No Economic Recovery Yet; Doubt We’ve Seen Bottom

There is a growing sentiment in the corporate media that the economy is finding its bottom and we’ll see recovery the rest of the year.  Their indication?  Economic leading indicators aren’t as bad as they have been.  “It’s only a matter of time”, they say.  Which is about the only thing they’re getting correct.  It is only a matter of time.  But they’re paying way too much attention to trends in the stock market and not enough attention to fundamentals.  Take the last two “recoveries” from the last two recessions.  The recovery from the 1991 recession took 16 months before the unemployment rate started going down.  16 months after the official declaration of the end of the recession, the unemployment rate finally responded.  The recovery from the last recession was even worse – exacerbated as it was by insane Con economic policies (giving away money to people who are already rich doesn’t benefit the economy or workers).  For 21 months (nearly 2 years) after the 8-month recession ended, unemployment continued to rise.  It took 47 months (4 years) for the same number of jobs to be reported as were held back in February 2001.  Which sounds good except for the U.S. population grew during those 4 years – meaning the percentage of people employed in 2005 was still less than it was in 2001.  And those two recessions weren’t nearly as bad as this recession is.

I don’t think the fundamental problems that helped cause the last two recessions were ever honestly dealt with by policy makers.  That goes for Democrats as well as Republicans.  The rich kept looking out for themselves while trying to screw the non-rich.  Few in political power have tried to stop that effort.  Instead, many of them have helped.  There are reasons fewer people are employed today than there were in 2001 – reasons that remain unaddressed.  So when the chattering heads get all excited about a small turnaround in the stock market – where the rich continue to make money while the non-rich continue to try to keep themselves afloat – I don’t get too worked up.  American corporations are firing American workers and closing American workplaces while at the same time keeping operations going in foreign countries, employing foreign workers.  Where is the outrage for that happening?  I hear nothing from the “build-the-border-fence” xenophobes, which reinforces the true intent of their complaints.  It was never about American jobs – they’re still being lost despite the efforts to crack down on immigration across our southwestern border.  It was and remains about people with different colored skin than the current majority of Americans.

So the numbers continue to get worse – and they’ll stay there for an awfully long time until more people figure out how they’re being screwed by American corporations.  Their profits will rebound while most Americans’ suffering continues.  It’s up to workers and citizens to decide when enough is enough.  Until then, news like ‘Retail sales fall‘, ‘Jobless claims remain high‘ and ‘wholesale prices fall while producer prices rise’ will continue to come out.  There is no sane reason economists should be cheering jobless claims at a rate of over 600,000 per month, just because last week’s reading is 10,000 or so less than the maximum number in late March.  600,000 per month is still over double what it was one year ago.  It’s not like 580,000 of them are finding jobs in a couple of weeks, let alone jobs that pay even as well as the job they lost.  Tens of millions of Americans are underemployed to some extent.  That is creating a huge weight on the economy, preventing it from being as strong as it should be if corporations were employing Americans instead of people in foreign countries.

Whatever bottom might be found in the next year or two won’t mean spit to those millions of Americans or the rest of us as we’re all held back by conditions that corporations and Chambers of Commerce fight for.  Unless more workers begin to stand up for themselves and their neighbors, we will all continue to be exploited.  Because you can bet any sum on corporations joining together to fight for their “right” to proiteer off of us.  As far as announcing recoveries go, economists don’t like dealing with the real world – their theoretical framework does what they want it to.  So don’t expect their prognosticating to make much sense when it comes to examining the real economy.

Economy Still Struggling

I know what’s going to happen soon.  Republicans will, at some point, begin complaining that President Obama’s economic policies aren’t working – if they were, why would we still be in a recession.  That’s why President Obama continues to personally address the American people, explaining his administration’s moves and why they’re being taken.  The American people in turn recognize that recovering from this economic disaster will take time and patience.  Not endless amounts of either, but reasonable doses.  The most recent corporate earnings reports haven’t thrilled Wall St.  Big deal – they shouldn’t thrill Wall St.  The fundamentals are still recovering from decades of economic mismanagement – initiated by Republicans and supported by Democrats.

