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Economic Complexity

May 5th, 2012

The lead article in today’s New York Times, “Rate of Growth in Jobs Slowed for U.S. in April,” provides a mixed message about the state of our economy. While we continued to grow, albeit at an anemic rate of 115,000 jobs added, and the unemployment rate dropped again to 8.1 percent, other factors combined to put a damper on the mildly good news.

The most important caveat is that even more people have left the labor force. In fact, the percentage of men either working, or actively looking for work, is the lowest since they started keeping statistics in 1948. Only 70 percent of men are engaged in the labor force.

There are several reasons for this statistical outlier, including the fact that many baby boomers have reached the retirement age. But with 13.7 million people unemployed, the economy remains sluggish and unresponsive to too many needs.

The mixed signals also plays into Republican designs as they are trying to avoid a picture of the economy on the mend. They are also quick to gleefully pounce on any shred of bad news, and one wonders at times whether the Congress is really trying to help the American people or just setting themselves up for a return to power.

More economic statistics will follow, and it looks like next month’s figures will prove critical in supporting either the Democratic or Republican analysis.

Jobs Ebb and Flow

April 7th, 2012

The lead article in today’s New York Times, “After a Winter of Strong Gains, Job Growth Ebbs,” demonstrates the continuing uncertainty about the economic recovery, with month-to-month results giving mixed signals.

After two previous months of strong growth with around 250,000 jobs added each, this past month only showed a gain of 120,000 jobs. It followed a recent pattern in the past two years with encouraging statistics in the winter followed by a pullback in the spring.

Of course, the Democrats and Republicans each tried to put their own spin on the data, but it seems like we will have to wait another month to see if this slowdown is an aberration or reason to be concerned. Manufacturing continues to lead the way in job growth, but a number of disconcerting signals suggest that its impact might be limited. These signals include a decline in average hours per workweek and in temporary positions — both indicators should increase before employers decide to hire more people.

There are also a number of outside developments to be concerned about as well. One, of course, is rising gas prices. Uncertainty about healthcare requirements is a second. And the economic situation in Europe continues to be unsettled as well, now with a weak bond offering by Spain. Next month’s unemployment figures will be even more important.

Christie Corruption

April 5th, 2012

The lead article in today’s New York Times, “Christie Leaning on Tax Subsidies in Hunt for Jobs,” describes the typical Republican in-bed-with-business approach to the economy. The Governor has misused the Urban Transit Hub Tax Credit Program and been criticized by government reform groups for it. He has handed out subsidies for 10-to-15 years into the future, ostensibly to keep jobs in New Jersey, but in reality providing major subsidies to businesses above and beyond all reason.

The amounts are staggering and work out to more than $300,000 per job retained. Probably the most reprehensible is a deal offered to Prudential for more than $250 million to help the company build an office tower. Meanwhile, Prudential’s previous landlords, also in New Jersey, are up in arms about the situation and have filed suit.

Other organizations benefiting from Governor Christie’s largesse are Panasonic, Campbell Soup and Goya Foods. Campbell actually elminated jobs but still kept some of the subsidy.

Needless to say, Mayor Bloomberg is not too pleased about the situation either. But he has done a better job of saving jobs for New York City than Governor Christie, without any subsidies. New York City has recovered 80 percent of the jobs lost in the recession while New Jersey has only recovered 20 percent.

Economic Eruption

March 10th, 2012

The lead article in today’s New York Times, “Economy Shows Solid Job Gains for a Third Month,” provides welcome news for President Obama and a warning sign for Republicans who have organized their campaign around the so-called downturn.

The unemployment rate held steady at 8.3 percent, but that was because so many new people entered the workforce. Manufacturing jobs are increasing for the first time since the 1990s, and the growth extended to a wide variety of other industries as well including finance and professional services. Public jobs continued to decline but at a lesser rate than before.

Other signs were positive as well including a boost in consumer confidence and an increase in temporary jobs, typically a precursor to more permanent ones. Economists had predicted slower job growth this quarter than the last quarter of 2011, but the strong expansion has continued for three months in a row now.

It’s true that the unemployment rate is still unacceptably high, but the trend is in the right direction. And consumers have also paid off a large amount of the household debt that was holding back a prolonged expansion before.

It’s not that often that there’s good news in the newspaper these days, but today’s story is really an unmitigated bonanza.

Improving Economy Hurts Romney

December 3rd, 2011

The lead article in today’s New York Times, “Jobless Rate Dips to Lowest Level for Last Two Years,” provides some welcome relief for President Obama and conversely hurts one of the main rationales for the Romney campaign.

The drop to 8.6 percent is not good news in itself but suggests that the economy is moving in the right direction at least. The new rate is the best for the economy in 33 months, and it comes accompanied with several other good signs as well. These include an increase in temporary hiring, retail sales and auto sales. And the statistics for the previous two months were revised upward as well.

There is still a major backlog of unemployed people, and part of the reason for the good statistic involves a drop in the number of people looking for work — only 64 percent of the people are involved in the labor market.

Still, it comes as welcome news for the President and deflates one of the main rationales for the Romney campaign — his supposed skill and knowledge of the economy. Whether this trend can be sustained may decide the result of the 2012 election.

Meanwhile, the Congress is tying itself in knots trying to pass an extension of the payroll tax cut and perhaps renew the extension of unemployment benefits as well. President Obama is suggesting they stay in session over Christmas if they can’t get it done. That’s not going to sit so well with Republican obstructionists.

