Employers added 157,000 jobs in January, the Labor Department said, which was right in line with analyst expectations. The best news, though, was that revised estimates put job creation in November and December much higher than earlier estimated; the nation added a whopping 247,000 jobs in November and 196,000 in December, revisions that place those numbers a combined 127,000 jobs above earlier estimates.
The unemployment rate ticked up to 7.9 percent, from 7.8 percent, however, as both the number of people reporting having a job and the number looking for one edged up.
I’m sure we will hear a lot about how the January figures were “…right in line with analyst expectations” given how they are usually “surprised” that their predictions are wrong.
The .1% uptick in the unemployment rate (from 7.8% to 7.9% is not all that much of a surprise – or shouldn’t be – if the economy truly is improving after all these years. The BLS U6 figure for the un/underemployed and marginally attached folks was unchanged at 14.4% (a figure that I believe is low but can’t prove). Bloombergreported the jobs news as:
Sustained hiring gains will give incomes a lift, buffering American workers from the sting of higher payroll taxes and helping them keep spending. At the same time, bigger employment advances are needed to drive down a jobless rate that Federal Reserve officials say is too high.
We can but hope Bloomberg is correct in this analysis that incomes will be lifted.
One of the areas that seems to escape a lot of notice is how the jobs reports impacts the Social Security Trust Fund. Bloomberg touches on this with the mention of higher wages offsetting “…the sting of higher payroll taxes” but still seems to miss how higher employment will provide more funds to keep Social Security running without needing to be “fixed.”
Of course, this in no way will stop people like Robert Samuelson of the Washington Post from offering up his fantasy of cutting Social Security as part of a “sequestration”:
To be effective, a sequester has to hit millions of Americans so hard that, if it took effect, mobs of outraged voters would storm Capitol Hill.
Here’s my modest proposal to do that. Unless congressional negotiators agreed on at least $1 trillion in deficit cuts over a decade — personally, I’d go higher — then the desired amount would be raised in two ways: half from across-the-board income-tax increases and half from across-the-board Social Security cuts. People would see their take-home pay and retiree benefits reduced. There would be no mystery.
…snip…
It won’t happen. Truth in journalism: I have proposed this before. There were no takers. It would astonish me if there were any now. But the point is that there is a path to agreement. The fact that our so-called leaders don’t take it reflects their calculation that disagreeing is better politics.
Thankfully, he has had no takers so he has a sad
Allison Linn at NBC News offers a counter to Samuelson and his gibberish with this report of a survey with results that fly in the face of so much Beltway Conventional Wisdom:
So I was doing my standard web surfing this AM after I had checked the (non-existent) jobs listings when I saw this from Bloomberg with the title, “Half of Wall Street Employees Expect Bigger Bonuses”:
Almost half of Wall Street employees expect their year-end bonuses to be higher this year than they were a year ago, according to an eFinancialCareers.com survey.
Of the 911 U.S. financial professionals who responded to the e-mailed survey, 48 percent anticipate a higher payout, up from 41 percent in a similar survey last year, the job-search website said today in a statement. Employees of hedge funds and other asset managers were more optimistic than those at banks and broker-dealers, according the statement. Of the respondents, 82 percent work for U.S.-based companies.
Well imagine my surprise this afternoon when I see this one from Bloomberg titled “Wall Street Bonus Pool Seen Shrinking for Second Straight Year”:
Wall Street’s cash bonus pool is likely to fall for a second straight year as the financial industry grapples with market turmoil, economic weakness and new rules, New York state Comptroller Thomas DiNapoli said.
Revenue and compensation trends have “edged downward” since February, when DiNapoli estimated that the 2011 pool for Wall Street declined by 13.5 percent to $19.7 billion, the comptroller said today in a report.
Even as the financial industry in New York has slashed jobs by the thousands, the average worker who remains is collecting a near-record paycheck.
In a report released on Tuesday, the New York State Comptroller, Thomas P. DiNapoli, said that the average pay package of securities industry employees grew slightly last year and was up 16.6 percent over the past two years, to $362,950. Wall Street’s total compensation rose 4 percent last year to more than $60 billion.
CNBC appears to be trying to split the differences with this report titled “Wall Street Expects Bigger Bonuses But May Not Get Them” as they report on the same survey that Bloomberg covered in the first link:
Revenue is down on Wall Street but expectations for bonuses are up — at least for some workers who have seen their pay shrink since the financial crisis explosion.