That’s why it’s no surprise that sales of existing homes in the U.S. fell 3% again last month.  Markets in the West recovered, selling homes at 23% more than last year’s numbers.   That’s a sharp recovery, but I’m not convinced it will be long lived.  Those markets were overpriced for many years before taking a hard tumble in this recession.  Did they fall far enough so that market fundamentals can support their prices?  Or are people still trying to squeeze unsustainable returns from their properties?

Continued economic weakness is the message in this article about additional unemployment news.  The Labor Department reported today that initial claims for unemployment compensation rose to a seasonally adjusted 640,000, up from a revised 613,000 the previous week.  More bad news: 6.1 million people continue to file claims for benefits.  Few companies are hiring – they won’t until the economic outlook improves.  That means we’re a long way away from recovery.  It’s a bad chicken-or-egg problem that more and more Americans are suffering under.  These claims mean that the unemployment figures for April are likely to go higher than March’s (which was over 15%).

Real March 2009 Unemployment: 15.6%

The U.S. Labor Department released March 2009 unemployment numbers today.  The most common number being reported by the corporate media is the U-3 number: 8.5%.  As I’ve written before, this number is used to undercount how bad un- and underemployment really are in America.  The more complete number, called U-6, is at 15.6% this month, up from 14.8% last month and 9.1% in March 2008.  That 15.6% number is the highest ever recorded (going back to 1994).

663,000 jobs were eliminated last month, as the Con 2008-09 recession continues to deepen.  The underemployed are becoming a large problem: The average work week in March dropped to 33.2 hours, a new record low.

Previous months’ numbers were updated: January came out much worse than originally thought; February was unchanged.  January’s job loss number went from an initial 655,000 to 741,000.

Since the recession began in December 2007, the economy has lost a net total of 5.1 million jobs, with almost two-thirds of the losses occurring in the last five months.

At this point, I still don’t thinkthe Obama administration has done enough to pull the economy out of its deep recession.  We still don’t know what millions of mortgages and other financial instruments are really worth.  The credit markets are still largely frozen.  Banks are walking away from houses, leaving their previous owners stuck with properties that are upside-down in value.  These unemployment numbers will continue to get worse for the forseeable future.  I expect the U-3 number to get above 10% and the U-6 number to bump up against 20%.  Combine those numbers with millions of workers that aren’t on the official rolls of companies and we’ve got huge problems.

Corporate Media Gunning for Obama – No Surprise

Most progressives knew what an Obama Presidency would look like: just like the Clinton Presidency, the corporate media would constantly assault the President and his policies.  Such an exercise didn’t take place in the Bush presidency until he and his gang of thugs had effectively wrecked every aspect of the country and it was too late to actually do their jobs.  This time around?  No time like the present, apparently.

MSNBC has a post up from two washington post “reporters”, Michael D. Shear and Paul Kane.  Actually, the corporate media does have one theme they have effectively carried over into the new Presidency: they make stuff up out of whole cloth.  The article, AIG’s turmoil depletes Obama’s political captial is filled with plenty of b.s.  These intrepid washington post propagandists are hard at work pushing right-wing talking points about how Obama is somehow responsible for every piece of bad economic news we’ve seen in the past year (the parts Bill Clinton isn’t responsible for, of course).

President Obama’s apparent inability to block executive bonuses at insurance giant AIG has dealt a sharp blow to his young administration and is threatening to derail both public and congressional support for his ambitious political agenda.

There has been no sharp blow to the administration.  President Obama was not and is not responsible for the outrageous executive bonuses at AIG.  That can effectively be put at the feet of president Bush’s Treasury Secretary and the Federal Reserve last year.  They decided to conduct the biggest bank heist in American history by giving away billions of American taxpayer dollars to corporations that were irresponsibly gambling with mortgages and other financial instruments.  Bush’s gang engineered that giveaway – Obama and his people had nothing to do with it.

