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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

Economists Who Are Always ‘Surprised’ Should Re-Think Their Models and Assumptions

10:30 am in Uncategorized by dakine01

"RETHINK" by depone on flickr

"RETHINK" by depone on flickr

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Today’s report of Initial Unemployment Claims from last week is out and once again, the economists are “surprised” at the figures reported (via Reuters):

The number of Americans filing new claims for state unemployment aid rose unexpectedly to 428,000 in the week ended September 10 from a revised 417,000 in the prior week, the Labor Department said.

It was the second straight weekly increase and took initial claims to their highest level since the week ended June 25. Wall Street analysts expected a modest dip in new claims.

Once again, that is an upwards revision from the previously reported figure. I’m feeling a tad too lazy to go back through all my blog posts to find the last week when there wasn’t an upwards revision from the previous week’s report but I know that it has been months since there has been anything but upward revisions. At best there might have been a week when the numbers reported were not revised at all a couple of months ago but that’s it.

Realistically, I have to admit that the continual ‘surprise’ by the economists is just a continuation of the overall cluelessness shown by the financial elites as evidenced by this yesterday from the World Bank head (also via Reuters): Read the rest of this entry →

Keep the Expectations Low – While Expecting to Be Disappointed

12:08 pm in Uncategorized by dakine01

"Low Expectations" by Emm Enn on flickr

"Low Expectations" by Emm Enn on flickr

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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. Read the rest of this entry →

Once a Year Speeches Do Not Mean Support for Workers

10:46 am in Uncategorized by dakine01

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Today is Monday, September 5, 2011. Since it is the first Monday of September, it is the national holiday known as Labor Day. Supposedly, it is the day when our politicians and pundits proclaim their unrelenting love for all things worker related – even as they spend the other 364 days a year doing all in their power to destroy the lives of workers by cutting salaries, limiting benefits. Just today, the Washington Post’s Robert Samuelson had a column decrying the state of labor in the US:

On this Labor Day, there is little good news about labor. We have entered a long period of crushing unemployment and downward pressure on wages that may well transform the nation’s economic and political landscape. There was no job growth in August, and the overall numbers are stupefying: 14 million unemployed; nearly 9 million part-time workers wanting full-time jobs; 6.5 million who want jobs but have given up looking and are, therefore, not counted in the official labor force. People are only gradually recognizing the magnitude of the problem.

…snip…

It’s not only the jobless who will be affected. No one has yet repealed the law of supply and demand. At last count, there were 4.5 unemployed workers for every job opening. Bargaining power has shifted from labor to capital. Sure, some workers will get promotions and seniority raises. Otherwise, gains will be slim. Since September 2008, annual wage and salary increases have averaged 1.6 percent, the slowest pace in 30 years, reports EPI’s Lawrence Mishel.

…snip…

Still, the harshest effects of joblessness fall on the jobless. “We’re creating a bifurcated society,” worries Harvard economist Lawrence Katz. “We’re talking about a lost generation of younger workers and displaced workers.” Younger workers have a harder time starting careers. Because many skills are developed on the job, long unemployment spells can lower lifetime earnings. The same is true of older workers. Even when those who lose stable jobs get new work, they often suffer a 20 percent earnings loss for 15 years or more, reports economist Till von Wachter of Columbia University.

I find it somewhat interesting that Samuelson felt the need to write his column given how many times over the years he has extolled the death of unions, called for cuts to Social Security and Medicare, and called for leaving the minimum wage age at $5.15 per hour. As I noted here, trying to do much more than survive on minimum wage for one person is not really possible and that’s when it is at today’s $7.25 an hour.

Some folks in Wisconsin and Pennsylvania did actually tell anti-worker/anti-union politicians that they were not welcome at some local Labor Day parades and celebrations (although the folks in Wisconsin may have backed down from their initial non-invitation – I hope the folks in Wausau do have plenty of rotten tomatoes available for their oh so poor US Representative who cant make ends meet on $174K per year.)