New Post-Recession Statistics

October 10th, 2011

The lead article in today’s New York Times, “Median Incomes Shrunk Further After Recession,” gives some indication of the suffering of the American people even after the so-called recovery from the recession began.

The recession and financial crisis extended from December 2007 to June 2009, after which the American people were assured that economic growth was on their side.

However, new reports show that median income continued to decline through June 2011, the latest measure of this statistic. Household income fell 6.7 percent to $49,000, while during the recession, it only fell 3.2 percent.

Of course, if you’re the one who’s unemployed, all these numbers are insignificant. You’re 100 percent out of work.

And people who do lose their job can expect a long and trying hunt for a new one. Average time of unemployment has climbed from 16.6 weeks in December 2007, to 24.1 weeks in June 2009, to 40.5 weeks in September, the worst in 60 years.

The people in the Occupy Wall Street protest put a human face on these numbers. The movement is based on fairness and outrage. As the inequality among our citizens grow, and our college graduates struggle to survive, we need to listen and respond to their desperate attempt to communicate the current realities in our society.

Median income is a statistic, but the decline of our society is all too real.

Uneven Economic Growth

October 8th, 2011

The lead article in today’s New York Times, “Modest Growth in Jobs Tempers Recession Fears,” provides the latest economic statistics from September’s monthly report. Jobs increased by about 100,000, just enough to cover new people entering the work force and keep the overall unemployment rate the same at 9.1 percent.

The results can be viewed as a glass half empty or half full. Auto sales increased by about 10 percent, but the manufacturing sector, responsible for much of our recent growth, lost jobs this month. In addition, about a third of the overall private job growth could be attributed to the return of 45,000 Verizon employees who had been out on strike.

Healthcare, professional and business services all grew last month, but the public sector continued to bleed jobs, with teachers being especially hard hit. Perhaps most important, there was no sign of alleviation for the 14 million unemployed Americans. The average length of unemployment, at 40-plus weeks, also continues to be unacceptable.

The President is caught between a rock and a hard place. If the statistics were worse, he could use them to push for his jobs bill. If the statistics were better, he could them to counter accusations from Republican presidential candidates about his poor stewardship of the economy. In between doesn’t help matters much.

Southern Slump

September 27th, 2011

The lead article in today’s New York Times, “Deep Recession Sharply Altered U.S. Jobless Map,” provides some sobering news for the once-booming “bible belt,” accustomed to attracting people from other areas of the country due to its growing economy. It appears that the South has suffered disproportionately to the rest of the country and is slower to recover as well.

Apparently, areas used to rapid influxes of population and the concurrent prosperity from the construction and housing industry have been hurt the most when the housing bubble burst. For example, South Carolina now has the fourth highest unemployment rate in the entire country. Other temperate states such as Nevada, Arizona and California have been significantly hurt as well.

The areas relying on healthcare, education or energy production have been less hurt by the recession and even the “Rust Belt” is starting to recover due to a renaissance in the auto industry. The long-term effects of the uneven state economies remains to be seen, but in the end, people will move to where the jobs are, and if they are no longer in the South, that will affect the population booms that have been supporting those economies as well.

Of course, no place is doing particularly well. Of 100 metropolitan areas, only 16 have recovered more than half of the jobs lost during the recession.

Companies and Consumer Confidence

September 10th, 2011

The lead article in today’s New York Times, “Employers Say Jobs Plan Won’t Lead to Hiring Spur,” describes some of the pluses and minuses of President Obama’s American Jobs Act, most importantly, the need for the economy to demonstrate sustained growth before hiring resumes in earnest.

It is consumer demand and increased business that drives hiring, and the President’s tax credit for hiring an unemployed worker will only help companies at the margin. On the other hand, the payroll tax cut, the main component of the plan, could generate increased spending, thus leading to that demand in the first place.

The President’s plan also allotted $35 billion to save teachers jobs as well as those of other public workers such as police and firemen, $30 billion to repair decrepit schools and $50 billion for infrastructure projects. These expenditures will directly save or create jobs but are unlikely to make it through the Republican-controlled Congress.

One major concern of analysts involves the six million workers who have been unemployed for six months or more. This is becoming a permanent underclass in our society and may represent structural unemployment that will be very difficult to reverse. Training programs would be desperately needed to help these people as the workplace continues to be transformed on an almost monthly basis due to the IT revolution and globalization.

Challenging Congress

September 9th, 2011

The lead story in today’s New York Times, “Obama Challenges Congress to ‘Pass This Jobs Bill,’” showcased a President who was determined to reason with his opponents and provide a moderate proposal to help the economy. The speech, before a joint session of Congress, seemed to illustrate the very partisanship the President was railing against, with Democrats and Republicans applauding separately depending on the issue being discussed.

The President’s proposal, called the American Jobs Act, is a $447 billion program of tax cuts and infrastructure spending, no surprise there. But the speech was delivered in a forceful tone and could represent an inflection point for the Obama presidency. It was to be followed by the President touring around the nation, promoting his new legislation.

The centerpiece of the proposal is a renewed and expanded payroll tax cut, this time for both employees and employers, and this section has the best chance for passage. Eric Cantor, the House Majority Leader, was surprisingly conciliatory after the address, noting that there were some areas where the two parties could work together. How that works in practice remains to be seen as several House committees would have jurisdiction over separate sections of the bill, and any one could help to tear it to shreds.

With 14 months to go before the next election, the hopes for major progress remain slim.