Jobs Story Could Turn More Gory
Hey, with the economy perking up, the Dow recently sprinting above 10,000, a sizzling jump of more than 50% from its March low, and growing talk out of Washington that we'll have a national health bill before year end, things are slowly starting to look honky dory again to a lot of folks.
Not, though, to the 15.1 million unemployed Americans who are no longer getting paychecks, nor the residents of the growing number of states being stung by double-digit unemployment rates. Nor for that matter the hefty share of the unemployed population (35.6%) that is out of work six months or more, and the 571,000 people who disappeared from the work force last month because they couldn't find jobs.
You've got to be a relative of Denny Dimwit to ignore this spreading economic cancer. Or, for that matter, give any legitimate credence to the administration's non-stop rah-rah public relations campaign that the economic horror story is all but over.
Not everyone agrees with me. Frequently, when I bring up the rising number of job losses to some economists and market pros, I come out a loser, often being tagged as an ignoramus for failing to recognize that unemployment is a lagging economic indicator, not a leading economic indicator.
As one well-publicized economics professor put it to me in stinging language the other day, "Why do you ask me about unemployment? It only makes you look uninformed and stupid."
Continuing, he went on to say, "Wake up; All you have to do is read a newspaper." Everyone, he observes, already concedes unemployment will go somewhat higher, but it should peak some time in the first half of next year at a little over 10% as the economy takes a turn for the better. (The general view is it will peak in the range of 10.3% to 10.5%, versus it's current rate of 9.8%.)
The professor's parting biting shot: "Don't quote me because I don't want anyone to know I even spoke to you." He also reminded me that, "In case you have any memory or hearing problems, unemployment is a lagging economic indicator."
Granted, this has been the case in the past. But a couple of pros -- both of whom see a much darker jobless picture than most people expect -- suggest it will be dramatically different this time out. In other words, they say, the time-worn view that unemployment is a lagging economic indicator (usually peaking about six months after the end of a recession) is no longer applicable because of the prospects of many more layoffs stemming from a much weaker than expected recovery.
"We've entered a new era of much higher chronic joblessness, which denotes a long-term period of economic stagnation," says Martin Weiss, the head of Weiss Research in Jupiter, Fla., who notes the news on the unemployment front remains pretty grim and is likely to remain that way.
For example, he points out there are now five people competing for every available job. Further, if you factor in part-time workers who can't find full-time jobs, as well as those who have given up looking for work, the official unemployment rate is no longer 9.8%, but nearly double that at 17%. Taking this exercise one step further, he notes that if you count both the unemployed and the discouraged workers (anyone willing to work, but who has given up looking for up to a year), the jobless rate then climbs to 21.4%.
To Weiss, this all means "we're not going to follow the recovery patterns that we've seen in past recessions and the lag time will be far more stretched out than it used to be."
That's also the thinking of Madeline Schnapp, economics director of TrimTabs Research, a West Coast liquidity tracking service partially owned by Goldman Sachs.
Over the past 25 years, she points out, recessions have resulted from industry overexpansion and inventory buildups and reductions. Not this time, she says. The latest downturn was caused by excessive credit and consumer deleveraging. Factor in, as well, the current woes and you hardly have a solid foundation for an economic recovery, Schnapp says. Those specific woes:
--9.8 million workers are collecting unemployment.
--Another 3.8 million are collecting emergency unemployment benefits (a reference to unemployed people who have been out of work for more than 26 weeks).
--5.2 million homeowners who are no longer paying their mortgages, and contracting income,
--Income is still contracting rapidly, with wages and salaries off 4% to 5% year over year.
To Schnapp, it all adds up to declining consumption, mounting job losses and an economy that won't grow.
That worrisome trio struck me as a trio of Halloween trick and treaters dressed up as Frankenstein, Dracula and the Wolf Man.
In terms of jobs, Schnapp looks for a 10% unemployment rate in November and an ensuing jump to 11% by next summer. That would raise the number of unemployed at that point by another 1.6 million to about 16.7 million.
In viewing the most recent unemployment data, some market observers who follow the job figures point to a sunny note -- namely, that the number of people filing unemployment claims over the past week dropped by 10,000. But these observers, Schnapp notes, are ignoring the fact that the number of people filing for emergency benefits in the same period rose by 16,000.