A survey from eFinancial Careers shows 48 percent of workers on the Street are looking for higher bonuses than 2011. Expectations are high even as investment banking revenue is down 11 percent for the same period last year while the securities industry overall saw revenue fall 7 percent in the first half.
At the same time, some of the larger firms have been doing better as the headwinds from the European debt crisis subside and hopes grow that the industry will close the year out strongly.
What I find most ironic about these CEO deficit hawks complaining about the “uncertainty” that is hurting the economy is that they are the ones responsible for helping to create said uncertainty to begin with. The deficit obsession created the uncertainty about raising the debt ceiling. Similarly, they constantly pushed for a big deficit deal resulting in the creation of the sequesters, which are seen as a big source of the fiscal uncertainty at the moment. The main “uncertainty” about government policy right now is how the government will clean up the mess created by past efforts to force a deficit deal.
But hey, MotU never have to be accountable for destroying the economy. After all, they deserve those millions dollars of bonuses right? Destroying the global economy is hard ass work so they must be compensated for it.
Meanwhile, CNN actually touches base with the real world with this article on part time jobs being the new normal in employment. Notice how much attention is paid to the ravings of Blankfein and Dimon and the Wall St WATB versus the attention paid to the rest of us in the real world?
Percent Job Losses in Post WWII Recessions, calculatedriskblog.com
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We have been seeing stories such as this from today’s NY Times about the “strong” jobs growth from earlier this year:
Although signs pointed to a strengthening economy earlier this year, the jobs report on Friday came with a message: don’t get ahead of yourself.
The country’s employers added a disappointing 120,000 jobs in March, about half the net gains posted in each of the preceding three months. The unemployment rate, which comes from a separate survey of households rather than employers, slipped to 8.2 percent, from 8.3 percent, as a smaller portion of the population looked for work.
120K jobs is not much more than is necessary to maintain the status quo of population growth (90K is the figure Dean Baker uses) and even 200K, while growing, does not appreciably put a dent in the long term un and underemployment rates. When there are 13M to 14M unemployed and 25M to 30M un and underemployed, 200K jobs is just not going to help all that much.
Surprisingly to me, the Benbernank may have been more realistic than many others (via Bloomberg.) Of course, the article goes on to quote Fed regional presidents as saying that the numbers, no matter how soft, probably won’t cause the Fed to actually, you know, do something to ease the un and underemployment problem. No matter that a primary part of the stated Federal Reserve Mission statement is to pursue “maximum” employment.
It does appear that the consensus being reported is to blame the warm weather from January and February for the lighter number for March. Here’s Dean Baker’s take: Read the rest of this entry →
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In addition, while the economy has been expanding for nearly three years and hiring is picking up, Reich notes, “we also see some major declines in terms of median wage. And that’s particularly true for the bottom 90 percent.”
In the past, economists argued that wage growth lagged in part because employers were spending more on benefits like health care and pensions. But that hasn’t been the case in the past few years. A recently released study from the National Institute for Health Care Reform shows that in 2010, the percentage of Americans with insurance who got insurance from employers fell to 53.5 percent, down sharply from 63.6 percent in 2007. “At the top of the talent chain, employers are providing very generous health insurance, deferred compensation, and everything you can imagine,” notes Reich. “But as you go down the job ladder, particularly to people who are doing routine jobs, they’re getting less and less. There has been a substantial erosion of health care benefits for the bottom 90 percent.
As I surfed the various news sites this morning though, I did find a couple of articles pointing out that some groups are still seeing their salaries and benefits go up, so all is not lost.
In the “No CEOs Left Behind” category, we have this article from today’s (April 4) USA Today, “CEO pay soars while workers’ pay stalls”:
At a time most employees can barely remember their last substantial raise, median CEO pay jumped 27% in 2010 as the executives’ compensation started working its way back to prerecession levels, a USA TODAY analysis of data from GovernanceMetrics International found. Workers in private industry, meanwhile, saw their compensation grow just 2.1% in the 12 months ended December 2010, says the Bureau of Labor Statistics.
Two years of scaling back amid tough economic times proved temporary as three-quarters of CEOs got raises in 2010 — and, in many cases, the increases were substantial.
This blog post from Reuters written by a corporate board member points out a few of the problems with executive pay:
There are several factors at play as the remunerations committee and the board as a whole try to weave together pay packages.
Compensation consultants.
…snip… Personal feelings.
…snip… A disconnect from today’s reality.
…snip… A lack of direct accountability.
