Employment: Comparing Recessions and Diffusion Index
Submitted by
CalculatedRisk on Fri, 05/08/2009 - 5:29am (127 comments)
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So this is a green shoot, right?
CK,
More like a Red Tide..... going out before the tsunami...
FD, nice, I live here in Florida on the Gulf Coast so the Red Tide analogy is beautiful...Ha.
Just 1948 and 1958 to beat now to take the prize "and with 3 qtrs to go its 2007 coming up fast on the inside rail......"
Are there any estimates on the amount of undocumented workers and the unemployment rate for that group? I would guess that that effect wasn't the same in prior recessions.
And the March unemployment has been revised to 699,000...is that a green shoot of record?
Also, OT, Fannie Mae is stressed out...
"Fannie Mae loses $23 billion
Troubled mortgage giant asks Treasury for $19 billion, and says it will have to ask for more in the future."
from marketwatch, this morning. Another green shoot to note.
Oh come on, CR! Isn't this just a weed whacker for green shoots?!!
Gah!...
energyecon,
Do you have any updates to the EMRATIO graph?
Market is up 1%, T bills unchanged. I think the market will shoot the moon today. T bills will fall in the coming weeks as people pull money out of bonds to play the market.
Check this out for the Brith/Death model adjustment - this month's preliminary number is the largest since the April 2008 preliminary number of adding 267K jobs:
Historical Net Birth/Death Adjustments
But the final April 2008 B/D added number is 176K:
Fake Jobs
which is a 33% haircut to the B/D add, if we apply that to the current adjustment that would mean an additiona 75K of job losses missing from the headline number.
U6 is above 16%. This cannot be good!
Out of town this weekend for a family event, will update many plots after return Monday eve...
Well, obviously we are at an inflection point where many more new businesses are being created.
9:45 Eastern time, ya still way to early to start drinking.
the 'official' rate of unemployment - labeled U3 by the BLS - at 8.9%.
Of the 13.7 million people now officially unemployed, 27.2% have been out of work longer than six months, a record.
U6, includes workers who have become so discouraged they’ve stopped looking for jobs as well as people forced to work part time because they cannot find full-time employment.
U6 hit 15.8% in April.
Most of all, lots of jobs, including the best high-paying ones, are not likely to reappear for years, especially in key sectors.
Stock market still goes up.
Full disclosure:
I believe the economy is stabilizing based on ISM and new unemployment claims. However, this rally is getting euphoric, just like 2006/2007. Major gains on any news as people rush in to avoid being priced out forever. Most of my friends are feverishly buying into the rally. That alone can probably sustain things for a few more months.
REBear,
Here is the raw EMRATIO data, it has yet to show the April data yet:
St. Louis Fed: Series: EMRATIO, Civilian Employment-Population Ratio
CBS and RBS report unexpected losses. Both stocks up sharply.
"U.S. Job Losses Slowed as Economy Began to Stabilize"
Current headline on Bloomberg. Evidently, everybody got the memo and it's only good news from now on. Fannie Mae's 23 Billion in announced losses don't even make the headline scroll. Don't want to confuse the equity buyers.
That is the seasonally adjusted number.. try the non-seasonally adjusted number.
//U6 hit 15.8% in April.//
What's most concerning about this graph is the pace of recovery it implies once we finally do hit bottom.
The recessions in '48, '53, and '58 were almost straight up from the bottom in terms of job gains.
'60 and '74 recovered in a slightly more measured manner, but still relatively quickly (within a year or so from the bottom).
The three from the past 30 years - '80-'81 (I'm mentally combining these two into one line), '90, and '01 - recovered jobs extremely slowly ... bumping along the bottom for six months to a year, and then adding jobs back at a slow, very slow, and glacial pace respectively.
If we bottom at between, say, 10 and 12%, we could be stuck with a double-digit U-3 print for several quarters in a row if we hold to form. Quite possibly longer. Not at all encouraging.
fried,
Reality does not care about human beliefs and delusions. They are going to find that out soon.
//Evidently, everybody got the memo and it's only good news from now on. //
no big deal. ppl it was worse in the 70s and 80s... then ppl were starving and wore elephant pants... today we have ipods, american idol, antidepressants and still have 91.9% employed. stop complaining! obama is the best.
California likely will have to borrow more than $20 billion in the coming 2009-2010 fiscal year as it struggles with cash flow problem, a budget watchdog for the state said on Thursday.
I'd like to see list of all States to see how many total billions.
Obama's 'stellar economic team' has already shot their bailout wad on too big to fail banks and Wall St crooks.
Things are going to get porgressively ugly....
Repeating a question from the tag end of the last thread:
If we have lost 5.7 million jobs since the recession began (according to the BLS), why are continuing claims 6.35 million??? Have not some of the jobless lost benefits? Were not some of them ineligible in the first place?