Given her expectations of surging job losses, which means reduced consumption, Schnapp sees only sluggish economic growth. For the third quarter, she expects a 2.7% spurt in GDP, largely because of the stimulus from the cash for clunkers program. But for the current quarter, she looks for a marked slowdown, with a puny GDP gain of from 0.5% to 1%.
Looking to next year, Schnapp pegs GDP, if we're lucky, at between flat and up 1.5%. And if we're not lucky, she adds, maybe a decline of 1.5%.
As Schnapp sees it, the only reason we haven't seen a collapse in consumption is because the 9.8 million people collecting unemployment and the 5.2 million households not paying their mortgages are spending money on some things.
Many consumers, she notes, are viewing things as getting better, including the government bailed-out banks. But she feels that's a blindsighted view, arguing that the big banks are in for a lot more pain going forwarded. They're piling more debt on top of toxic debt, which is hardly the right prescription, she notes, for turning around their operations, in turn enabling them to resume lending and giving the economy a renewed shot in the arm.
If our jobs bears are right, the bottom line seems more like the bottom of the economic barrel since a consumer who is not earning any money is in no shape to spend us back into prosperity. And such a dismal condition, the folks at TrimTabs tell me, is not what bull markets in stocks are all about. In any event, if you're looking for a job, don't hold your breath.
Write to Dan Dorfman at Dandordan@aol.com
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While Emperor Obama is busy fiddling and campaigning to raise more money for candidates, the economy is rapidly deteriorating around us. He promised us jobs, where are they? He says that he will create millions of jobs, where are they? He spends his time pushing a health care bill that most Americans are not sold on and does little to create jobs. We need jobs NOW not later!
When the jobs do come back, the pay will not cover anything but the taxes. Someone please press the reset button soon. BTW jobs are not coming back in the numbers required to put the unemployed back to work for any length of time.
NONSENSE! LET’S GENERATE MILLIONS OF NEW JOBS!
A so far ignored Human Investment Tax Credit (HITC) program can create up to 6 million jobs and launch perhaps 4 million entrepreneurs.
Download it free at: http://www.aesopinstitute.org
The 1977 job tax credit program included a few of these incentives and generated almost one million jobs - 20% of the jobs created that year!
The House Ways and Means Committee and the White House should consider the suggested 2009 HITC program without delay!
Another path to millions of jobs is described in the article: 5 Steps to Revive the Auto Industry and the Economy - on the same Aesop Institute website.
It outlines revolutionary new technology that opens surprising paths to cars that need no fossil fuel or recharge. Advanced versions can later turn parked cars into power plants, able to wirelessly sell power to the local utility. Vehicles will be able to pay for themselves.
The technology will be greeted with extreme skepticism and disbelief.
However, independent laboratory validation of one remarkable breakthrough has taken place at Rowan University. It produced far more heat than can readily be explained by existing science, clearly suggesting a new source of energy is involved. The experiments should rapidly be repeated other laboratories.
The validation is proving that new technology allows a barrel of water to replace 200 barrels of oil! That could hold down oil prices.
It can change what is currently believed about energy, jobs and the economy.
Let's accelerate the process!
It's true that there is so much incredible technology and creativity yet to come. What seems to be harder is keeping some basic checks and balances in place for what was a world exemplary middle class.
You are correct, but it can be done! See The Brooklyn Project on the Aesop website.
The difficult we can do immediately - the impossible will take a bit longer!
Please write as many legislators that you can and tell them to support the Durbin Grassley H-1B Visa Reform bill. This would require employers to recruit American citizens to fill jobs before foreign workers. Right now the H-1B program is very corrupt and is being used to undercut and replace American workers in mass. It's original intent was to hire "highly specialized" foreign workers when needed. Instead it is being used by corporations to get labor at cheap prices that they can entrap or dismiss at will - no obligation. In Information Technology we have been gutted. But it is affecting many other sectors now as well. The result is to drive down our wages, our benefits and remove incentive for our young people to train for the careers in question. Reform to the H-1B system alone would bring back many jobs. We are just being bled to death.
Again, stop discrimination against American workers.
Support the Durbin Grassley H-1B Visa Reform bill.
Dan says he's being ridiculed for even trying to cover the plight of the underemployed. I believe him.
the 30% of people underemployed and unemployed aren't getting any attention. The closest the elite get to hearing the underemployed is "can I have your order please"
Add to the fact that they have a crappy education, no dental, drug abuse and such, there is a social stigma to giving any help at all to the underemployed.
What's more likely is class-based politics. As the upper class demands more protection from having to see and feel the lower classes.