Now I realize that to some folks there is no equating the attack on Unions as an attack on individual workers. Yet all those benefits that are available to individual workers are there precisely because of the unions. Whether it is the eight hour day/forty hour work week or paid sick time or worker safety, it is the action of unions that led to these worker benefits available to all. While recognizing that “correlation does not equal causation,” the flatness of wages in the US since the ’70s has at least been a companion to the attacks on unions. CEO and senior executive salaries have exploded while the wages for workers have gone down.

On this Labor Day 2011, we have millions of long term un and underemployed. In an economy that has to create roughly 90K jobs per month to stay even, August 2011 had zero jobs in total. Businesses are profitable so the economy appears to be growing even as the underside of the economy gets larger. Self-employed individuals are not counted among the unemployed nor are new graduates. State and local governments are cutting jobs while those folks with jobs worry that their jobs will be gone tomorrow.

This Thursday evening, President Obama is scheduled to give a speech to Congress on jobs. Yet for all the vaunted interest in creating jobs that has supposedly captured the attention of the Beltway Village Idiots Politicians, Pundits, and Courtiers (finally), all the proposals likely to receive attention are warmed over re-hashes of previously failed policies. Massive tax cuts in place since 2001 have not created jobs so why would further tax cuts create jobs? Regulations and taxes do not stifle small businesses yet we continue to hear how all regulations must be done away with in order for small businesses to thrive.

Short sighted actions by politicians and global businesses will eventually be their downfall (and ours). It would almost be fun to watch it happen if it weren’t causing so much pain and suffering for all the world.

And because I can:

Cross posted from Just A Small Town Country Boy

If Beltway Pols Were 1st Responders, No Foundations Would Be Saved

10:59 am in Uncategorized by dakine01

foundation - frame

foundation - frame. Photo by ClintJCL

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So here we are, coming to the end of another month with limited economic growth. Friday (August 26), the Commerce Department downgraded the second quarter US Gross Domestic Product (GDP) from 1.3% as initially reported to 1%. Via Reuters:

The rate of growth between April and June was cut from the government’s first reading of 1.3 percent and followed a lethargic 0.4 percent pace in the first three months of 2011. 

This means the economy grew only 0.7 percent in the first half of the year. Nonetheless, and despite a sharp fall in consumer confidence this month, economists do not believe the economy will fall back into recession.

Note for those with short memories – the first quarter GDP was initially reported at 1.8%, upped to 1.9% with some fanfare before being downgraded to .4%. That seems to be a bit of a trend these past few weeks and months where the various economic indicators get revised in a negative direction (negative that is in relation to what would be good news). For example, when the Initial Unemployment Claims for last week came out on Thursday, the previous week’s claims were revised upwards (via CNN):

The number of first-time filers for unemployment benefits rose to 417,000 in the week ending Aug. 20, the Labor Department said Thursday. That’s up 5,000 from a revised 412,000 the prior week. 

The original report for the previous week was at 408K so the upwards revision was 4K. Since the business reporters like to latch onto a factoid or two to try to explain things, they’ve all seemingly latched onto the point that some striking Verizon workers had filed claims. But the number provided was 8.5K which means even without the Verizon worker claims (which will most likely be denied as strikers are rarely allowed to collect unemployment), it would still have the initial claims at 408.5K. From the previously linked CNN article:

In most states, workers on strike are not eligible for unemployment benefits. And the weekly initial claims number merely reflects applications for the benefits — not all of which will be approved and paid out. 

Today (Sunday, August 28), Bloomberg has an article on their survey of economists for the August jobs and economic numbers. Read the rest of this entry →

Trickle Down Exists, Just Not as Commonly Supposed

11:04 am in Uncategorized by dakine01

Trickle Down Economy

"Trickle Down Economy Bin" by LauraFries.com on flickr

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Trickle down economics is the phrase that has often been supplied to describe whatever current flavor of economics theory being propounded that says cutting taxes for the well-to-do is the quickest path to an economic nirvana. Supply-side is just one of the variants of this from over the years.

While what I just described is the most commonly used version of “trickle-down,” we are now seeing examples of true trickle-down, i.e., the trickle-down of pain through the economy from all the various budget cuts at all levels of government. The past two days the Tampa Tribune has had articles showing the affects of cuts. First up is this one from yesterday on cuts for caregivers of the disabled:

The state Agency for Persons with Disabilities needs to slash about $90 million in services this year to meet its budget. The cuts not only affect contract workers like Davison, but employees in group homes who coordinate training programs, community outings and other activities for the disabled. 

