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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:
The plan for $2.4 trillion in spending cuts over a decade, if backed by lawmakers, would help lift some of the uncertainty that has weighed on investors, businesses and consumers unsettled by talk about a possible new and deep U.S. financial meltdown.
Of course, this was published prior to the stock market drop on Thursday. So much for the “certainty,” right? The LA Times seems to have a little better handle on things than Reuters with this:
Instead of increasing confidence in the future, the agreement seems to have underscored the near paralysis in Washington — and the fact that no substantial new efforts are likely for dealing with unemployment, lagging consumer spending or a host of other problems that have been dragging the economy down.
The stock market provided an early indicator Monday that investors and business leaders saw little to cheer about. Stocks initially rallied on the debt-ceiling pact, then tumbled after a report showed that U.S. manufacturing activity slowed sharply in July, reinforcing other weak economic data.
As we know today (Saturday, August 6), the stock markets worldwide greeted the Debt Ceiling deal by having their worst week since the middle of the Great Recession.
As always though, my foremost interest is in the Jobs Reports. Or maybe better phrased as lack of jobs reports. The ADP report on private sector jobs came out Wednesday and had it as 114K jobs (via Reuters), although this was offset by Challenger-Gray reporting that planned layoffs had jumped once again to the highest number in 16 months. CNN had a nice little article on the top ten latest “job killing” companies.
Thursday brought the weekly report of Initial Unemployment Claims for last week. Reuters reports it:
Initial claims for state jobless benefits edged down 1,000 to 400,000, the Labor Department said on Thursday. Economists had expected claims to rise to 405,000 and the dip last week indicated an easing in layoffs, which have weighed on employment in the past two months.
Of course, they failed to mention that the previous week’s report had been revised upwards once again from the original reports of 398K.
The official BLS numbers on jobs created for July came in at 117K. The most interesting part of the reporting on the BLS number is how many media sites put on the rose colored glasses to report. CNN’s headline (linked above) was “Hiring Picks Up” while the Washington Post presented it as”Cautious relief amid modest job growth.” The NY Times headline read “US Posts Stronger Job Growth in July” and Bloomberg said “Payrolls Rise, Jobless Rate Falls, Concerns Ease.” I think the LA Times may have provided one of the more realistic looks at the Friday report with this headline “Jobs report doesn’t offset U.S. recession fears.” The fact is, 117K new jobs, in an economy that needs to create 1 million jobs a year (roughly 90k per month) just to stay even with folks entering the work force, is no where near enough to attack the long term un and underemployment problems we face.
For a bit of comic relief, I’ll leave you with this article from Bloomberg this past Monday headlined “‘Embarrassed’ CEOs Silent on U.S. Debt Debate Driven by Republican Demands” combined with this one from Reuters from last week on hedge fund managers refusing to comment on the economy. So much for the best and brightest on Wall St I guess.
And because I can (H/T Old Folks Boogie on Facebook):
Cross posted from Just A Small Town Country Boy