Dale Franks’ QandO posts
I see that Megan McCardle thinks the unemployment numbers released today are enough to make her make her “cautiously optimistic” about the jobs picture. I’ll meet her halfway. I see room for caution, but not yet for optimism.
Ms. McArdle writes:
It’s very solidly good news: the labor force participation rate was basically unchanged, which means we’re seeing an actual decline in the unemployment rate, not a spike in the number of people leaving the labor force because they can’t find a job.
My reading of the numbers is precisely the opposite. It appears to me that teenagers, high school dropouts, and those with only a high school diploma, all of whom have high unemployment rates, did, in fact, drop out of the labor force, which led to the decrease in the employment rate.
I also think the numbers are skewed by the seasonal adjustments. The BLS adjusts the figures for seasonal changes, with extra weighting given to more recent years. Last November, the Lehman collapse led to the loss of 610,000 jobs–the largest ever recorded by the BLS–so I suspect the weighting for seasonal factors is skewed to the point where the jobs situation may look better than it actually is.
We do see an increase in hours worked of 0.6 hours, but that doesn’t really create new jobs, it just provides more hours for current part-timers.
However, temporary employment rose significantly for the 4th straight month, and it appears that the mass layoffs have petered out.
So, as far as I can tell, there may have been a bottom, but there are still some anomalies that need to be explained before I jump into the optimist camp.
And, of course, none of this even touches on the 800-pound gorilla in the room, which is monetary policy. The Fed’s policy of quantitative easing, i.e. massive increases in the money supply, still present us with hundreds of billions of dollars in low-velocity money floating around, all of which will have to be absorbed through higher interest rates, or through significant inflation. The possibility still remains that necessary credit tightening will strangle any nascent recovery over the next 12-18 months, and send the economy on a another downward leg.
Usually, the kind of story that’s roiling around Tiger Woods right now is not the kind of thing we comment on. But it is instructive in some ways.
This is Tiger Woods’ wife.
The lesson is this: As hard as it may be to believe, there is one unchangeable truth about relationships. No matter how hot the girl is, no matter who she is…there’s a guy out there who’s tired of her sh*t.
So, the CBO today, in surveying the success of the American Recovery and Re-investment Act (ARRA,. or as we call it, “the stimulus”, makes the following claim:
Economic output and employment in the spring and summer of 2009 were lower than CBO had projected at the beginning of the year. But in CBO’s judgment, that outcome reflects greater-than-projected weakness in the underlying economy rather than lower-than-expected effects of the ARRA.
It’s kind of hard to argue with that kind of “judgment”. Your “judgment” may vary, of course.
Not that it matters, because neither you, nor the CBO, have the math to back it up.
Since the Great Depression, the peak unemployment rate was 10.8% in November, 1982. We will, in all likelihood, set a significantly higher record for the unemployment rate in the next 12 months. Here are 12 reasons why the unemployment rate will reach at least 12%.
I would also remind you that if we currently reported the unemployment rate as they did in the 1930’s, our current rate of unemployment would be around 17.2% In any event, here are just two of the most compelling reasons why the job picture is going to remain very cloudy:
For the first time in at least six decades, private sector employment is negative on a 10-year basis (first turned negative in August). Hence, the changes are not merely cyclical or short-term in nature. Many of the jobs created between the 2001 and 2008 recessions were related either directly or indirectly to the parabolic extension of credit…
But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first? Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began…So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over — perhaps even years.
There are other compelling reasons at the link, but the two above are enough to ensure that the unemployment rate will remain high for quite some time.
So, the deal was supposed to work like this: The government takes over Chrysler, then sells a big chunk of it to Fiat. In return, Chrysler would give us all these cool, American-made electric cars that would turn the planet sparkly, and make the unicorns smile.
If you’re tooling around in a Chrysler electric vehicle in a few years, you’ll still be driving an American car.
While some other companies are looking to foreign battery suppliers, Chrysler said Monday that it’s going to stay all-American. It announced it is choosing A123 Systems, a Massachusetts company, as its battery supplier. A123 will make the battery packs for Chrysler’s wave of electric vehicles at a new plant in Michigan. The first will hit the streets in 2010, says Lou Rhodes, vice president of advanced vehicle engineering for Chrysler. With Monday’s announcement, Chrysler is “that much closer” to getting its vehicle on the road.
Of course, the news that it could generate more American jobs could play well in Washington, D.C., where Chrysler is under the gun from the Obama administration to close its deal with Italy’s Fiat and take other drastic steps if it wants up to $6 billion in additional government loans.
How’s that working out for us?
Chrysler has disbanded the engineering team that was trying to bring three electric models to market as a rush job, Automotive News reports today. Chrysler cited its devotion to electric vehicles as one of the key reasons why the Obama administration and Congress needed to give it $12.5 billion in bailout money, the News points out.
The change of heart on electric vehicles has come under Fiat. At a marathon presentation of Chrysler’s five-year strategy, CEO Sergio Marchionne talked about just about everything on Chrysler’s plate last week except its earlier electric-car plans. With the group’s disbanding, Chrysler’s electric plans will be melded into Fiat’s. Marchionne is apparently no fan of electric power:
He says electrics will only make up 1% or 2% of Fiat sales by 2014 and that he doesn’t put a lot of faith in the technology until battery developments are pushed forward.
Now, the unicorns are crying. And considering the money we shelled out, we should be, too.
Coming in at 1,992 pages, I’m sure there’s something in there that appeals to everyone. But if I had to pick any part of the bill to single out for special mention, it’s this:
Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.
Now, it’s a bit more complicated than that, because it requires that you wilfully evade the tax by refusing to pay it, or by fraudulently claiming reduced income in order to evade income taxation under the IRS code. But still, the statutory authority is there to send you to federal prison for five years for essentially refusing to maintain the appropriate medical coverage, and then refusing to pay the 2.5% income tax surcharge.
No doubt this will make the public much more excited about the House version of health care reform then they were previously.
Dede Scozzafava, who suspended her House campaign earlier this week, in the face of rising discontent from Republican rank and file voters over her candidacy in the conservative NY-23 district, made the following statement this afternoon:
I want to thank you for your support and friendship. Over the past 24 hours, I have had encouraging words sent to my family and me. Many of you have asked me whom you should support on Tuesday.
Since announcing the suspension of my campaign, I have thought long and hard about what is best for the people of this District, and how to answer your questions. This is not a decision that I have made lightly.
You know me, and throughout my career, I have been always been an independent voice for the people I represent. I have stood for our honest principles, and a truthful discussion of the issues, even when it cost me personally and politically. Since beginning my campaign, I have told you that this election is not about me; it’s about the people of this District.
It is in this spirit that I am writing to let you know I am supporting Bill Owens for Congress and urge you to do the same.
So much for being a “lifelong Republican”.
In this podcast, Bruce, Michael and Dale discuss the state of the economy, and the health care bill that came to the house floor this week.
The direct link to the podcast can be found at BlogtalkRadio.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
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