Free Markets, Free People
Yesterday we were told the nation’s employers “unexpectedly” shed more jobs last month than forecast. Today we’re told that despite that, the unemployment rate “surprisingly” decreased to 9.7%.
Unsurprisingly I don’t believe a word of it. Call me a cynic, call me a skeptic, but I just don’t believe much of anything coming out of the government these days (I know, let’s call it a “deficit of trust”). Don’t forget that 9.7% number comes on the heels of a report saying the government forgot to count over 800,000 lost jobs last year.
When the government releases Friday’s unemployment report, nearly a million jobs could be erased. The change won’t show up in the monthly report. Rather, the expected job will show up in the government’s revised job losses from April 2008 to March 2009, showing the labor market was in much worse shape than we knew at the time.
So here we are, rampant and exceedingly high unemployment, no relief in sight and the unicorns and rainbows crowd are spinning the numbers and telling us all is well and getting better.
Well, economic well-being, like is said of politics, is all local. And for the most part, the locals aren’t buying the spin. Here’s the brutal truth:
An unemployment rate that’s projected to average 10 percent this year will likely weigh on consumer spending, preventing the biggest part of the economy from accelerating. Without additional gains in sales, companies will be forced to keep cutting costs, limiting staff in order to boost profits.
“Businesses are simply postponing their hiring for as long as possible,” Richard DeKaser, chief economist at Woodley Park Research in Washington, said before the report. “The willingness to hire is not there.”
Fewer customers, less spending. Less spending, less of a need to make things. Less demand for products means less demand for more employees.
Key line: “Without additional gains in sales, companies will be forced to keep cutting costs, limiting staff in order to boost profits.”
And that’s precisely what they’re doing. The Labor Department reports:
Nonfarm business sector labor productivity increased at a 6.2 percent annual rate during the fourth quarter of 2009, the U.S. Bureau of Labor Statistics reported today. This gain in productivity reflects increases of 7.2 percent in output and 1.0 percent in hours worked. (All quarterly percent changes in this release are seasonally adjusted annual rates.) This was the first quarterly increase in hours worked since the second quarter of 2007 (0.9 percent). Productivity increased 5.1 percent over the last four quarters –more than during any similar period since output per hour rose 6.1 percent from the first quarter of 2001 to the first quarter of 2002.
Even the Riddler could puzzle this one out. Worker productivity has increased 5.1% over the last four quarters. But unemployment has continued to grow. What does that mean? Well it means companies and businesses have found a way to increase production with fewer employees. And that, as the key line above suggests, boosts profits.
Now that productivity increase can come in many ways. Simply distributing the same (or even increased) work load to fewer employees. That’s happening all over the place now. Then, in certain industries, automation replaces employees (it doesn’t require health insurance, vacation days, a 401k and isn’t represented by a union). And in some places it’s a combination of both plus modified business models.
The bottom line is there’s not likely to be that much hiring if and when the economy actually turns around unless a huge increase in demand is realized. And even then, employers are likely to try to hold out as long as possible, given their productivity gains, until those productivity gains are neutralized. I’m sure there’s a tremendous gap between now and that point. Then add in the market instability brought on by pending legislation like health care reform and cap-and-trade, and you can see high unemployment in the future for quite some time.
But the unicorn and rainbow crowd are going to tell you everything, relatively speaking, is getting better. The fact that your relatives are all unemployed and your job isn’t looking so hot at the moment either will cause you to doubt their assertions. Do. Doubt them I mean. They’re as full of crap as a Christmas goose. And that’s becoming more and more obvious each day as we watch this dance of the dodgers continue. Because, you know, you can’t handle the truth. No, that’s not true. If they tell you the truth, they too will be unemployed.
“Deficit of trust?”
A true understatement.
Don’t you just love non-falsifiable government claims?
The Obama administration, in its latest progress report on the $787 billion stimulus program, said both the overall economy and employment continued to be in better shape at the end of 2009 than they would have been without the government’s help.