I especially like that third point. A disconnect from today’s reality indeed. And speaking of disconnects from today’s reality, we have this from Bloomberg today on rising Wall Street salaries for most:
Most Wall Street (S5FINL) employees got higher salaries in 2011, with the biggest bumps going to those at boutique banks and alternative asset managers, according to a survey by eFinancialCareers.com.
The online survey of 2,860 financial professionals found that 54 percent received salary increases — excluding bonus — and 40 percent reported no change from 2010, according to an e- mailed description of the survey’s findings. Workers at so- called bulge-bracket banks got an average increase of 3 percent, compared with a 14 percent gain for people at boutique banks and a 13 percent raise for those at fund managers.
When year-end bonuses were included, average pay last year fell for workers at companies including Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM)’s investment bank amid declining revenue. As year-end bonuses dropped, some banks raised base salaries that in past years contributed just a fraction of pay for senior employees.
But no matter what happens, we can be assured that Jamie Dimon will find something to whine about. Why just this morning, the Commodities Futures Trading Commission has fined JPMorgan the astronomical sum of $20M to settle charges related to the Lehman Brothers bankruptcy. TWENTY MILLION DOLLARS! (/Dr Evil voice) Why based on JPMorgan’s reported profit from 2011 of $19B, that’s a whopping .1%. By my rough math, that is less than a half day’s worth of profits.
Hank Paulson and Helicopter Ben Action Figures! (Photo: parapolitical, flickr)
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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.
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You might have seen some headlines from yesterday on the weekly report of Initial Unemployment claims about those claims “falling sharply” (Reuters headline phrase):
Applications for unemployment benefits fell by 37,000 to a seasonally adjusted 391,000 in the week ending September 24 from an upwardly revised 428,000 the prior week, the Labor Department said on Thursday.
My first prediction today is that the 391K figure first announced will be revised upwards when next week’s report comes out. My second prediction is whatever good news that can be wrung from this report will have a limited overall effect.
CNN’s report was a bit more circumspect with this:
The recent drop to 391,000 maked the lowest level since the week of April 2, when 385,000 new claims came in.
Still, economists cautioned against getting too excited about the better number. It’s just one week of data, and according to a government spokesman, seasonal adjustments could have impacted the calculation.
Sign reads: "War On Greed - starring Henry Kravis and his homes" Photo: Brave New Films, on flickr
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If you read me often enough, you have probably noticed that I tend to check various news and opinion sites throughout the TradMed each morning, after I’ve spent a few minutes reviewing emails and jobs sites. Most of the time, I just shake my head at the various levels of stupidity I find, not being able to quite give it the full YOU HAVE GOT TO BE F*CKING KIDDING ME! treatment so richly deserved. Then there are days like today where teh stoopid is so truly dumbfounding.
Today, we have Henry Kravis, co-founder of private equity firm KKR, sending up a fine whine to Bloomberg on how tighter credit rules are forcing the private equity firms to kick in more of their own money and making buy-outs more expensive. Sayeth Mr Kravis:
“As the debt markets tighten and the cost of capital goes up, something has got to give,” Kravis said yesterday at the Bloomberg Dealmakers Summit in New York. “You just have to pay more.”
Kravis, 67, said the cost of capital for a leveraged buyout has risen more than 2 percentage points since the firm agreed to buy Pfizer Inc.’s Capsugel unit in April, forcing buyers to put up more cash for deals and borrow less. Uncertainty in the equity markets also is making it more difficult to reap profits through initial public offerings or sales of companies owned by private-equity funds, he said.
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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.
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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. Read the rest of this entry →
"François, it's just good business" by dawpa2000 on Flickr
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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.
Buffeted by high taxes, strict regulations and uncertain state budgets, a growing number of California companies are seeking friendlier business environments outside of the Golden State.
…snip…
While not all companies investing elsewhere are doing so for economic reasons, some are shopping around for lower costs, lighter regulations, stable leadership and government assistance and incentives.
The most popular places to go? Texas, Arizona, Colorado, Nevada, Utah, Virginia and North Carolina, said Vranich. All rank in the Top 13 places to do business, according to Chief Executive.
And there it is. “Looser environmental regulations…” From the article:
WASHINGTON — Republicans in the House of Representatives are waging an all-out war to block federal regulations that protect the environment.
They loaded up a pending 2012 spending bill with terms that would eliminate a broad array of environmental protections, everything from stopping new plants and animals from being placed on the endangered species list to ending federal limits on water pollution in Florida,
The terms also include a rollback of pollution regulations for mountaintop mining and a red light on federal plans to prevent new uranium mining claims near the Grand Canyon.