In U-6 terms, it's down 7.5% ... only slightly off the bottom of the image.
"while the Federal Reserve and the Obama administration continue to insist that they’re committed to tighter financial regulation and greater oversight, Wall Street insiders are taking the mildness of bank policy so far as a sign that they’ll soon be able to go back to playing the same games as before.
So as I said, while bankers may find the results of the stress tests “reassuring,” the rest of us should be very, very afraid."
Krugman in the NYTimes this morning.
energycon,
which is a 33% haircut to the B/D add, if we apply that to the current adjustment that would mean an additiona 75K of job losses missing from the headline number
That was when the good BLS prognosticator was taking annual leave, not to worry now, every thing under control...
"The change in debt is therefore the best–and most ominous–predictor of future unemployment levels. Though well down from the peak level of being responsible for 25% of aggregate demand, private debt is still generating 10 percent of demand in the USA. Yet even with still positive debt-financed demand, unemployment has risen to 8.7 percent. If deleveraging results in debt reducing aggregate demand by 25 percent as it did in the Great Depression, then unemployment is going to go much, much higher"
Debtwatch No 34: The Confidence Trick | Steve Keen's Debtwatch
and off topic:
Krugman tips hand on his dinner with Barack
"But focusing on the process can distract from the larger picture. What we’re really seeing here is a decision on the part of President Obama and his officials to muddle through the financial crisis, hoping that the banks can earn their way back to health"
OP-ED COLUMNIST; Stressing the Positive - NY Times
this guy agrees
Information Arbitrage: What Keeps Me Awake At Night: Economy Edition
obama knows what hes doing... he wouldnt be president if he didnt know what to do. so krugman is wrong and geithner is right. the economy is ok, and the banks will make trillions. let it be said, everything is fine.
In the bay area I definetley feel as though layoffs are slowing but more people are worried about getting laid off (rightfully so). Public sector thought they were untouchable 8 months ago. The slide continues.
14-15% UE here we come.
Wholesale inventories off 1.6% vs expected 1.2%
Obama is a decent intelligent man. Political sniping is an insult to intelligent discussion.
Nice explanation of diffusion, CR.
anoddamoose
Those inventories are telling us that we won't see a increase in PCE anytime soon IMO
from Krugman -
"it’s my sense that the prospects for fundamental financial reform are fading. "
He finally figured it all out out!
OT: Volume is heavy on GM and price is moving up! Was the "shareholders get wiped out story" just a rumor?
Wholesale sales off 2.4% vs expected 1.6%.
Rocky
I a modern stock market where the indexs are above 8000 a stock that moves from 30 to say 1 dollar... the market has left it for dead. Think of it as a fish out of water flailing about
Obama is an intelligent man. I voted for him. However, I am beginning to question whether he is a decent man. The longer his economic program is focused on a no-consequences policy toward banks while the rest of the nation suffers from further massive misallocation of capital, the more I will question his decency.. Talk is cheap. Watch the money.
anoddamoose,
well said.
Political sniping is an insult to intelligent discussion.
Scanning for the so called intelligent?
ot: dept of energy stops research on fuel cells.
km4 try this link and scroll down to map,it is old 3/09
Recession Continues to Batter State Budgets; State Responses Could Slow Recovery — Center on Budget and Policy Priorities
laters guys. im going to watch csi
you think the market will go over 450
Obama ( with Goldman Sachs crooks in his admin or advisors ) already spent $12 trillion to bail out the financial sector compared to only about $1 trillion being spent on economic stimulus ( infrastructure, education, tax cuts etc )
California likely will have to borrow more than $20 billion in the coming 2009-2010 fiscal year
What about all the States?
How many total billions ?
Is Wall St. still favored over the States like they were favored over the taxpayers ?
It's going to get ugly...
Ben is helping out though, juicing inflation in necessities. When do we dust off the Misery Index (MI for short)?
gabyjan thx just saw your link - How bad it will get chart - YIKES !!!
When U6 hits 20%, it triggers the zombie apocolypse.
government numbers.
I look at briefing.com daily which gives current #, prior #, and revision to prior#. Can anyone recall ANY government number in which the revision to the prior was more favorable (economically speaking) in the past year?
Trillions to the banks, tent cities for Obama's voters. Nuff said.
Did anybody else notice that while job loss in April is lower than job loss in March (hence the implication that the US labour market has passed an inflection point and the second derivative is now positive), this fact is due entirely to job creation in Education, Health and Government sectors.
What happens when the States run out of money?
Basel
ot: dept of energy stops research on fuel cells.