Better shape, hmmm? Wasn’t this the same stimulus which promised it would keep unemployment below 8% if passed? Yet here we are at 10% with no real relief in sight. Wasn’t this the stimulus which was promised to create or save millions of jobs? Even the administration has finally given up making such claims, instead quietly changing the way it makes such determinations and including pay raises and anything even remotely job related on which the money was spent. So when further claims, such as this, are made, they should be taken with a large and skeptical grain of salt:
Though unemployment reached 10 percent at year’s end—two percentage points higher than the peak that the council forecast when the administration proposed the stimulus package to Congress nearly a year ago—the number of jobs was between 1.5 million to 2 million greater in the fourth quarter than it would have been without the recovery plan, the council said.
This is the same council that made the 8% claim and changed the rules for counting “saved and created” jobs. If anything, their claims should be completely disregarded.
This is the stimulus which was claimed to be so necessary to the recovery, yet of the $787 billion signed into law, only $263 billion has been spent. How is that a stimulus? The theory is the government pumps money into the economy as quickly as possible to “stimulate” growth and hiring. Yet this particular bill is structured so that less than half the funds are spent within what most would consider the critical first year? That alone tells you two things about this particular bill:
It had little to do with stimulus and a lot to do with pork. In fact, it appears to be a 100% pork bill despite the President’s claims to the contrary. Just because individual earmarks weren’t in the bill doesn’t mean this bill isn’t a compilation of wasteful spending and pet projects. They were simply written up differently than they normally are. There was never any intention of spending this money to jump start the economy as witnessed by the amount spent in the first year and its lack of effect. It can be credibly claimed, in contravention of the administration’s claim, that it hasn’t done anything to stimulate economic growth. Don’t get me wrong, I’m not in favor of the spending that has been done or its continuation, but any objective analysis would make the point that $263 billion in a contracting 14 trillion dollar economy is likely to have little effect if any at all. So far the numbers seem to verify that.
Any claims made about the bill’s effect should be viewed very skeptically. In reality, this bill was a spending bill, not a stimulus bill. It was the bill which allowed Democratic legislators (and a good number of Republicans) to spend money on things they’d been unable to get through the body in the past. Again, its structure and the items upon which the money were spent make the argument pretty handily. Its failure to “stimulate” as advertised is precisely why there is talk of a second stimulus. There never was a first.
Whatever recovery has gone on in the economy has been largely a result of factors other than this bill. That includes the positive 3rd quarter GDP numbers they try to trot out as “proof” of the stimulus’s efficacy. Those numbers were driven by the cash for clunkers program, a program outside the stimulus bill, and were largely illusory. They were illusory because it was “growth” driven strictly by government spending, it was temporary growth because it was simply stealing from future sales, and when all the dust settled, that was quite apparent to those who analyzed the results.
What this present claim is all about is message preparation. These claims, which really don’t stand up to scrutiny at all, are being made now for a reason. The president has a State of the Union address coming up soon and needs some “good news” very badly. That’s why these non-falsifiable claims are being tossed out there now. Establishing these claims and repeating them often enough is done in the hope of having them become “conventional wisdom” by the time the SOTU address rolls around. Then when the President makes these claims, an uncritical press will parrot them, establishing them as “fact” for the administration and a part of the narrative that will be repeated in 2012.
That is how the game is played, folks.
After only 10 months in office in what he likes to describe as the worst economic downturn since the Great Depression, President Obama finally has figured out that its all about the economy – and jobs:
The president focused his remarks on the economy, however, saying he pressured Asian leaders to allow more U.S. exports and to work with U.S. leaders on climate-change efforts.
“Asia is a region where we now buy more goods and do more trade with than any other place in the world – commerce that supports millions of jobs back home,” Obama said. “It’s also a place where the risk of a nuclear arms race threatens our security, and where extremists plan attacks on America’s soil. And since this region includes some of the fastest-growing nations, there can be no solution to the challenge of climate change without the cooperation of the Asia Pacific.
“Above all, I spoke with leaders in every nation I visited about what we can do to sustain this economic recovery and bring back jobs and prosperity for our people – a task I will continue to focus on relentlessly in the weeks and months ahead.”
Well there you go – he’s talked about it. Expect the world to listen and do exactly what he expect.