Another Republican-sponsored bill that’s before Congress would weaken the nation’s 1972 Clean Water Act, taking away the Environmental Protection Agency’s authority to step in when it finds state water-pollution rules too loose.
It’s OK to poison the earth, air, and water but doG forbid anything should be done to stop businesses, right? Just today, the NY Times had this article on how a recently approved herbicide may be killing trees:
Manufactured by DuPont and conditionally approved for sale last October by the federal Environmental Protection Agency, Imprelis is used for killing broadleaf weeds like dandelion and clover and is sold to lawn care professionals only. Reports of dying trees started surfacing around Memorial Day, prompting an inquiry by DuPont scientists.
…snip…
In a June 17 letter to its landscape customers, Michael McDermott, a DuPont products official, seemed to put the onus for the tree deaths on workers applying Imprelis. He wrote that customers with affected trees might not have mixed the herbicide properly or might have combined it with other herbicides. DuPont officials have also suggested that the trees may come back, and have asked landscapers to leave them in the ground.
Mr. McDermott instructed customers in the letter not to apply the herbicide near Norway spruce or white pine, or places where the product might drift toward such trees or run off toward their roots.
…snip…
Imprelis is not approved for use in New York and California because both states have separate review procedures for such products. New York State officials say they have told DuPont that it has detected two problems: the herbicide does not bind with soil, and it leaches into groundwater. The state has told DuPont it will therefore not allow Imprelis to be sold unless the company provides evidence to the contrary.
Good for New York and California. And this leads me right to the point. With all the articles around the Toobz on “business friendly” there are a couple I’ve found, pointing out some of the fallacies of the phrase. Both Bloomberg with this opinion piece from last Friday and the Fiscal Times also from last Friday had pieces pointing out how the “Texas Economic Miracle” so often touted by Gov Goodhair isn’t so much of a miracle after all. From the Bloomberg piece:
It’s easy to be charmed by Texas, but it would be a mistake to think the state might serve as a national model. Texas created almost 250,000 jobs in the past two years, nearly as many as the other 49 states combined. Texas leaders, including Republican Governor Rick Perry, credit that success to low taxes and a business-friendly regulatory approach.
Yes and no. Those factors played a role. To a sizable degree, however, the state’s booming payrolls are the result of hard-to-duplicate factors, such as a fast-growing population, and unusually low wages.
Of course, the businesses surely do love the low wages aspect. But even in Texas, try living on minimum wage. And I have to be honest, there are many parts of the opinion piece conclusions (passing the so-called “Free Trade Agreements” and repatriating overseas profits at a much lower rate for example) that I find just as wrong as touting low wages as something that is good for people.
The Fiscal Times piece offers a different set of reasons for how maybe Texas isn’t quite the shining star:
There’s just one problem with that portrayal. While Texas has created more jobs than any other state in the past two years, the increase is far less than advertised, and the rate is not much higher than a number of other states, including former rustbelt centers like Pennsylvania or liberal sanctuaries like Vermont. In fact, the Lone Star State’s unemployment rate of 8 percent is ranked 24th among states, placing it squarely in the middle of the pack.
Moreover, to the extent Texas has done better than other areas of the country, most of its good fortune rests on conditions that are not replicable elsewhere: soaring oil prices have provided a substantial number of new jobs and tax revenue even as higher gas prices put pressure on other state budgets, and an influx of new government defense spending has pumped up revenue. Moreover, the state has used oil revenue to postpone a sharp cutback in state and local government employment, which is about to hit in full force.
In addition, Texas eluded the housing price bubble and thus did not suffer as much from price declines and foreclosures. After the savings and loan crisis of the early 1990s, which hit Texas hard, the state legislature tightened mortgage regulations. Even though Perry touts a free market economy, the new mortgage rules saved Texas from the worst effects of the national housing bust, even as construction employment fell by 95,000 and remains 14% below its pre-recession peak.
Why imagine that! Those dastardly, no good, very bad regulations that seem to be the root of all evil for businesses actually protected people in Texas from the very worst parts of the Great Recession.
Too bad the Beltway Village Idiots Politicians, Pundits, and Courtiers can’t see how eviscerating environmental regulations, banking regulations and such will not protect them from the effects of un-breathable air, poisoned ground and water or destroyed financial markets. I think it may just be a matter of finding which Dystopian or Apocalyptic fiction winds up being closest to the eventual reality of life on earth. Any predictions?
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