In a related story GS downgrades all fuel cell makers
dr munch (profile) wrote on Fri, 5/8/2009 - 7:17 am
Trillions to the banks, tent cities for Obama's voters. Nuff said.
The Quiet Coup
The Atlantic Online | May 2009 | The Quiet Coup | Simon Johnson
If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.
From 1973 to 1985, the financial sector never earned more than 16 percent of domestic corporate profits. In 1986, that figure reached 19 percent. In the 1990s, it oscillated between 21 percent and 30 percent, higher than it had ever been in the postwar period. This decade, it reached 41 percent.
Obama ( with Goldman Sachs crooks in his admin or advisors ) already spent $12 trillion to bail out the financial sector compared to only about $1 trillion being spent on economic stimulus ( infrastructure, education, tax cuts etc )
Soon states have to start releasing prisoners because of budget cuts and at the same time fire a lot of cops and teachers. That makes things even worse. Nothing is more dangerous than a lot of angry young men and nothing to do...
I would short crude here. Economy is not bottoming, record levels of storage
Krugman: "It’s not at all clear that credit from the Fed, Fannie and Freddie can fully substitute for a healthy banking system. If it can’t, the muddle-through strategy will turn out to be a recipe for a prolonged, Japanese-style era of high unemployment and weak growth."
OP-ED COLUMNIST; Stressing the Positive - NY Times
Trillions to bail out the financial sector .... for what return ?
anoddamoose (profile) wrote on Fri, 5/8/2009 - 10:06 am
"Obama is an intelligent man. I voted for him. However, I am beginning to question whether he is a decent man. The longer his economic program is focused on a no-consequences policy toward banks while the rest of the nation suffers from further massive misallocation of capital, the more I will question his decency.. Talk is cheap. Watch the money. "<br/>
\
I wouldn't stress too much about President Obama's moral status. When things continue to falter, he'll have the "Bully Steamroller" to rearrange the social and economic landscapes however he pleases.
Do you really think Obama's changed his stripes? He's a born and bred socialist, to paraphrase Jas' favorite cliché. I'm still wondering if the guy only has one suit.
You voted for change? I have a feeling--like it or not--we're all gonna get it ...
Kermit And Elmo Discuss Happy And Sad
YouTube - Sesame Street: Kermit And Elmo Discuss Happy And Sad
August 1991
First of all are you still in high school?
State governments are hiring based on need. They must feel (hope) a recovery is coming
The last "jobless recovery" was a credit bubble. There will be no true recovery this time jobless or otherwise.
Kinda makes you scratch your head when you compare the 1974 job losses to the current losses then compare the way the stock market is behaving comparatively. Hmmmm.....
Fannie Mae to Tap $19 Billion in Treasury Capital
Fannie Mae, operating under a federal conservatorship since September, asked the U.S. Treasury for a $19 billion capital investment as a seventh straight quarterly loss drove the mortgage-finance company’s net worth below zero.
Fannie Mae to Tap $19 Billion in Treasury Capital (Update1) - Bloomberg.com
OT but just wanted to say I read and lurk every day -- thanks to all the smart people here.
Chipped in for hoocoodanode -- I hope everyone who can does too.
thanks again CR and community!
-- Murphy.
Also notice how the length of the losses have become much more elongated as Federal Reserve intervention in the economic cycle has been increased and they've attempted to make things better by endlessly cramming credit down the throats of the general population.
How do you chip in?
Tim,
I am in fact mistaken. If you take Health, Education and Government out of the Non-farm Employment numbers, then job losses are the following:
Feb -707
Mar -703
Apr -626.
I think that it's fair to say that even in private sector employment, an inflection has been passed and the second derivative has turned positive. IOW, the US is losing private sector jobs at a lower rate. Bear in mind that the labor market is a leading indicator.
This doesn't mean that the unemployment rate will not continue to grow or that many other events can occur in the future. But this seems to be a green shoot (while I'll admit others will see it as grasping at a green straw).
If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform.
The very real problem is that we have this sort of Pavlov's Dog population.
All you do is make the numbers on the ticker go up and you can gang rape them from dawn to dark and they just don't care.
"Also notice how the length of the losses have become much more elongated as Federal Reserve intervention in the economic cycle has been increased and they've attempted to make things better by endlessly cramming credit down the throats of the general population."
You wouldn't be implying that all the talk from our rulers, that all that's needed to fix things is to get credit rolling again, is rubbish, would you?
About FNM... Loss rates and severities for Alt-A (OptionARMs) seem to be at odds with Geithner's most severe stress test scenario Above 60%. Think WFC can handle THAT with their GoldenWest holdings. Won't be long before that little shitpile finally hit critical mass and the UST will be the proud owner of another black hole.
bearly on FNM true+1
bleh said:
"obama knows what hes doing... he wouldnt be president if he didnt know what to do. so krugman is wrong and geithner is right. the economy is ok, and the banks will make trillions. let it be said, everything is fine."