It's worth mentioning that taxing the poor through inflation to pay for the hi risk derivatives debts (gambling debts) of the rich is pretty much the worst thing ever.
Waiting in the wing are the oil vultures. If there was a recovery, the demand would go up and higher prices would quash any recovery and they would swoop down to feed on the carcass of a wrecked economy to join the bankers, health care industry, and military industrial complex. Remember Democrats and Republicans are just fancy names for vultures who feed on different sides of the carcass.
There are the commercial real estate and the FHA bubbles that are collapsing. I have two friends who are losing their houses and are having to do short sales. The one was a mortgage broker (business dried up and he let his license go) whose downtown condo went from $400K to $150K and the other had his ARM house loan reset $400/mo. higher and is short selling from $260K to $129K, sadly, after putting his $60K inheritance in as a down payment which he will lose. There are waves of these ARM reset mortgages coming soon like a tsunami. Three friends have had their hours cut from 5 to 4 days/week. No one is talking of restoring their hours. Two friends now have to work from home as their bosses are trying to save money. One boss/owner lost a 40K client and can save $30K by not having a central office. My other friend who is a commercial loan officer is now working from home and says that this is a major trend as a way for companies to save money. These rentals are never coming back for the commercial real estate sector. These sectors are in a permanent depression, not a recession.
Lots of black roots, not green shoots.
Many TARP borrowers aren't repaying their billions in loans and the FDIC reserve recently went billions in the red because of bank failures & bankruptcies (they are the people insuring your bank deposits - lol - sleep well tonight). Some of the banks weren't even on their watchlist, but had dramatically fast collapses because of the worsening economy. There have been a lot of articles lately about endowments and pension funds that have lost major portions of their investments in the recession (some 30-40%: some of it due to speculation in derivatives that had the meltdown) just like many of us. Many may be unable to meet their obligations to their retirees which will be a long term problem. Tax revenue is down 17%, so expect more government job layoffs. Just like the alcoholic that has another binge to postpone a hangover, we have just delayed the day of reckoning by adding all this stimulus money, bailout money, & borrowing from China to our national debt.
In NH for years 50 year olds wash dishes.
Many teenagers cant find work.
The job market sucks year after year.
Clinton Full Employment 3 part time jobs.
Bush partial Employment 2 part time jobs.
Obama ------------------- 1 part time job
I'm sick and tired of the talk about jobs. We are no longer a nation of shopkeepers. Have you noticed that many of the small 'niche' businesses are run by foreigners? I was amazed this summer while in DC and NYC that almost all of the street vendors were asians, east indians, middle easterners and a sprinkling of africans. Where in the h.el.l are the Americans??? We have turned away from the hustle of hard work, the satisfaction of controlling our own time and being our own boss for the safety of the payroll check.
Of course, it's not all our fault. Cities and states have put up all kinds of obstacles to self-employment. The hassle of laws, regulations, taxes, oversight, paperwork and lawsuits are more of a headache than most people can handle. It's all part of the plan of corporate entities to lessen competition, put people under their control and make them dependent on the corporate tit. When hard times hit, payroll/people are the first things cut -- before production, expenses etc. Yet another conspiracy!
You can't sell watermelons on the corner. Truck farmers don't drive through neighborhoods with fresh produce anymore. For thousands of years man has been free to survive as God gave him the talent and resources. But in late 20th Century America, citizens have to pay the government for a chance to thrive/survive. You can't have a garage sale for your own junk without buying a license in many communities.
Why then is Obama still importing foreign labor into the US? Look up H-1B work visa program.
I am a software engineer and in my 15 year I have never met a single H-1B holder who wasn't just driving down wages and taking a job that many Americans could do.
Where I work we use a vendor to screen resumes. There are two actually, Wipro and Infosys. Both are Indian companies and every resume we get is H-1B. The quality is terrible and we find they will switch the people. So the person you phone interview isn't the person who shows up for the face to face. Nice. But they get us cheap rates.
In past 3 years I have never seen an Americans resume. There are many Americans available but the vendors filter them out.
So even as Microsoft lays off thousands of Americans they continue to hire H-1B workers.
H-1B is a federal regulation. It is pure market manipulation but the federal government in favor of corporations. AND OBAMA IS SUPPORTING THIS!!
It's not just computer jobs. Lots of medical workers from India are getting into America on the H1B. They come here and work for less money, but once they get a toe hold, Indians are a very prolific people. They have made more gains in American life in a few short years than blacks and asian-americans (chinese/japanese) who helped build this country have made in hundreds of years.
