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President Zero?
September 3rd, 2011
The lead article in today’s New York Times, “Zero Job Growth Latest Bleak Sign for U.S. Economy,” paints a stark picture of the current unemployment situation in the United States. The retail and manufacturing sectors, both which have been leading the slow recovery, ground to a halt, and even indicators for the future such as hours worked per week showed no increase. The statistical impasse comes as a point when Democrats and Republicans are in partisan gridlock, and the brinksmanship over the debt ceiling led to Standard & Poors downgrading the United States credit rating, albeit from AAA to AA. Meanwhile, with the President’s nationwide address now scheduled for early Thursday evening, timed to avoid a conflict with NFL football, and changed after the Republicans refused to extend him an invitation for Wednesday to avoid a conflict with their Presidential debate, the stakes have become even higher. One wonders if it even matters what he proposes since it seems inevitable that the Republicans will oppose it anyway. Indeed, even prior Republican legislative proposals have gone down in flames when President Obama has recycled them. Clearly, a jobless rate of 9.1 percent is unacceptable, and action is required. But one wonders whether the players in our system, Democrats, Republicans and the Federal Reserve, have the guts and leadership to accomplish it. Economic Evisceration
July 9th, 2011
The lead article in today’s New York Times, “Feeble Job Numbers Show Recovery Starting to Stall,” delivers devastating news for the Obama administration and could significantly imperil his reelection. The unemployment rate for June ticked upward to 9.2 percent, defying economists’ predictions, with leading indicators signaling problems for future months as well. These indicators such as temporary hiring and average hourly work week generally rise before employers hire new staff — they try to supplement labor hours per these two methods first. Both actually declined in June. Of course, Republicans were quick to tout the numbers as a sign of failure by the Obama administration, but one wonders how much any government could do with an economy as large and unwieldly as the United States, one led by its own internal dynamics. It’s not totally clear to me, but it seems like everyone says that the main engine driving the economy is consumer demand, and as long as so many people are unemployed, that engine will remain stalled. Thus, our real economic problem is not deficit and the debt, or the status of “job creators,” as many Republicans claim. We need a jobs bill and economic stimulus to get us going again, the opposite of what the Republicans are touting. Business Blues
June 4th, 2011
The lead article in today’s New York Times, “Sharp Slowdown in Hiring Clouds Economic Outlook,” describes a continuing anemic recovery as the nation only added 54,000 jobs last month compared to more than 200,000 in the previous three. State and local governments as well as the manufacturing sector, that has been leading the recovery, all reported net losses. In addition, two leading indicators, the amount of temporary help and the length of the workweek, showed no increase. These statistics are important because employers typically increase them prior to hiring new full-time employees. Probably the worst statistic for the President’s reelection chances, the unemployment rate, also ticked up to 9.1 percent from 9 percent. This is the most widely reported barometer of economic health, but it is unreliable because it is dependent on the amount of people seeking work, and when the economy starts to improve, more people do so. Republicans, of course, were quick to score points from the report and characterized the stimulus package as a failure when many economists think it wasn’t big enough. Meanwhile, liberal Democrats called for more spending and additional actions by the Federal Reserve. It’s hard to deal constructively with these policy issues when all sides just use them as an excuse to push their pet programs. Good News on the Jobs Front, Anyway
April 2nd, 2011
The lead article in today’s New York Times, “U.S. Posts a Gain of 216,000 Jobs, a Lift for Obama,” provides welcome good news after the crises in Japan and Libya. The increase represents the 12th consecutive month of job growth since the recovery began, totaling 1.8 million new jobs in all. The President rightly used the statistic against Congressional Republicans who are threatening deep cuts in the budget at a time when all respectable economists say we need stimulus. The cutbacks could stifle or even reverse the recovery should they become law. Still, even with the positive statistic, there are some reasons for continued worry. The black unemployment rate is 15.5 percent, and the Latino is 11.3 percent. These were 8.3 and 5.6 percent respectively before the financial crisis. And at the rate we’re going, 200,000 new jobs a month, it will be 2019 before we recover to pre-financial crisis levels. We really need 300,000 per month for a vigorous comeback. And we should also be concerned about the long-term unemployment picture, those who have been without work for 27 weeks or more remains extremely high at more than six million people. Also, it’s becoming increasingly common for job ads to say that the person must already be employed to be considered. Government lawyers are looking into the propriety of that, but a decision remains to be reached. Unemployment Rate Plummets
March 5th, 2011
The lead story in The New York Times this morning, “Big Jump in Private Jobs Bolsters Recovery Hopes,” describes a plummet in the unemployment rate, figuratively speaking of course. The psychological barrier of 9.0 percent was broken as the statistic descended to 8.9, based on the 12th consecutive month of job growth in the private sector. President Obama deserves kudos for this good news as his shepherding of the economy is starting to bear fruit. The U.S. economy is like a giant supertanker; it takes time to turn it around, but once it is turned, it can start to gain momentum in the new direction. News like this tends to have a snowball effect; as more people grow surer of the economic recovery, they tend to jump back into the game, creating a reinforcing effect. The unemployment rate may fluctuate a little in the coming months as more former workers are encouraged to reenter the job market — the current percentage of adults actively engaged in the job market is 64.2 percent, the lowest in 25 years. And it will take time to get back to where we were before the recession, at a growth rate of 200,000 jobs a month, it will take three years. Still, good news is better than bad news, and this is definitely the former. Economic Flatlining
January 8th, 2011