Ummm... right. And we've always been at war with Eastasia!
vbg
Look unemployment is slowing. This is positive evidence of a recovery. You might not like that Obama gave bankers trillions.. .but it is getting us out of this recession. Be happy.
I think that it's fair to say that even in private sector employment, an inflection has been passed and the second derivative has turned positive.
I think you need to be careful about torturing the data until it tells you what you want to hear. -626k SA unrevised is a disaster by any measure. It isn't measurably in any way "better than -703k 1st rev. Let's also not lose sight of the fact that we cannot sustain even mildly negative to flat employment for any length of time before slipping deeper into recession.
HI BEN!
I SEE YOU WANT THE YIELD ON THE 5-20 SEGMENT OF THE YIELD CURVE DOWN BY 5 BP!
I BET THE EXTERNAL CREDITORS NOTICED TOO!
I wonder if he's paying for it by raw printing or pushing it down into the short end of the yield curve.
The Washington Post on GM.
"The U.S. government is pouring billions into General Motors in hopes of reviving the domestic economy, but when the automaker completes its restructuring plan, many of the company's new jobs will be filled by workers overseas. "
...
"It's an almost impossible dilemma," said former labor secretary Robert B. Reich, now a professor at the University of California-Berkeley. "GM is a global company -- so for that matter is AIG and the biggest Wall Street banks. That means that bailing them out doesn't necessarily redound to the benefit of the U.S. or American workers.
"More significantly, it raises fundamental questions about the purpose of bailing out these big companies. If GM is going to do more of its production overseas, then why exactly are we saving GM?"
Under Restructuring, GM To Build More Cars Overseas - washingtonpost.com
Michelle befriends Elmo on Drudge!
Yahoo! - 404 Not Found
Is this The End?
Or just the Beginning?!
Take A Name,
Thanks for linking "What Keeps Me Awake At Night: Economy Edition"
Information Arbitrage: What Keeps Me Awake At Night: Economy Edition
well written
frazzle (profile) wrote (in reply to...) on Fri, 5/8/2009 - 10:42 am
How do you chip in?
Scroll to the top of page and there's a blue box that say "Support HCN."
I you're, by chance, a chemist like me, you'll wonder why HCN (hydrogen cyanide) is in need of support. Then you'll feeled conpelled to click on the reddish bar that says "ChipIn!" It'll walk you through the procedure.
I've contributed as well--it's a good cause. Besides you'll save a fortune since you'll be glued to CR, you won't have time to spend any money (just don't let it get you fired from your job).
bleh, perhaps you should look at the birth death model additions and the 60,000 census jobs added -- then tell me exactly how much unemployment is slowing.
Obama is not going to get us out of this recession. The hole is much larger than many like to admit.
"Trillions to bail out the financial sector .... for what return?"
Seriously? It's an infinite percent return! The banks had no money. Then they took your money and paid it to themselves. Profit! I stand in awe of the banks ability to make huge salaries and bonuses despite being insolvent. Tenacity, voraciousness, stick-tuitiveness. They are heroes to be worshiped (with your money of course. don't forget to chip in when the collection plate comes around).
bleh.........how are we going to get back the trillions it has cost so far?
"I wonder if he's paying for it by raw printing or pushing it down into the short end of the yield curve."
Well, the way I see it, you either stomp on the rubble swept under the carpet, mashing it around so that it is (hopefully) less noticiable, or you just keep weeping rubble under it until it's roughly level, and hope no one trips on the edge.
Both kinda rely on one thing that's not a strategy....hope.
Have faith in America. Thats what will get us out of this recession. Plus its not so bad, in the 70s we had it worse and got out of that.
bleh (profile) wrote on Fri, 5/8/2009 - 10:51 am
Look unemployment is slowing. This is positive evidence of a recovery. You might not like that Obama gave bankers trillions.. .but it is getting us out of this recession. Be happy.
YouTube - 03 MC 900 Ft Jesus Adventures In Failure
I weave down the road for a block
jugglin' a beer and a a styrofoam box
pull into a parking lot and kill the motor
presently I notice a peculiar odour
a little black smoke is risin' from the hood
somethings gonna happen and it's probably not good
I open the door grab my stuff and go
just in time to watch the whole thing blow
the car explodes with a bang and a hiss
Oh boy, my wife is gonna really like this
I can't believe this is happenin' to me
this piece of junk's goin' back to the factory!
bleh said:
"Look unemployment is slowing. This is positive evidence of a recovery. You might not like that Obama gave bankers trillions.. .but it is getting us out of this recession. Be happy."
