Despite the rash of "excellent" economic news suggesting that the weak recovery is gaining steam, the underlying fundamentals continue to spell trouble. As we've repeatedly pointed out, the jobs picture is MUCH weaker than the administration would like us to believe.
Robert Reich, former Secretary of Labor under the Clinton adminstration, and no friend of Republicans, has weighed in with his own "take" on the employment situation.
According to an editorial in the Wall Street Journal, Reich wrote "Since the start of the Great Recession in December 2007, the economy has shed 8.4 million jobs and failed to create another 2.7 million required by an ever-larger pool of potential workers. That leaves us more than 11 million jobs behind. (The number is worse if you include everyone working part-time who'd rather it be full-time, those working full-time at fewer hours, and people who are overqualified for the jobs they're in.) This means even if we enjoy a vigorous recovery that produces, say, 300,000 net new jobs a month, we could be looking at five to eight years before catching up to where we were before the recession began."
Reich points out that consumer demand is insufficient to facilitate a decent recovery, especially in light of the fact that the stimulus bill has now passed its peak. Even with consumer demand on the upswing, it has a long way to go to reach pre-depression levels.
Since many, if not most, households rely on two wage earners, the unemployment and under-employment situation is affecting virtually every family. Compounding that is the wealth effect of substantially lower home values and investments.
Consumers' debt burden is still very heavy, despite the fact that the wave of personal bankruptcies and defaults have reduced debt levels. According to Reich "At the end of last year, debt averaged $43,874 per American, or about 122% of annual disposable income. Most analysts believe a sustainable debt load is around 100% of disposable income, assuming a normal level of employment and normal access to credit — neither of which we are likely to have for some time."
Dr. Williams of ShadowStats (http://www.shadowstats.com/) confirms Reich's views in his latest piece. Williams notes that real consumer credit in the first-quarter is down at a seasonally-adjusted annualized pace of 3.0% from the fourth-quarter. Williams also concludes that the sluggishness in consumer income, combined with contracting debt are not indicative of a sustainable economic recovery.
On the corporate side, both Commercial Paper outstanding as well as Commercial and Industrial Loans are in virtual free fall. As a result, money supply aggregates, such as real M-3, is now down a mind-numbing 6% year-over-year. This level of contraction is indicative of imminent and severe economic weakness.
So, while the Obama Administration runs around trumpeting their "success" in turning the economy around, the foundation for economic strength is simply non-existent.
Marko's Take
Our new YouTube video on the Legality of The Personal Income Tax is now posted. You can access it here (http://www.youtube.com/watch?v=1TInKnCIikg&feature=youtube_gdata).
Showing posts with label Jobless Recovery. Show all posts
Showing posts with label Jobless Recovery. Show all posts
Tuesday, April 13, 2010
Wednesday, March 31, 2010
Yes, Virginia, There Is A Jobless Recovery
Every time economic statistics are released by an entity, other than the Bureau of Labor Statistics (BLS), we get a much better read on what's really going on. Private company Automatic Data Processing (ADP), a firm which handles payroll accounting for employers, released its employment report this morning and the results were dramatically at odds with the hype emanating from the White House.
Non-farm private employment decreased 23,000 from February to March on a seasonally-adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.
The March employment decline was the smallest since employment began falling in February of 2008. The lack of increase in employment from February to March is consistent with the pause in the decline of initial unemployment claims that occurred during the winter. I'm sure this is all the weather's fault (sarcasm intentional)!
The ADP survey covers only private-sector jobs, while the numbers produced by the BLS on non-farm employment, to be released Friday, includes government workers. The addition of workers for the 2010 census is expected to lift federal government payrolls. This makes any rise in employment suspicious, temporary and subject to substantial downward revision in the coming months after the census is completed.
The ADP number is very disappointing given the expectations of a 50,000 gain projected by economists in a Dow Jones Newswires survey. The change in employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a drop of 24,000.
Economists surveyed by Dow Jones expect the BLS will report that March payrolls jumped by 200,000 jobs, following a drop of 36,000 in February, when blizzards along the east coast cut into business hours and kept workers snowed in. Should this report disappoint, at least we'll know the weather was at fault (sarcasm intentional)!
Other economic data, released this morning, was a bit more positive, however.
Demand for manufactured goods rose by 0.6% in February, to a seasonally-adjusted $383.53 billion, the Commerce Department said. The increase is the 10th in the past 11 months. Orders in January rose 2.5%, revised up from a previously reported 1.7% increase.
U.S. consumer confidence rebounded in March from a sharp February drop. The Conference Board, a private research group, said this week that its index of consumer confidence increased to 52.5 in March, from 46.4 in February.
However, the index remains below its readings of December and January, as Americans remained concerned about jobs and, presumably, the weather!
Job losses since the beginning of the downturn in late 2007 have reached 8.4 million.
Regardless of the Friday BLS report, the more reliable private data continues to show that the "recovery" is a complete phantom. Given that the massive stimulus of the Federal Reserve's "quantitative easing" is now ceasing with the end of the first quarter, one can only wonder how bad the economy will get once the heroine needle of monetary juicing is removed or even curtailed.
Marko's Take
Some of our favorite sites: http://www.youtube.com/markostaketv, http://www.lemetropolecafe.com/, http://clivemaund.com/ and http://www.stockmavrick.com/.
Non-farm private employment decreased 23,000 from February to March on a seasonally-adjusted basis, according to the ADP National Employment Report®. The estimated change of employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a decline of 24,000.
The March employment decline was the smallest since employment began falling in February of 2008. The lack of increase in employment from February to March is consistent with the pause in the decline of initial unemployment claims that occurred during the winter. I'm sure this is all the weather's fault (sarcasm intentional)!
The ADP survey covers only private-sector jobs, while the numbers produced by the BLS on non-farm employment, to be released Friday, includes government workers. The addition of workers for the 2010 census is expected to lift federal government payrolls. This makes any rise in employment suspicious, temporary and subject to substantial downward revision in the coming months after the census is completed.
The ADP number is very disappointing given the expectations of a 50,000 gain projected by economists in a Dow Jones Newswires survey. The change in employment from January 2010 to February 2010 was revised down slightly, from a decline of 20,000 to a drop of 24,000.
Economists surveyed by Dow Jones expect the BLS will report that March payrolls jumped by 200,000 jobs, following a drop of 36,000 in February, when blizzards along the east coast cut into business hours and kept workers snowed in. Should this report disappoint, at least we'll know the weather was at fault (sarcasm intentional)!
Other economic data, released this morning, was a bit more positive, however.
Demand for manufactured goods rose by 0.6% in February, to a seasonally-adjusted $383.53 billion, the Commerce Department said. The increase is the 10th in the past 11 months. Orders in January rose 2.5%, revised up from a previously reported 1.7% increase.
U.S. consumer confidence rebounded in March from a sharp February drop. The Conference Board, a private research group, said this week that its index of consumer confidence increased to 52.5 in March, from 46.4 in February.
However, the index remains below its readings of December and January, as Americans remained concerned about jobs and, presumably, the weather!
Job losses since the beginning of the downturn in late 2007 have reached 8.4 million.
Regardless of the Friday BLS report, the more reliable private data continues to show that the "recovery" is a complete phantom. Given that the massive stimulus of the Federal Reserve's "quantitative easing" is now ceasing with the end of the first quarter, one can only wonder how bad the economy will get once the heroine needle of monetary juicing is removed or even curtailed.
Marko's Take
Some of our favorite sites: http://www.youtube.com/markostaketv, http://www.lemetropolecafe.com/, http://clivemaund.com/ and http://www.stockmavrick.com/.
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