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

12:30 pm in Uncategorized by dakine01

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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.

Economist Magazine offered this analysis of Growth and jobs across the country on September 15. Their close:

Two things seem clear, however. Across the country, a greater level of demand growth is necessary to boost employment. And at the same time, there are places within the country experiencing strong growth which aren’t producing the jobs we’d expect them to. If America could find ways to make San Jose just a little more like Dallas, that might make a meaningful dent in America’s employment problems.

MSNBC offered this article with a touch of good news involved, i.e., that there is some hiring going on, although not to a level necessary to reduce the official un and underemployment rates. One point to note from that MSNBC link – all the reasons offered for the slow hiring have to do with demand levels and not the skills of the workers.

Today’s (Tuesday, September 27) NY Times had this article analyzing some BLS figures on how the economic map is being redrawn due to the lingering economic ill-effects:

When the unemployment rate rose in most states last month, it underscored the extent to which the deep recession, the anemic recovery and the lingering crisis of joblessness are beginning to reshape the nation’s economic map.

The once-booming South, which entered the recession with the lowest unemployment rate in the nation, is now struggling with some of the highest rates, recent data from the Bureau of Labor Statistics show.

Several Southern states — including South Carolina, whose 11.1 percent unemployment rate is the fourth highest in the nation — have higher unemployment rates than they did a year ago. Unemployment in the South is now higher than it is in the Northeast and the Midwest, which include Rust Belt states that were struggling even before the recession.

…snip…

The long cycle of “lose jobs, gain jobs, lose jobs” that kept Georgia’s unemployment rate at 10.2 percent in August — the same as it was a year earlier — is illustrated by Union City, a small city on the outskirts of Atlanta.

It suffered a blow when the last store in its darkened mall, Sears, announced that it would soon close. But the city had other irons in the fire: a few big companies were hiring, and earlier this year Dendreon, a biotech company that makes a cancer drug, opened a plant there, lured in part by state and local subsidies.

Then, this month, Dendreon said it would lay off more than 100 workers at the new plant as part of a national “restructuring.”

…snip…

In a sign of how severe the downturn has been, the Brookings analysis found that only 16 of the nation’s 100 largest metropolitan areas have regained more than half of the jobs they lost during the recession.

So here we are. After all the years of hearing about the Rust Belt failing everyone and how the South was the leader in everything, well, maybe not so much. Businesses will accept all the subsidies and tax breaks in the world, but they will cut and run at the slightest sign of problems. Of course, I’m from a small town in Kentucky that bragged over the years about bringing in jobs from the Rust Belt (make sure you use plenty of Post-It Notes to keep the folks in my hometown working). I would almost suggest the governors of Georgia and South Carolina might want to contact their rust belt counterparts for some advice except that most of the governors involved seem to be intent on learning the wrong lessons.

And because I can:

Cross posted from Just A Small Town Country Boy by Richard Taylor

Officially, It Will Be a Double-Dip

9:21 am in Uncategorized by dakine01

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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.

The reality is, the corporations have been holding those record levels of cash for over a year now (via WSJ). They have used the money to buy back stocks or to invest in equipment (NY Times). Another reality is there are always “one-time events.” This year it is earthquakes/tsunamis/nuclear melt-downs in Japan and tornadoes in Alabama and Missouri combined with floods along the Mississippi and Missouri Rivers and wildfires in Texas and Arizona. This past winter, it was record blizzards. Later this summer it will be hurricanes in some areas and droughts in others. All “one-time events.”

BlackRock Investment Management CEO Laurence Fink is predicting that the US economy will lag the global economy for the next five to ten years. CNN says it will be because of household debt. My guess is that it won’t be helped by the Japanese economy contracting 3.5% in the first quarter, Australia adding fewer jobs than predicted (economists surprised!), Spain making unilateral moves (via NY Times) that go against the wishes of businesses and labor that no one thinks will work.

Nouriel Roubini is predicting that the Chinese economy will have a “hard landing” in 2013. (Side note: I had to laugh at Roubini’s wiki page):

In 2008, Fortune magazine wrote, “In 2005 Roubini said home prices were riding a speculative wave that would soon sink the economy. Back then the professor was called a Cassandra. Now he’s a sage”.[1]

I find it interesting that if you check the link at the footnote on the Roubini wiki page and scroll through the “8 who saw the financial crisis coming and the 8 who didn’t,” the “8 who didn’t…” are the ones still being quoted all the time. So much for Roubini becoming a “sage” instead of a Cassandra.

As always, we are not helped when we see Dana Milbank proclaiming that Austan Goolsbee leaving means President Obama is losing a “voice of reason.” That is the same Goolsbee who just last week was bragging about 1M private sector jobs having been created while ignoring the hundreds of thousands of public sector jobs lost.

Nor are we helped when the President goes on his weekly radio address and announces (via AFP):

“Now, government is not — and should not be — the main engine of job-creation in this country. That’s the role of the private sector, ” the president said in his weekly radio and Internet address.

“But one thing government can do is partner with the private sector to make sure that every worker has the necessary skills for the jobs they?re applying for,” Obama added.

As I noted in this post from Thursday, Dean Baker has already written the rebuttal to the “necessary skills” argument.

Reuters noted in their article on the weekly address that:

President Barack Obama, seeking to ease voters’ concerns about his handling of the U.S. economy, said on Saturday a meeting with his jobs council next week would focus on possible further steps to boost hiring in the short term.

That would be the “Jobs Council” of Outsourcers and Masters of the Universe.

Just think, now Reuters has a headline that starting tomorrow (Monday June 13), they will offer a column from Larry Summers on the “jobs crisis.”

I keep wondering how The Onion manages to write their stuff with all the competition from reality.

And because I can:

Cross posted from Just A Small Town Country Boy