About 33,000 people in Florida with developmental disabilities like Cherta go through the agency to find companions who will not only care for them but also find ways to make them a part of their communities.

The agency serves about 50,000 people with autism, cerebral palsy, spina bifida and intellectual disabilities.

Today was this article on cuts to child services providers in Hillsborough County (Tampa): Read the rest of this entry →

So where exactly is that good economic news?

11:22 am in Uncategorized by dakine01

"Good News and Bad News"

"Good News and Bad News" by Mike Licht, NotionsCapital.com on flickr

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Well, here we go again. As usual, the past couple of weeks there have been a few articles on how the economy really isn’t THAT bad. In fact, that was a large part of the title of this article from McClatchy while USA Today offered up this from a Maria Bartiromo interview with the head of AIG, Robert Benosche (with a McCainesque “There’s a core of strength to the economy”). However once again, the reality on the ground rears up to refute the cheerleaders. Today’s (Thursday, August 18) Initial Unemployment Claims report for last week is out and the numbers are back over the dreaded 400k line once again (via Reuters):

Initial claims for state unemployment benefits increased 9,000 to a seasonally adjusted 408,000, the Labor Department said.

Economists polled by Reuters had forecast claims rising to 400,000. The prior week’s figure was revised up to 399,000 from the previously reported 395,000.

Given that the trend the last few weeks has been for an upwards revision of the previous week’s numbers, I am not at all surprised at the upward revision from 395K initially reported to the 399K (although since I did not write a post on last week’s report, I can’t claim to have officially predicted the revision.)

Last Thursday, CNN had this article showing the lost jobs holes each state has to crawl out of to regain their pre-recession jobs numbers, especially when the new job seekers and residents for each state are factored in. Meanwhile, we got to ‘enjoy’ President Obama’s photo op Midwest bus tour this week (not to be confused with Cincinnati’s own Midwestern Hayride). Even though the lack of jobs has been an economic crisis for months years now, the elected officials, when they see fit to do something seem most intent on doing the wrong things. Marcy Wheeler has taken a few whacks at the stupidity of “free trade,” deficit reduction clueslessness, and the White House propensity for rhetoric over accomplishment, but I have to chime in with a big WTF over this NY Times article from this past Sunday: Read the rest of this entry →

Grasping at Straws on the Economy

11:21 am in Uncategorized by dakine01

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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.

…snip…

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

“So be it”

9:56 am in Uncategorized by dakine01

"crisis management"

"crisis management" by howard.hall on flickr

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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.

Hoocoudanode, right? Read the rest of this entry →

The (Official) Double Dip Moves Closer

10:43 am in Uncategorized by dakine01

"just take one dip and end it"

"just take one dip and end it" by peyri on flickr

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Back about six weeks ago, I predicted that the economy was headed for an official “double-dip” recession. Today’s Commerce Department report on the economy showed the second quarter of 2011 GDP growth at 1.3% but also reported a downward revision to the 1st quarter GDP from 1.9% to .4%. This is after the original 1st quarter numbers had been revised upwards slightly from 1.8% back in June.

The economy grew at a 1.3 percent annual pace in the second quarter after expanding just 0.4 percent in the first three months of the year. First-quarter growth was revised from the previously reported 1.9 percent increase. 

While the recovery stepped-up in the second quarter, economists had expected a stronger 1.9 percent reading.

Fourth-quarter [2010] growth was revised to a 2.3 percent rate from 3.1 percent.

Now, I have been using the phrase “officially a double-dip” because for the millions of people among the long term un and underemployed, we’ve never left the Great Recession/Lesser Depression. It has been all one long scene of watching our unemployment run out, our savings and retirement plans get cashed in and spent while trying to survive and keep a roof over our heads. And this is not just limited to those folks covered by the official un and underemployment lists but includes the new college graduates from the last few years trying to find employment in their fields. It also includes the folks who gave up and filed for Social Security if they were eligible, just to have some money coming in. It includes all the folks who are now considered “independent contractors” or “self-employed.” Read the rest of this entry →