I think you've had too much Victory Gin, Winston! Downward revised unemployment figures seem to suggest otherwise. Wait till the April figures are downward revised.
April Fools!
vbg
Just more evidence that this is no Recession with an "L'-shaped 'Recovery'.
This is a structural transformation of our economy with the tell-tale feature of permanent destruction of headcounts & payrolls for key occupations & career-paths, mainly those related to products and services whose payrolls grew very unsustainably as consumers accessed EZ $$s.
Amazingly, Team Obama feels they have to timidly float the idea that tens of millions of Americans will need job training in new fields before they can re-enter the job force. As if this is not 'common sense'...well it was 15-20 years ago....what happened, did IQs collapse?
But truth is, we have no idea what professions can 'sustainably' grow and absorb these displaced surplus workers...so 'Job training' for what jobs? Something vague like 'Green-collar' jobs?
Therefore, we need to build the safety padding and safety cushions on the economic floor that surplus workers are landing on with a bone-crushing thud; you see, Europe has a Safety Net, the US of A only aspires for at best, Safety 'Padding' atop a hard floor. Don't look for Team Obama or the Dem Congress to show bold leadership on this even Safety Padding; displaced surplus workers must unite and demand this rather than disappear into the shadows of 'shame', or into the embrace of numbing 'substance abuse' like alcohol, or take up the American sport of spouse-beating and dog-kicking.
You wouldn't be implying that all the talk from our rulers, that all that's needed to fix things is to get credit rolling again, is rubbish, would you?
Actually I agree that what's needed is to get credit rolling again.
However, historically the only way to successfully do that is to purge the existing credit from the system and then restart from there.
Apparently we're not doing that because we want "European" style security for our economy.
Funny thing is my European friends were always telling me how they would send their kids to Oxford or Cambridge and afterward advise them to go to America to find the opportunity to make something of themselves.
I guess now they'll be going to Asia instead.
Zombieconomy.
Methinks bleh is doing the Joe Schmoe parody, and doing it effectively it appears.
"Rob Dawg (homepage, profile) wrote on Fri, 5/8/2009 - 10:53 am
I think you need to be careful about torturing the data until it tells you what you want to hear."
-- "Bureau of Labor Statistics (& Waterboarding)"
Does Obama know about this?
That is a real head on in the making - absent real dollar devaluation it is difficult to see how the price of crude does not decline as the OPEC cuts have been outpaced by reduced demand...
I think you need to be careful about torturing the data until it tells you what you want to hear.
Absolutely Dawg. This is preliminary data and the numbers are not great.
I just mean to say that yesterday's fall in jobless claims is consistent with this data and implies that the US economy is beginning to turn.
At first glance, I thought public sector hirings explained the change but if you net this out, the employment numbers are still falling at a slower rate.
IMV, the bigger dangers are the unknowns down the road. This inflection point could turn again. Roller coasters often have double dips.
Yancey Ward (profile) wrote on Fri, 5/8/2009 - 11:02 am
Methinks bleh is doing the Joe Schmoe parody, and doing it effectively it appears.
I just think this is hilarious to watch. You will never see such a show again in your life.
Even now, Ben Bernanke as Daffy Duck in a red devil suit gestures grandly.
"And now, a match."
bleh, solid rationale! Maybe prayer would also help? I look forward to engaging in deep and meaningful economic debate with you in the future.
bleh (profile) wrote on Fri, 5/8/2009 - 7:59 am
"Have faith in America. Thats what will get us out of this recession. Plus its not so bad, in the 70s we had it worse and got out of that."
You must not have been around in the '70s. I was. Besides Nixon being a crook and Carter being a total incompetent, the only issues I had was waiting at the pump lines.
But I had a job - and most others did, too.
Keep clicking those ruby red shoes of yours together and chant, "Obama will lead us out of this, Obama will lead us out of this!"
Who knows, worked for Dorothy!
Byzantine_Ruins (homepage, profile) wrote (in reply to...) on Fri, 5/8/2009 - 8:06 am reply Ignore user
Yancey Ward (profile) wrote on Fri, 5/8/2009 - 11:02 am
Methinks bleh is doing the Joe Schmoe parody, and doing it effectively it appears.
I just think this is hilarious to watch. You will never see such a show again in your life.
Even now, Ben Bernanke as Daffy Duck in a red devil suit gestures grandly.
"And now, a match."
[Clapping] Colossal! Stupendous!
(too bad the trick only works once)
No. It is positive evidence of UE slowing, and you are inferring this to indicate a recovery in progress (without addressing the probability of that assessment being correct).
That is a real head on in the making - absent real dollar devaluation it is difficult to see how the price of crude does not decline as the OPEC cuts have been outpaced by reduced demand...
