If you follow the news at all, you heard a lot yesterday regarding the shooting at Fort Hood. As more information becomes available, I may or may not write about it here. This grizzly news did hide some economic news: The U.S. is not over 10% unemployment. This is the first time it has crossed 10% since 1983. A Fox News article this morning had two other cautionary statements:
Counting those who have settled for part-time jobs or stopped looking for work, the unemployment rate would be 17.5 percent, the highest on records dating from 1994.
And...
Economists say it could climb as high as 10.5 percent next year because employers remain reluctant to hire.
In the middle of all this is talk of a possible Stimulus Part II. Looking at how much we spent to still have over 10% unemployment, I'm not sure a Stimulus Part II is any thing other than throwing money that our government, and our taxpayers, and our grandchildren, don't have.
6 comments:
Unemployment won't lower until we
a) go back to being a producing nation, and not a consuming nation
and
b) stop having wall street stock prices being the measure of success/failure with companies.
Real job growth won't happen until we improve our gross receipts for exports and stop over consuming (or insert leveraging) on a macro level (read: we the people). And likewise, we bring back jobs from offshore.
Do people really wonder why there is a lack of jobs in this country? Did no one pay attention to the fact that fortune 500 + companies started moving mid-level career positions overseas due to cheaper labor costs 5-10 years ago? All so that they could cut costs, and show it as profit.
We haven't lived in an inflated housing market for the past 5-7 years, we've lived in an inflated economy.
Fox news reporting on the 17.5% number is nothing earth shattering either. It's been talked about in the financial world for at least a couple years now. Unemployment numbers only take into account those that are actually receiving government assistance, which generally speaking, is normally about 50/50. Hence a big reason why my world has tightened up (lending world).
There are much larger forces at work here and I'm afraid any improvements we see in unemployment will be short-term, small gains (IE not actually career type jobs).
Normal people (meaning people who don't see economic data on a daily basis) just don't either want to look, or know where to look, below the surface.
Neither of these reports are earth-shattering.
The biggest thing is that the Stimulus Package did not protect unemployment. The President's team threatened the American public with an 8 to 9% unemployment if the stimulus wasn't passed. It was passed, and the unemployment rate has gotten worse than that.
Here are some numbers for you taken straight off of the Bureau of Labor and statistics. Granted, you can find either good or bad news in this data, depending on how you want to slant it. However, the numbers themselves can't be disputed. (I hope this formats ok)
Nonfarm payroll:
190k in October
188k job loss average over the past 3 months. (aug/sept/oct)
357k job loss average over the prior 3 months (may/june/july)
645k per month average from Nov 08 to April 09
Since Dec 07, payroll employment has dropped by 7.3 mil
Construction Employment:
62k loss in Oct
117k avg decline over the previous 6 months.
Since Dec 07, 1.6 mil decline
So, you can either say a) we are still losing jobs or b) we are losing jobs, but at a much slower pace than 6months ago, and 1 year ago, depending on how you want to present it.
However, the real question is what is influencing these changes? Are we consuming more goods? Disputable. Are we manufacturing more goods? No. Is consumer confidence up? No.
So, there is a logical argument that can be made that would show a correlation between infusing capital directly into the market, and the slower pace of job loss.
I'm not going to make it, because it would take me more time than I want to spend on it to really spell it all out. And plus, I would probably bore the heck out of most people. (I find a perverse sense of happiness in staring at numbers all day, and I know I am in the minority on this).
Finally, the other question we all should be asking ourselves, no matter what our political beliefs are, is this: What is our own expectations for the economy and are they realistic?
Anyone who argues that the stimulus has done nothing at all for this country in the past 6-9 months probably should re-evaluate what their own personal timeline is. And likewise, anyone who argues that the stimulus is the savior of our economic situation should also re-evaluate.
The bottom line is that our economic model is the most complex economic model in history. There are so many internal and outside factors that effect out GDP, amongst other things, it's makes a rubix cube look easy by comparison. Which means that no matter what we do, nothing is going to change overnight.
Job growth isn't just manufactured and created over night. It could take years for us to see 5% unemployment again. However, at this point, the signs are begining to show that by infusing capital into the largest entities in our country, we might just have averted an even worse crisis than we already have. Think of the flip side. What would have happened if we had let the largest banks in this country fail, the largest insurer in the world, fail and the automakers fail? How many millions of people would just those sectors have touched in terms of job loss. You're not just talking about those companies, you're talking about entire micro-economic subsets of each industry affected by their failures. Surely everyone understands that if GMAC or Ford, or Chrysler-Daimler, or AIG, or (insert any large banking institution here) fail, that that failure affects every business that supports it. I mean come on fans of Reganomics, that was his model.
Now I'm rambling.
Dave,
You have a number of good points in that comment. I want to focus in on one point because I believe I am going to develop this into a post later:
Anyone who argues that the stimulus has done nothing at all for this country in the past 6-9 months probably should re-evaluate what their own personal timeline is. And likewise, anyone who argues that the stimulus is the savior of our economic situation should also re-evaluate.
I guess to be accurate I would say that the stimulus plan has had a negligible affect on the economy. First, very little of the plan was geared towards creating jobs in 2009. I say this not based on what the politicians were saying, but based on the actual targets of the bill.
Second, we were told if we didn't pass the bill right now, we would see 8 to 9% unemployment. We have already passed that.
Based on these two points, I would say the stimulus plan was a failure, and one with a big price tag.
That's fair, the negligible opinion.
I would assert that your timeline of creating jobs in 2009 in completely, and utterly, unrealistic. I would sat that '11-'12 is probably a realistic time frame to shoot for to start seeing some growth in the job sector.
Dave, it isn't my time line, it was the President's. He told us that unemployment would exceed 8% if we didn't pass the Stimulus plan. I'm simply trying to hold him accountable to his own claims.
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