John Bolton, former US ambassador to the UN, has remarked previously about this propensity to consider “engagement” and negotiation as a policy in foreign policy:
Negotiation is not a policy. It is a technique. It is a way of achieving our objectives. It doesn’t tell us what the objectives are. The emphasis on negotiation as an end in itself reflects a shallowness in this administration’s approach to international affairs, and gives us little confidence that our interests will be well served.
In this trip, Obama claims these accomplishments:
Specifically, Obama said he “developed a host of new clean energy initiatives” with China and also raised the issue of human rights. China has been seen as reluctant in agreeing to reduce its carbon emissions, claiming its economy is still evolving.
Obama tied the U.S. economy directly to Asia’s openness to U.S. products, noting that an increase of just 5 percent in U.S. exports to Asia Pacific nations could produce hundreds of thousands of American jobs.
Now comes the hard part – turning words into deeds. And that means both domestically and internationally. So far, it’s been mostly words and few deeds – except increasing the deficit four fold and adding a trillion dollars to the debt is a record 8 months.
Apparently the Obama administration had discovered, 10 months into the presidency, that perhaps jobs are the highest priority for most Americans.
So? So they’re going to have a “jobs summit”. Yes sir, they’re going to get together and talk about it! Because, you know, talking about something always is better than not talking about it, I suppose.
Uh, but not till next month. You know – it’s not that important.
And sure while doing something about a problem is much better than talking about it, talking is what this administration does best.
Look at Afghanistan. They’ve been talking about that for almost 3 months since the commander has made his request. And he’s still talking about it.
But back to jobs:
“Hiring often takes time to catch up to economic growth,” Mr. Obama said. “Given the magnitude of the economic turmoil we’ve experienced, employers are reluctant to hire.”
Of course they’re reluctant to hire – health care is up in the air, cap-and-trade is on the horizon, the government is spending like a drunken sailor on shore leave in Shanghai, it has inserted itself into the business and financial markets to an unprecedented degree and there is no question that taxes are going up – some think dramatically. Why would any business worth their salt be considering taking on new employees or expanding at a time with the future as unsettled as it is?
“We all know there are limits to what government can and should do, even during such difficult times,” Mr. Obama said, “but we have an obligation to consider every additional and responsible step that we can to encourage and accelerate job creation in this country.”
This said by the same guy who assured us that his “stimulus” package would absolutely cap unemployment at 8%. We’re at 10.2% and rising and he’s reduced to pretending a smaller number of unemployed submitting applications for unemployment benefits than did last week is “progress”. Oh, and using fake “saved and created” numbers.
Of course there are things the government can do to “encourage and accelerate job creation” that have absolutely nothing to do with more spending or extending unemployment benefits. But my guess is those won’t even be brought up much less considered. In fact my guess is the cry, led by Paul Krugman and others, is going to be “mo money”.
But hey, jobless folks, take heart. They’re going to talk about it. Next month. Right before Christmas I assume. Which will naturally delay anything being done till about the anniversary of his 1st year in office [if then]. And frankly, I wouldn’t be surprised if we were still waiting on an Afghanistan decision then as well.
Dale brings you up to date on what we’re facing on the employment front below. Meanwhile the dissembling about what government is doing continues. The farce of “saved or created” jobs announced by the various government’s and agencies as a result of “stimulus” money continues to unravel with “Sheriff Joe” Biden nowhere in sight to call them out on it:
While Massachusetts recipients of federal stimulus money collectively report 12,374 jobs saved or created, a Globe review shows that number is wildly exaggerated. Organizations that received stimulus money miscounted jobs, filed erroneous figures, or claimed jobs for work that has not yet started.
Yes, the “Globe” in question is the decidedly liberal Boston Globe, and even it couldn’t countenance the nonsense that has been paraded as “fact” in the administration’s spin on how well the pork-laden stimulus is working. Some of the specifics it found:
One of the largest reported jobs figures comes from Bridgewater State College, which is listed as using $77,181 in stimulus money for 160 full-time work-study jobs for students. But Bridgewater State spokesman Bryan Baldwin said the college made a mistake and the actual number of new jobs was “almost nothing.’’ Bridgewater has submitted a correction, but it is not yet reflected in the report.