There is no threat to public or congressional support for his agenda.  Every poll conducted since November, when Obama won the 2008 Presidential race, has shown a clear difference in support for Obama’s policies and the Cons’ constant naysaying.  Over 60% of Americans support what Obama is doing and what his plans are – that hasn’t changed.  Around 30% of Americans support Cons’ obstructionism and negativism.  You can’t point to support for their policies because they don’t have any.  They aren’t offering alternative solutions.  They’re only saying that the Democrats’ solutions won’t work.  That’s why they lost so big in November’s elections.

Until those things change, there will be no threat to Obama’s agenda.  He was elected to make changes to every policy area.  So far, he’s succeeded.

But the washington post propagandists can’t say these things: their corporate overlords want a different message spread.  So they use language like “sharp blow”, “threatening”, “swamping efforts”, “blowback”, “struggled” and “grasped”.  Does anyone remember a washington post article using this kind of language with regard to Bush’s policies?  Of course they didn’t.  It didn’t fit into their pre-conceived agenda.  Where are the articles about how resolute and strong Obama is to standing by his principles?  They won’t be found at the washington post, that much is obvious.

The most surprising development in this story is that the Cons are trying to catch the populist wave sweeping the nation.  I guess some of them have realized they’re the responsible parties to this economic disaster.  They’re the ones who are struggling and grasping: for political viability.

The way this is being covered by the washington post is indicative of why the corporate media is failing: too many Americans realize that their reporting isn’t reflective of the reality they’re experiencing.  The same reality that is affecting their families and neighbors in the same way and the corporate media’s lies and propaganda becomes more ridiculous to watch by the day.

As much as I detest AIG handing out millions in bonuses to executives who ran their corporation into the ground with my tax dollars, I’m not aware of a viable solution to halt or reverse them.  Perhaps the strongest argument I’ve heard so far is this: the government controls a majority share of AIG.  The government needs to exercise the control over the corporation that comes as a privilege of that ownership.  At the least, these clowns should be immediately fired.  AIG’s pathetic excuse that it couldn’t maintain the “best” in the business won’t work.  These executives competed to see who could be the worst in the country – there is no place for them at AIG any longer.  This is especially true when their actions since mid-September 2008 is examined: all the lavish trips and spa treatments and bonuses are beyond insulting to the American people.  Not only should these clowns be fired, they should be prosecuted for defrauding taxpayers.  They need to either use those billions as they were intended – to insure securities – or they need to give them back and let the corporation finish failing.

I’m sick to death of the excessive corporate greed that has run this country for too long.  I’m nearly as sick of the joke of a media that refuses to cover the facts of this evolving disaster.  Both deserve what they get.

Job Losses in Context

How do the job losses during this horrible recession compare to past recessions?  There are a couple of graphs at this post at Calculated Risk that provide some context.  More people have lost their jobs in this point in the recession than any other recession since WWII: 3.6 million.  That’s actually more than any other maximum loss.  The 1982 recession came close with 2.8 million people.

When job losses as a percentage of work force is examined, this recession is in the top 30%.  We just passed the percentage reached in the 1981 recession: 2.5%.  At this same point in time, only three recessions were worse: the 1953, 1958 and 1948 recessions.  The total number of workers has obviously increased since then, so more people would have to lose their jobs before the percentage in this recession got to 4% or 5%.

I doubt undocumented workers were counted in any of these calculations.  I would imagine the actual total of people who have lost their jobs, documented and undocumented, would come much closer to previous steep job losses.

Also clear in the graphs: the last three recessions took much longer to recover from than did previous recessions.  Maybe because we don’t actually make things in this country the way we did in the immediate post-WWII era.  If things aren’t made in the U.S., U.S. workers have nothing to do, limiting the job recovery that would otherwise occur.  How patriotic of the pro-job off-shoring crowd.