Well if some forward looking countries decide to hoard it in storage containers in expectation of a future rebound or if they just want to divest their stash of fiat garbage.
I wonder what will be more valuable 10 years from now:
A trillion dollars worth of oil at today's prices or a trillion dollars.
Note: slowing the rise of joblessness is not tantamount to 'ending a recession'. Especially when you’re in an ‘L’-shaped Descent, not recovery.
Is a slowing in the drop of weekly average temps in the month of December, as always happens in that month in bitter cold places like the Midwest, ever assumed by people to equate to 'Ending' winter in December? No.
C’mon people, use those critical thinking skills and stop mouthing the political spin and nonsense from reality-challenged economists.
@a/c, Saying all we have to do is 'purge credit' from the system reminds me of a StartTrek TNG episode where the omnipotent Q said all we had to do was change the Gravitational Constant in order to prevent the crisis of that particular episode.
"Market is up 1%, T bills unchanged. I think the market will shoot the moon today. T bills will fall in the coming weeks as people pull money out of bonds to play the market."
historically, the stock market luv luv loves rising interest rates.
in opposites land
Exactly, GH - plus let's not forget the all time record amount of consumer credit decline reported yesterday, which on a relative basis needed an 18 year mark to see worse - what is the current contribution of consumption to GDP again? And without transfer payments, what was happening with PCE again? And how is that employment income thingy going again?
Trillions thrown into the black hole has a bit sloshing around the event horizon, with anedotal data of retail investors leaping back into the equity markets...
Here's your answer kids - check what is being sold on strength, with attention to the block trades (teh boyz):
Comment by energyecon from thread 'Employment: Comparing Recessions and Diffusion Index'
actually i think its going to get alot worse before it gets better. im just bored at work. plus what i hear from coworkers is basically that its not that bad (after we already have made 30% cuts in payroll and are planning more)... so it rubs off on me!
".......the only issues I had was waiting at the pump lines."
.....remembering back, I thought I was so damned kewl & important because I never had to wait in line for fuel (we had a card-lock fill station). What a dumb-ass I was (some would say "still am"). LOL.
"Plus its not so bad, in the 70s we had it worse and got out of that. "
I don't understand how anyone can compare a recession that's still going to one that's already complete.
Thinking about these lines, I can't help but think about how they mean different things. Think about how workforce participation has changed over the years. In earlier recessions, maybe a housewife would find a way to make some money picking up some work. Today, households are more likely to be single wage earners or more likely to have two wage earners. I think this has implications for how unemployment alters consumer spending. Add to that the pressure of long-stagnant median wages and this unemployment dip is qualitatively different from the previous ones. I'm not sure how one would get at this, but I would love to see some analysis that tries to capture this effect relative to past recessions. Maybe it's a graph of household income changes?
ac,
the issue is that world storage is just about full up to the rafters and once we get there, producers still have to produce...
IMV, the bigger dangers are the unknowns down the road. This inflection point could turn again. Roller coasters often have double dips.
Well the real danger is known, the question is whether it manifests or not:
We've taken on massive debt and diminished the credibility of our currency to "solve" this crisis.
If we don't get a sufficient rebound to offset this increased burden / loss of credibility then potentially lose control over our economic future.
Obama and Bernanke are jamming the control stick as far as it can go in one direction. If the movement doesn't take there's not much left to do.
A second wave down with the amount of debt we have could bring about a fiscal "super crisis".
The history of debt abuse is not reassuring on these matters.
"In 2008, personal consumption expenditures represented 70% of gross domestic product,
or total spending on final goods and services... This article analyzes consumer sentiment and spending data to uncover differences across income and education level groups."
http://www.chicagofed.org/publications/fedletter/cflmay2009_262.pdf
Caution: pdf file.
you have to remember its already bad for many people and even when it does get worse they will never take the drugged optimism glasses off... it just seems to be a part of being american these days.
With the US economy based on extemely cheap credit - how does that end again?
Calculated Risk is my favorite place on the Web. Learned about it from the John Batchelor show, the only radio I listen to anymore.
This recession and its aftermath will be worse than the 70's.
Samdog (profile) wrote on Fri, 5/8/2009 - 9:56 am reply Ignore user frazzle (profile) wrote (in reply to...) on Fri, 5/8/2009 - 10:42 am
How do you chip in?
I've contributed as well--it's a good cause. Besides you'll save a fortune since you'll be glued to CR, you won't have time to spend any money (just don't let it get you fired from your job).
Thanks Samdog. I'm in.
ac,
the issue is that world storage is just about full up to the rafters and once we get there, producers still have to produce...
If that's the case then yeah, you may be looking at a real price problem.
Plus its not so bad, in the 70s we had it worse and got out of that.
70s, we were in so much better fundamental shape than now.