In other cases, federal money that recipients already receive annually – subsidies for affordable housing, for example – was reclassified this year as stimulus spending, and the existing jobs already supported by those programs were credited to stimulus spending. Some of these recipients said they did not even know the money they were getting was classified as stimulus funds until September, when federal officials told them they had to file reports.
“There were no jobs created. It was just shuffling around of the funds,’’ said Susan Kelly, director of property management for Boston Land Co., which reported retaining 26 jobs with $2.7 million in rental subsidies for its affordable housing developments in Waltham. “It’s hard to figure out if you did the paperwork right. We never asked for this.’’
In reality, much of the funding has been used for existing projects (and jobs) and to cover state and local government budget shortfalls. But jobs? Not much. And those reporting jobs created? Well many don’t stand up to scrutiny:
The community action agency based in Greenfield reported 90 full-time jobs associated with the $245,000 it got for its preschool Head Start program. That averages out to just $2,700 per full-time job. The agency said it used the money to give roughly 150 staffers cost-of-living raises. The figure reported on the federal report was a mistake, a result of a staffer’s misunderstanding of the filing instructions, said executive director Jane Sanders.
And the federal agency collecting and reporting all this data? Well they’re sure it’s just the result of “innocent mistakes”. But do they scrub the data in any way before reporting it (i.e. verify if the data received is correct?)? Uh, no. That would actually entail work and the Orwellian sounding Recovery Accountability and Transparency Board would much rather produce positive numbers – unvetted.
Remember this was the administration which promised to make government “cool” again. Well, thankfully, it hasn’t. In fact, it is piling up examples of why government is uncool at an amazing rate. And this is just one of many. Its “saved and created” jobs numbers are pure unadulterated propaganda with, as should be obvious by now, no basis in fact. What numbers it has, given what investigations around the country have turned up, are pure fantasy. That, however, hasn’t stopped them from issuing them as gospel.
So given that, why again should we trust their numbers on health care or cap-and-trade or just about anything?
Well, we shouldn’t – not without a proper look and a sound vetting. But we just don’t have time for that, do we? Anyone figuring out why yet?
Health care reform?
Or, perhaps, economic recovery and jobs?
On Thursday, Obama’s economic adviser Christina Romer told Congress the administration agrees with other analysts that the economy will grow in the third quarter, and beyond. Even so, she said, “unemployment is likely to remain at its severely elevated level,” and noted expectations that few jobs will be added through the third quarter of 2010.
And what happens during the 4th quarter of 2010?
So why are Democrats fiddling with health care reform and cap-and-trade instead of the economy and jobs?
All I can figure is the radical element in control of the leadership in Congress right now sees the small window they have to push this garbage through as more important than putting policies in place which would enable economic recovery and create jobs.
Politically its a mixed bag for Democrats – push the extremist agenda through but at the cost of seats and possibly a majority in the midterm elections. Apparently they (the liberal Democrats, certainly not the more conservative Democrats who’re actually the one’s who might lose their seats) think enacting the legislation is worth the cost of 2010. And then, they might just be arrogant enough to think they can pull both off.
The Magic Unicorn and Snake Oil show that is the federal government has invented a new statistic for your entertainment, because it certainly has no real meaning. Why do I say that, you ask?
Well read this and tell me what you think:
The first direct stimulus reports showed that stimulus contracts saved or created just 30,083 jobs, prompting more Republican criticism of the $787 billion package.
The data posted Thursday was the result of the government’s initial attempt at counting actual stimulus jobs. Obama administration officials stressed that data was partial — it represented just $16 billion out of the $339 billion awarded — but they said it exceeded their projections.
Two points – we have no idea, given that number, what percentage were “saved” and what percentage were created. But it is clear that the claim of saving a job is a useful tool to pad the total. Even then, however, that means that each “saved” or created job cost you, Mr. and Mrs. Taxpayer, $533,000 per job. And yes, that’s for those “saved” as well.
Doesn’t government efficiency just dazzle the heck out of you?