I will say that part of the blame has got to be our education system for not preparing young people to fill the positions. When I was substitute teaching, I found that my students actually believed and accepted that foreign children are smarter and better than they are!
But that does not change the fact that in just about every country on earth, their citizens are hired first. I'm sure you couldn't get a job in India as a software engineer. Bottom line, it all comes down to corporate greed, the cancer infecting all of our society.
In Michigan, if you are a foreigner you get a tax break for opening a new business. If you are an American, you do not. There is one reason.
Yeah, right, niche businesses just like the ones that are closing right and left because nobody has the money to spend in them. Have you seen what is happening to the retail sector these days?
My landlaydy is a native born American who was able to support herself for thirty years in the vintage clothing business now her only source of income is renting because PEOPLE ARE TAPPED OUT AND DON'T HAVE THE MONEY FOR THAT STUFF.
Selling trinkets to each other on street corners won't create a 'recovery' any more than all those people selling apples ended the Depression.
Sorry you lose. Thanks for playing, here's your copy of the home game and a box of Turtle wax....
I'm sure a lot depends on WHERE you live! Some states have not been as severely impacted as the high rollers along the eastern seaboard and California, and the upper midwest (Michigan).
It's the story of Rumpelstiltskin, all over again.
Look: a computer spreadsheet, or a gambler's computerized model, can say any damn thing you want it to. And the people who are gambling away our country's future and fortunes simply do not (think that they) have any reason whatsoever to care. On paper, straw is still magically turning into gold.
But a national economic system is not about the few thousand people in Manhattan (and D.C.) who know how to "game the system." It's about 307,733,419 people (at this particular instant).
Banking, insurance, and finance are three mutually-exclusive industries ... a "three-legged stool" upon which all other parts of an economy ultimately depend. But for approximately the last twenty years now, a well-honed criminal cartel with"excellent $$ DC $$ Connection$ $$" has gleefully chopped-up that stool and stuffed it into the fire, all the while chortling, "oh, what a good boy am I."
These are ancient crimes, oft repeated, and both our history books and our fairy tales are filled with its inevitable consequence.
All of you people don't listen. The President and others stated that jobs would be the last thing to come back in this recovery.
What I find unconscionable with our Government these days....Obama, are you listening?...is the tired, jaded manipulation of information " for public consumption".
Please tell us the TRUTH, like Dan Dorfman is telling us the truth, so that we may construct informed opinions.
Shame on you Barack Obama, shame, shame, shame.....Hillary was right...just the wrong subject matter.
Why have I not seen a statistic on the number of liberals vs conservatives losing thier job. I'll tell you why. There's a secret bias out there that the people that should be working are working. That's code for we republicans stick together. I bet you if you looked at it you would be amazed and amazed further that their base is still holding. Things are a mess out there and this one is all on them. While I know a large number of republicans were laid off I bet they were the questionable kind and I bet nary a liberal made it thru unless he had something on them.
Huh? First of all the terms "liberal" and "conservative" are meaningless. Secondly, most people in America are both. Just depends on the issue.
Finally, most people, especially in the midwest don't talk about politics. So how would anyone know your views?
I meant to say "the terms liberal and conservative are largely meaningless."
Is that capitalism? Lay off the guy whose political views you don't like, as opposed to keeping the best workers? I'll bet you are one of those guys against affirmative action as well, "We don't hire on race, we hire the best person for the job, no need for affirmative action", yada yada yada.
You are probably also against people suing for being fired for reasons such as this.
One more reason corporations need to have more regulations on hiring and firing. I don't think the founding fathers meant for dissent to be stiffled by economic means.
Your vision of a perfect world is one in which workers either agree with you, or keep quiet about their political beliefs, in fear of being unable to support themselves.
Sounds a little old school Russia to me.
American Corps. jumped on the bandwagon to cut costs by sending jobs overseas for cheaper labor...partly inspired by low or no tariffs on these good brought back into the USA.
It's time to change the law and re-introduce former tariffs to re-create American jobs.
If the government is unwilling to take this step, it is up to the people to create American jobs by selectively buying American goods.....and NOT buying imported goods.
I agree, but buy American hasn't worked in the past. My next car will be a ford, for sure. I think we need to concentrate on changing the laws. Other countries don't allow all their jobs to go out of the country.
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