The lead story in today’s New York Times, “Slow Job Growth Dims Expection of Early Revival,” bodes no good tidings for President Obama. Though the unemployment rate fell from 9.8 percent in November to 9.4 percent, the drop was less than most economists were expecting, and one liberal group plotted out the trend lines and found it would be 2037 before we returned to the situtation before the fiscal crisis. With the unemployment rate likely to remain above 8 percent for the rest of President Obama’s term, it looks like jobs and the economy will be the major issue in the 2012 election, not a good situation for the incumbent. More significantly, there seems to be major structural problems with the unemployment rate, especially among 35-to-44 year olds, according to the article. Other economic indicators give little cause for celebration: housing is still off, consumer debt is still high, and the real unemployment rate (including those who have given up looking for jobs) is 16.7 percent. Many would hold corporations to blame for the situation. According to the article, they are holding $2 trillion in cash in reserves without any indication of hiring. One wonders what they are thinking of. There are a few wisps of silver linings in all these clouds. Jobs increased for every month last year, and it is just the rate that we need to speed up. There are other indications we have definitely emerged from recession. But too many people are hurting too much. Jobless Rates Jumps amid Washington Paralysis
December 4th, 2010
The lead article in today’s New York Times, “Jobless Rate Rises to 9.8 Percent in Blow to Recovery Hopes,” describes more bad news on the economic front. The economy only added 39,000 jobs, and local governments shed jobs, effectively destroying the story line that the economy was on the mend. With more than 15 million people unemployed, 6.3 million for more than six months, the Democrats and Republicans continue to bicker in Washington about the Bush tax cuts, unemployment benefits and just about anything else they are considering in any arena. While the Republicans continue to insist on tax cuts for millionaires, that would blow a $1 trillion hole in the deficit they claim to be so concerned about, they insist on allowing unemployment benefits for the truly suffering to expire, unless the Democrats can find spending cuts to offset the impact on that very same deficit. The bad news on the unemployment statistics was reinforced by other data from last month as well. The hiring of temporary workers increased, indicating that employers are preferring to use them rather than committing to a permanent employee. And the average workweek remained steady, showing that employers do not need to even push their permanent workers harder to meet demand. One can only hope that as the country is continuing to decline, the country will wake up to the emergency situation, and both parties will be willing to make some compromises to their core beliefs. The proposals of the debt commission led by Alan Simpson and Erskine Bowles might provide a good place to start. Employment Gains, Too Little, Too Late
November 6th, 2010
The lead article in The New York Times this morning, “Hiring is on Rise, But Jobless Rate Remains at 9.6 Percent, ” demonstrates the continued intractable problem in our economy to create enough jobs for those entering the workforce and alleviating the suffering of those who have been thrown out of it. The report showed a gain of 151,000 jobs in October, but it did not affect the unemployment rate. A more accurate statistic, the underemployment rate includes people who are in part-time jobs who prefer to work full-time and those who have grown so frustrated that they’ve stopped looking. That stands at a whopping 17 percent. Meanwhile, the Fed’s decision to stimulate the economy itself, since the legislative branch seems paralyzed, may be having an effect. It has lowered the value of the dollar, and that has made American goods more competitive overseas. President Obama has pledged to consider any proposal to improve the jobless rate, and has even said his trip to India might open up new markets for American goods. There were some elements of hope in the report. Hourly wages have increased as well as the length of the average work week. An increase in both these statistics generally foreshadows employer’s actions before they hire new workers. E.g., they push the ones they already have as hard as they can before taking on new people to cope with an increased work volume. Jobs, Jobs, Job
October 9th, 2010
The lead article in today’s New York Times, “Public Jobs Drop Amid Slowdown in Private Hiring,” shows the dismal state of the economy in terms of employment statistics, if not the stock market, which somehow managed to find good news out of the latest reports, and closed over 11,000. With the $787 billion Recovery Act fading away, the economy experienced the most rapid loss of jobs in local governments in 30 years. That combined with anemic growth in the private sector led to a general atmosphere of stagnation with the unemployment rate holding steady at 9.6 percent. While President Obama called for infrastructure improvements and tax incentives, the Republicans maintained an election-time stalemate in their bid to gain control of the House. Meanwhile, the long-term outlook seems bleak as well because the length of the work week remained static, indicating that employers will have no need to hire more help as the demand on their current workers isn’t even increasing. Hourly wages remained static as well, leading to a poor forecast for any growth in consumer spending. Meanwhile, President Obama is out on the hustings attacking the Chamber of Commerce instead of talking about the one topic on every Republicans’ list of talking points: jobs, jobs, jobs. Really the only hope in this article involves possible action by the Fed to ameliorate the situation. They are expected to buy long-term bonds, causing the rates to fall, and hopefully encouraging consumer and business spending. Tech Job Market: Dynamic or Disappointing?
September 7th, 2010
The lead article in today’s New York Times, “Once a Dynamo, the Tech Sector is Slow to Hire,” raises major questions about the ability of high-tech companies, once the most promising in the United States, to pull their own weight in helping the United States economy out of the recession. It notes that job growth in this field has been lackluster, and the unemployment rate, while better than the U.S. average at 6 percent, is still larger than any other white-collar profession. The article cites two major reasons for the poor performance: increasing automation in the industry and the improvement of overseas job pools in meeting many of the skills required. While most analysts seem to believe that employers are still chasing after tech people rather than the other way around, it is still disappointing to see slow growth in this field, as it has kept the U.S. as the world’s leading source of innovation. The shipping of high-tech jobs overseas has been couched in the same misleading language as other industries — Oracle describes it as “rebalancing their work force.” The main caveat in the article, for software engineers and computer pros, has become the same as other professions. A basic proficiency in the skills of your field is no longer enough, you need an edge over the other guy. Or, as the article puts it, if you just know C++, the programming language, you will be competing with professionals overseas with the same capability. |
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