Fear not, though, you haven’t seen all the magic unicorns or snake oil yet. Feast your eyes on this:
“All signs — from private estimates to this fragmentary data — point to the conclusion that the Recovery Act did indeed create or save about 1 million jobs in its first seven months, a much needed lift in a very difficult period for our economy,” said Jared Bernstein, the chief economist for Vice President Joe Biden.
According to the White House recovery office’s rough calculations, the 30,083 jobs number projects out to a total of 1.2 million jobs saved or created by the stimulus through September.
Yessiree – when they get into the projecting business, why it’s even better than they thought. It seems – according to those wonderful projections – that we’ve been able to “save” or create 1.2 million jobs, at least in the world of statistics. Again, how many are “saved” vs. created seems to be an unknown. But whatever the mix, 1.2 million seems to be the number they’ll be crowing about.
Of course what they’ll be trying to forget are those other numbers they originally promised when they were selling the magic unicorns and snake oil called “the stimulus”. Seems the rubes were told that passage of that fantastic piece of legislation would most certainly “save” or create 3 to 4 million jobs.
Oh … that and keep unemployment under 8%.
Drink up folks – Dr. Obama’s elixer is guaranteed not to slip, rip, tear, get rusty or roll down the hill sideways. Helps your wallet, does you good and makes child birth pleasant, besides the benefit you get from it. Now who’ll have another bottle of Dr. Obama’s Magic stimulus tonic?
Ah, Dr. Krugman wants more, doesn’t he?
Some specifics about the record job losses:
Hiring last month in goods-producing industries fell by 276,000. Within this group, manufacturing firms cut 168,000 jobs bringing the total since the recession began to 1.3 million.
Construction employment was down 104,000 last month. The unemployment rate in that sector is now 21.4%, almost double where it was this time last year.
Service-sector employment tumbled 375,000. Business and professional services companies shed 180,000 jobs, the fourth-straight six-figure loss, and financial-sector payrolls were down 44,000.
Retail trade cut almost 40,000 jobs, while leisure and hospitality businesses shed 33,000 as households curtail nonessential spending.
Temporary employment, a leading indicator of future job prospects, fell by almost 80,000.
So there, in a nutshell, is the status of the productive sector of the economy – the sector that produces wealth, jobs and growth. The sector that should be the focus of any recovery plans and stimulus money.
Instead, what is the President talking about in Ohio, as he panders in the buckle of the rust belt (via email transcript)?
Today I’m pleased to announce that Attorney General Eric Holder and the Department of Justice are making available $2 billion in justice assistance grants from the recovery act. (Applause.) That’s funding that will help communities throughout America keep their neighborhoods safer, with more cops, more prosecutors, more probation officers, more radios and equipment, more help for crime victims, and more crime prevention programs for youth.
Cities and states can apply for these funds right away, and as soon as those applications are received, the Justice Department will start getting the money out the door within 15 days. In Savannah, Georgia, the police department would use this funding to hire more crime and intelligence analysts and put more cops on the beat protecting our schools. In Long Beach, California, it will be able to help fund 17,000 hours of overtime for law enforcement officials who are needed in high-crime areas.
West Haven, Connecticut, will be able to restore crime prevention programs that were cut even though they improved the quality of life in the city’s most troubled neighborhoods. And the state of Iowa will be able to rehire drug enforcement officers and restart drug prevention programs that have been critical in fighting the crime and violence that plagues too many cities and too many towns.
So the list goes on and on. From Maine to San Francisco, from Colorado to New Jersey, these grants will put Americans to work doing the work necessary to keep America safe. They’ll be directed only towards worthy programs that have been carefully planned and proven to work. And Vice President Biden and I will be holding every state and community accountable for the tax dollars they spend.
More cops, more prosecutors, more parole officers.
Private sector jobs? Nada.
Now I understand we need all of those people he talks about. But they won’t help one bit in creating new wealth, new jobs or new opportunities for both, will they? They’re a number Obama can point too when he tries to sell is jobs “saved or created” nonsense in a few years. But as far as a stimulus to the economy – huh uh. What they are, however, are precisely what is expected from a big government liberal – government jobs.
As the WSJ further informs us after giving us the bad news about the productive sector of the economy above, “the government added 9,000 jobs.”