The whole oil crisis was really nothing but a protest against the US leaving the gold standard, only applied to the US and Australia. Producers could have turned the taps on at any instant they wanted to.
energy, don't forget the impact of MEW. When you dig deeply into the numbers, the largest source of improvement is how they are portrayed in the MSM. Sentiment is fueling a rising stock market, improved consumer confidence, delaying layoffs (encouraging managers to keep capacity in hopes of rapid recovery). Propaganda is effective, and collectively economists and executives are engaged in groupthink -- just as being bearish was popular 3 months ago, positive spin is the new rage. And we SHOULD see an improvement in indicators considering the government is spending hundreds of billions of stimulus.
I suggest that people enjoy the rally. But when reality hits, and people get realistic about the strength of US consumers, corporate earnings, balance sheet impairments, and the implications of a deleveraging process that is still going on -- people will reach a point of capitulation and despair. As a country we need to make some tough choices and reallocate our human and capital resources. Those decisions are currently A) being postponed, or B) made poorly with negative implications on future output.
What is Krugman's obsession with Japan? How are we anything like Japan? Are we a net exporter? Do we have a positive trade balance?
This is going to be like the 70s, but worse. We have put trillions of dollars into the most unproductive industry in our country. What do you think they are going to do with that money? Lend it to productive industries? Which ones would that be? Our auto industry? Heavy industry? Give me a break.
It is all going into commodity speculation. Look at the price of oil - WTI went over $58 a barrel today, and is still up to 57.4, over 1% increase just today. Corn, up almost 2%. Wheat, 2.67%. etc.
Corruption in our govt is at an all time high, the control of our govt by the financial industry is unbelievable.
Zimbabwe Ben took the GD off the table in March when he stepped up his QE efforts, and put Argentina/Zimbabwe/Weimar Germany into play.
bleh (profile) wrote on Fri, 5/8/2009 - 11:24 am
"they will never take the drugged optimism glasses off... it just seems to be a part of being american these days."
bleh,
it goes like this:
God grant me the serenity
To accept the things I cannot change;
Courage to change the things I can;
And wisdom to know the difference.
--Reinhold Niebuhr (attributed)
My Take:
The April jobs report came in somewhat better than expected with a loss of “only 539,000” jobs. Due to growth in the labor force, the total number of people who are unemployed rose by 563,000 This good news was offset by upward revisions to the February and March lost jobs figures totaling 66,000. The unemployment rate rose to 8.9% from 8.5% in March (U-3). There was mixed news in the details of the report. On the plus side the broader U-6 measure of unemployment which includes discouraged workers and those working part time for economic reasons only rose to 15.8% from 15.6% in March. This was a much smaller rise that we saw in either of the last two months (February, up 0.9 points, March up 0.8 points). Other things were not as comforting. The biggest area of job gains was in the Federal Government, mostly due to hiring for the up coming census. Private sector employment was down by 611,000.
As I pointed out in a previous blog, Changing Nature of Unemployment, the amount of time people are out of work is lengthening. The number of people out of work for more than 27 weeks rose by 498,000, or by 88% of the total increase in unemployment. The consequences of being out of work for more than six month are substantially different than for being out of work for a few weeks. Since the start of the recession in December 2007, the number of long term unemployed has almost tripled to 3.7 million. Currently, the long term unemployed make up 27.2% of the total unemployed, an all time record (or at least since the data became available) up from 17.9% of the unemployed a year ago. In contrast, those out of work for 14 weeks or less now make up just 54.1% of the jobless, down from 65.4% a year ago.
Once again the losses were widespread throughout the economy. The goods producing sector shed 270,000 jobs, or which 110,000 were in Construction and 149,000 were in Manufacturing. Relative to the average for the fourth quarter of 2008, the total number of goods producing jobs is off by 7.5%. The service sector lost 269,000 jobs including 47,000 in Retail, 122,000 in business and professional Services, and Leisure and hospitality down by 44,000 jobs. Those losses were partially offset by gains of 15,000 in Education and Health, and by 72,000 Government jobs. The service sector, is of course, much larger than the goods producing sector. Relative to the average of the fourth quarter of last year, total employment in the sector is down 1.5%.
Demographically there have been wide disparities in how hard different groups have been hit in this downturn. Most notably, men are taking it on the chin (partly because they are much more likely to be employed in the goods producing jobs than are women). The unemployment rate for adult men now stands at 9.4%, up from 8.8% in March and 8.1% in February. A year ago the unemployment rate for men was just 4.7%. Women on the other hand are holding on to their jobs 9relatively speaking) with an unemployment rate of 7.1%, up from 7.0% in March and 6.7% in February. A year ago the unemployment rate for women was 4.3%. As is usually the case in recessions, Teenagers, Blacks and Hispanics have be hit harder than adult Whites. For teens, however, the unemployment rate is leveling off at a very high level. In April, it was 21.5%, up from 15.4% a year ago, but actually down slightly from February (21.6%) and March (21.7%). For blacks the unemployment rate rose to 15.0% from 13.3% in March and 8.8% a year ago. For Black Men the rate is now 17.4%. For Hispanics, the unemployment rate dipped slightly to 11.3% in April from 11.4% in March but is up from 7.0% a year ago.
