any posting here the last few weeks. It's not that my situation has changed appreciably for the better nor has the economic situation of other un/underemployed folks gotten better. But occasionally life does intrude, even when things are not going all that well.

That being said, there have been a couple of articles from the NY Times recently that I can only hope will penetrate the minds of people in power. (I shant be holding my breath mind you, but I can hope).

First up is this article from back in June on the possibility of rising wages in China possibly causing prices of Chinese made goods to rise.

Coastal factories are increasing hourly payments to workers. Local governments are raising minimum wage standards. And if China allows its currency, the renminbi, to appreciate against the United States dollar later this year, as many economists are predicting, the relative cost of manufacturing in China will almost certainly rise.

The salaries of factory workers in China are still low compared to those in the United States and Europe: the hourly wage in southern China is only about 75 cents an hour. But economists say wage increases here will eventually ripple through the global economy, driving up the prices of goods as diverse as T-shirts, sneakers, computer servers and smartphones.

“For a long time, China has been the anchor of global disinflation,” said Dong Tao, an economist at Credit Suisse, referring to how the two-decade-long shift to manufacturing in China helped many global companies lower costs and prices. “But this may be the beginning of the end of an era.”

Laffer Writes a Laugher

As I tend to do most morning after I've checked the jobs sites in my attempt to find full employment, I came across this piece of gibberish written by Arthur Laffer for the Wall St Journal (via Google). For those too young or too memory impaired, Laffer was the "author" of the "Laffer Curve" which was used by the Reaganauts and subsequent Republican politicians to justify massive tax cuts for the rich.

It's hard to know where to begin in tackling the various strawman and out right fallacious arguments Laffer uses in this opinion piece.

On the face of it, the idea that higher unemployment benefits won't lead to more unemployment doesn't make much sense. Imagine what the unemployment rate would look like if unemployment benefits were universally $150,000 per year.

First off, few people are actually calling for higher Unemployment compensation, although with an average weekly payment of $293 per week, with only a few states maxing out their Unemployment payments over $500 per week, it surely would not be a bad thing to raise the compensation a bit.

It's Not Just That It's Spin, It's Bad Spin

A couple of days ago, I saw this headline from the AP (via MSNBC):

Layoffs of census workers will distort jobs data

I found the headline a bit dishonest but considering that it was the AP, I was not all that surprised since the AP has moved far from the days when it was a premier news gathering and reporting agency. Unfortunately for a lot of folks, though, as the AP has gotten worse, more and more newspapers and news sites rely on it because they've cut their own news gathering staff to a minimum.

Then this morning, I saw this article from today's NY Times where the reporter used the same dishonest framing in her lede:

The June jobs report, which comes out on Friday, will probably look very bad, reinforcing worries that the recovery is teetering. But first impressions might be deceiving.

Folks, the "distortion" in the jobs data was not due to the lay-off of Census workers. It was due to the admittedly temporary nature of the Census hiring in the first place. So when the economy loses 125K jobs and the private sector has created only 83K according to today's Jobs Report, that is a more accurate reflection of the official numbers.