Corporate Media & the Economy

With the economy in free-fall since last September, most Americans’ focus has been on this issue to the exclusion of everything else.  As such, wouldn’t it be prudent for the media outlets in America to provide analysis of the problem and different solutions by … economists?  Note that I don’t have a a lot of respect for economists these days in general.  For one, their forecasts aren’t held to the same standards as weather forecasts when validating them.  When was the last time someone else at the water cooler took their local economist to task for missing their unemployment forecast by hundreds of thousands of people or retail sales by hundreds of millions of dollars?  You haven’t because economists aren’t held accountable to the public.  But beyond that rant, the American people might benefit from having different economic views presented to them.

Why then have economists been on the weekend political talk shows and cable shows only 5% of the time the economy was being discussed in recent weeks?  Because the corporate media played a hand in wrecking the economy, along with the Cons they serve so well.  They have no interest in presenting qualified information to their viewers.  The corporate media distributes entertainment, not news.

My ire at this situation is non-partisan.  I hold Keith Olbermann and Rachel Maddow in much higher regard than I do Glenn Beck or Bill O’Reilly.  Yet even KO and Maddow only had a single economist on their shows in two weeks’ time.  That is unacceptable.  Talking heads and pundits are shown to the public.  Just as in the physical sciences, economists need to engage the public more often.  Our public discourse would benefit from it.  Our pressure to develop intelligent policies would also then benefit from it.

Rescued Firms Just Not Getting It

An interesting headline caught my eye this morning.  “Obama imposes limits on executive pay” is about President Obama and other Democrats introducing common sense limits on executive compensation if their firms receive bailout money from American taxpayers.  Why do I think they’re not understanding the environment?  Executives have been allowed for a generation now to run free at the helm.  They’ve been more than happy to take millions of dollars per year from firms, regardless of whether they succeed or fail.  They shouldn’t earn anything if their firms fail due to horrible executive decisions.  That’s more true than ever if firms accept American taxpayers’ money.

What Pres. Obama and other Democrats want to introduce in this recovery and reinvestment legislation is public accountability and transparency.  Private firms have been able to do whatever they want with consumers’ investments.  They’ve done whatever they want with the corporate welfare money they’ve taken from the public.  Now it’s time for change – that’s what the 2008 election was all about, after all.

Out of the $350 billion financial firms received from “president” Bush and Secretary Paulson, they decided to use it to buy other banks.  They decided to use it to pay for $18 billion worth of bonuses for executives!  What was the money supposed to be used for?  Balancing out the crappy financial instruments the firms decided to gamble with.  They money was supposed to increase the credit flow to Americans so that our economy could continue to function.  The same executives that decided to not use the money as it was intended by Congress are now warning Congress that

intrusion into the internal decisions of financial institutions could discourage participation in the rescue program and slow down the financial sector’s recovery.

Call me underwhelmed.  That warning is a good indication of just how alternate the reality these clowns have been living in.  If private firms want public money to bail them out from their disastrous decisions, the terms for doing so need to include public transparency and accountability, as Sen. Dorgan is recommending:

On Tuesday, Sen. Byron Dorgan, D-N.D., introduced amendments to the Senate’s economic stimulus legislation that would require firms that receive bailout funds to disclose the bonuses they paid during the time they received government funds. The bonuses would be posted on the Internet and included in a report to Congress.

Why would executives not want their bonuses made public?  Because they know they’ve made unethical business decisions in the past and they think that a different set of rules should apply to them just because they’ve been financially successful.  All this while millions of Americans that actually work for a living have lost their health insurance, their jobs and their houses.  Those losses have come about as a direct result of the executives’ immoral decisions.