While there are some tentative signs that the rate of decline in the labor market is slowing, most notably the drop in initial claims, I still remain worried that this progress could be erased if General Motors (GM) goes bankrupt. This will cause many of its suppliers major headaches the suppliers like Lear (LEA) and TRW Automotive (TRW) causing major additional layoffs at those firms. Still there are reasons for cautious optimism in this jobs report.
timmay is wearing his zorro costume today. he is really in to those 1950's TV shows. except for rin tin tin. his friend the judge is visiting. the judge and timmay became good friends when he consulted with timmay on guidelines for torturing the banks.
tarpy is lounging on john thain's old couch from his office that timmay was able to pick up for a song. she is in a sort of josephine baker outfit except it's ben franklins, not bananas.
timmay to the judge: bybe, just slap me around a little and pound my forehead on the wall. i have to go out tonight, so no marks!
the judge: justice will be dispensed, all within the guidelines.
tarpy: judge, strong men like you will have convictions . . .
"Calculated Risk is my favorite place on the Web"
I second that.
"As a country we need to make some tough choices and reallocate our human and capital resources. Those decisions are currently A) being postponed, or B) made poorly with negative implications on future output."
A very astute comment. I would add:
C) being delegated to the banksters who put us into this mess in the first place.
D) nearly impossible to make given the poor education of our workforce, and state of our primary educational system
E) highly dependent on how long our bankers, the Chinese, Saudis, etc are willing to bankroll us.
I laugh when BHO talks about tax cuts.
Here's your tax cut J6P
Bloomberg.com:
Commodity Futures
Im sorry, but this is not a turning point - it IS a deceleration in the cliff diving. But that isnt exactly a reason to cheer.
Take a look at the revised job loss figures. Prior month almost hit 700k. What do you think will happen to the 539k next month? Yeh, it will be 600k. So wow, we're losing jobs at a slightly slower rate, which historically is still way worse than we would ever think possible.
Now, if you believe there is ANY reason for a v shape recovery in employment, Id love to hear it. Try to remember the pressures ahead on consumers, and overall demand. Do you have some miracle fix for the banking sector and high end real estate foreclosures? Are we magically going to do a matador Ben OLE! on that? Dont think so. Losing a million jobs every two months is going to revive demand? Nope. Look at the inventory to sales ratios. Still way way out of whack. Look at capital spending. You think the adjustment is over? Uh, nope. Now I will agree, we probably wont see another cliff dive like the 700k+ job loss months, and if we had back to that, bring on GD2.
Picture a car with no driver, Ben in the backseat occasionally grabbing the wheel as we are about to go off the road. A bunch of bankers skitching behind on the tailgate. Common folk in the road dead ahead, waving like their savior is coming, and when he arrives, he runs flat over them.
That's about where we are.
Dirk. Thank you for your take on the BLS report. But... tucked in those details was a 100% in increase in unemployment for those with college degrees from April 2008 to April 2009. The number unemployed increased y 1 mill where the population size only increased by about 170,000+. We all know college educated folks who are currently unemployed. I personally know of 3 late fifties and early sixties who became redundent. Most of these folks are terrified that they are not going to find emplyment at all never mind anything near their prior income levels.
"Worker retraining" is a cruel sham designed to instill hope and entice laid off workers to spend precious family savings on useless education programs!
I had a friend who had worked for years in the construction industry and went to college at a very good engineering school. When he graduated (with honors, no less), he never got a sniff! And that was when the economy was humming along and engineering job openings were supposedly everywhere.
Seems companies did not want to stoop to hiring engineering "retreads" in their mid-fifties!
And even during this downturn, I have looked numerous times for an engineering/technical management job to shore up my declining retirement funds but no-one will even talk to me. Again, mid-fifties, slightly out-of-date technology-wise, and a proven fast learner with an engineering degree from a top engineering school.
So the next time you hear someone blowing about how Obama is going to retrain all these laid off auto workers into highly paid engineers, wake up, smell the coffee and get a grip.
Retraining is nothing more than a political buzzword. Politicians have been spouting retraining - for decades - every time there is structural unemployment, and every time, it never materializes. When will the blind idiots in this world ever wake up to that fact???
I thought Obama was going to bring about CHANGE. Not rehashed fairy tales!