A lot of high-fives on the left concerning a portion of the budget dealing with energy. The Center For American Progress, in a post entitled “Energy Budget Is Sunlight After Eight Years of Darkness” says:
The most significant energy proposal in this budget is the inclusion of revenue in 2012 from the auction of all greenhouse gas emission allowances to major polluters under a cap-and-trade system. The budget assumes that this program will raise $646 billion between 2012 and 2019. Some of these funds would create jobs via a $120 billion investment in clean energy technologies over the same period. The auction revenue would pay for a “global warming tax cut” for working families with $526 billion. It would fund Making Work Pay, which provides a refundable income-tax credit for low-income working families. Any remaining funds would go to other families and businesses to offset higher energy prices.
In other words, CAP believes that adding huge additional costs onto the already high cost of producing goods, services and energy will “create jobs” to offset those lost apparently. And the money collected will be redistributed to make things fair.
As so-called members of the “reality based community”, you have to wonder if they’ve ever bothered taking off the rose colored glasses and glanced around the real world.
Alan Wood in Australia asks:
CAN the Senate save Kevin Rudd and Penny Wong from their global warming folly? It can, and it might, if it rejects the Government’s attempts to prematurely lock Australia into a flawed carbon trading scheme. Ask yourself, do you believe that the worst global recession since the Depression, with job losses accelerating, is the time for Australia to introduce a carbon trading scheme that will squeeze growth, jobs and investment? Business certainly doesn’t.
Is there anyone in the Congress who can do the same for Barack Obama? Probably not. Do they understand that the carbon trading schemes in place around the world are literally melting down? Again, probably not.
And jobs? Well right here at home we can learn from the impact of the draconian regulations and resultant costs imposed on industry by such schemes and what that means. California, as usual, provides the case study:
California regulators Thursday adopted the world’s first mandatory measures to control highly potent greenhouse gases emitted by the computer manufacturing industry. “The financial impact is going to be severe,” Gus Ballis, a spokesman for chip maker NEC Electronics America Inc., a subsidiary of NEC Electronics Corp. in Japan, told the board. Ballis warned, “We’re potentially on the chopping block — whether they are going to keep us or pull our production back to Japan.”
The painful loss of 1850 jobs at Pacific Brands in NSW, Victoria and Queensland is more than a byproduct of the global recession. The main reason for shifting to China, chief executive Sue Morphet said on Wednesday, is that manufacturing in Australia “is no longer a competitive advantage” to the company. The Prime Minister owes it to businesses large and small, as well as to Labor’s core constituency, workers, to re-evaluate the impact on employment of his emissions trading scheme, especially in mining, where Australia has such a strong comparative advantage.
The German biofuels industry is facing bankruptcy according to their industry association, despite millions of state-sponsored subsidies in recent years. “It is five to twelve, but few politicians understand,” said the chairman of the Association of German Biofuel Industry (VDB), Kurt Stoffel. “The biodiesel market for trucks has come to a complete halt,” said Stoffel.
Britain said on Thursday it backed the building of new coal plants and would make a decision soon on whether these must have expensive, climate-friendly technologies fitted called carbon capture and storage (CCS). “We will need new fossil fuel plants including coal if we are going to maintain diversity in energy mix and energy security….”,
Yet here we are getting ready to implement a scheme that is already seen to be worsening the economic conditions around the world (and being abandoned by those realing the losses). Unsurprisingly our implementation would most likely occur just as we are beginning to see an end to the recession.
The administration certainly seems to be aware of the cost of such legislation but still plans on pursuing it:
Steven Chu, President Barack Obama’s new Secretary of Energy, told The New York Times earlier this month that reaching agreement on emissions trading legislation would be difficult in the present recession because any scheme to regulate greenhouse gas emissions would probably cause energy prices to rise and drive manufacturing jobs to countries where energy was cheaper.
Yet, with blinders fully in place, and giddy at the prospect of sticking it to evil corporations while redistributing their ill-gotten gains, the left applauds a plan which will cripple our economy for decades to come.
If ever there were budget proposals poised to send us into darkness, it is this plan put forward by the Obama administration.