Sen. McConnell offers up another b.s. talking point:

“I really don’t want the government to take over these businesses and start telling them everything about what they can do,” Sen. Mitch McConnell of Kentucky, the Republican leader, said this week. “Then you truly have nationalized the business.”

Fine, Sen. McConnell, then the businesses should take care of themselves.  If the market is truly free, as you and other ideologues constantly assert, then they shouldn’t need billions of Americans money.  If they don’t want the oversight and the accountability that Pres. Obama and Congressional Democrats are proposing in return for a public bailout, they don’t have to take the money, do they?  They have the choice to do what they want.  Let’s see what happens when they refuse the money and oversight and fail.

Perhaps the scariest part to all of this is considering the “solution” the Cons would be offering if they had won the 2008 elections.  They were successful in giving away $5 Trillion of Americans’ money under 8 years of Bush rule.  This meltdown would only provide them an excuse to give away trillions more.  Democrats are coming up with solutions that will result in a healthier economy in the medium- to long-term.  Democrats want transparency and accountability, two items that were not considered under the Cons.

News Pieces 1/30/09: Cassini, GDP, Exxon and Winter Storms

NASA’s Cassini mission managers want to extend the mission another 7 years.  Doing so would allow them to investigate the Saturnian system for 1/2 of a Saturn year.  I hope they get the go-ahead.

The economy shrank at a 3.8% annual rate in the last quarter.  That’s a preliminary reading – one which is expected to get worse as the numbers are looked at in more depth.  That number won’t get better any time soon.  Millions are losing their jobs and their houses.  Millions more have lost access to credit, which was the economy’s driving force for the past twenty years.  Americans are going to realize they aren’t being paid enough when their credit lines are shut down as the recession deepens and lasts longer than most people are estimating right now.  All these things are the direct results of Con-servative policies being implemented (exactly as Cons wanted them to be, by the way) in the U.S.  It’s happened to every other country in the world where America tried to export “capitalistic democracy”.  The Cons finally got their chance to implement their policies to their fullest extenet here in America.  We’re living with the consequences now.  What are Cons doing in Congress? Pushing the same failed policies that got us here.  Thankfully, voters made better choices in this last election.

Did you hear that even poor ol’ Exxon Mobil is huring – just like the rest of us – in the recent economic downturn?  Okay, maybe not just like the rest of us.  After all, their 2008 profits were only $45,200,000,000.  Only $45.2 Billion.  Does anybody remember $4.50 gas last summer?  Guess where it went.  Autocratic regimes in the Middle East and mega-corporations like Exxon Mobil.  That’s correct – that disgusting number is only the profits of one corporation.  Keep those numbers in mind when you see their advertising claiming they’re doing all  kinds of critical research, developing better things for tomorrow.  In the face of the worst economic downturn since the last Republican Great Depression, in the face of record energy prices, the mega-fossil fuel corporations are making billions in profits and distributing millions more to executive bonuses.  When will their new technologies and “cleaner” fuels be available?  Eh, just keep buying gas for a few more decades.  Maybe after another $500 Billion or so in profits, they’ll actually come up with something.  Or Americans can continue to play the sucker in the relationship and continue buying their fossil fuels and never expect more out of them.

I heard about this last night on the radio.  Plenty of people in the eastern half of the U.S. are without power from … an average January winter storm.  The excellent questions raised were the following.  How many billions of dollars is the Dept. of “Homeland Security” sucking down every year?  The purpose of DHS is to protect the “homeland”, correct?  What kind of target do you think terrorists would like to strike?  Maybe power plants or power infrastructure more generically?  Our economy would certainly suffer even more if extensive power outages occurred.  Do you think DHS is doing its job protecting the homeland if a common, well-forecasted winter storm puts millions of people into the dark and cold?  I certainly don’t.  Given these circumstances, I have no faith in DHS to protect any American from a terrorist attack.  There are plenty of problems with our current infrastructure.  This kind of problem should receive some attention in the recovery package making its way through Congress now.