More Dismal Economic Numbers In January

The effects of failed Republican economic theories continue to make themselves known.  The latest numbers to come out:

Only 550,000 new housing starts (annualized) were started in December.

589,000 new jobless claims were filed last week.

The corporate welfare giveaway didn’t save the banks and now they want more.

The housing number ties together a number of issues.  The Fed’s record low rate cut hasn’t changed much with regard to new housing.  People are refinancing their mortgages like mad, but not many people are buying new houses.  So that policy failed.  (It also failed to get credit flowing through the system.)  Also hurting housing is unemployment.  13.5% unemployment translates to a populace that isn’t able to buy a house.  That effect is maintained by 589,000 new jobless claims.  Over 1 million people are losing their jobs every month.  How are they supposed to buy groceries, let alone new houses?

The solution does not lie with dispensing billions of dollars to mega-corporations.  It’s millions of people and small businesses that need the government’s help, not the tiny numbers of ultra-rich people and corporations.  Rich people are sitting on our billions, letting the economy slide further into recession toward depression; watching as workers lose their jobs and their houses; hoping the spread between them and the rest of the citizenry grows each day.  Which leads to the third article: banks are still “teetering on the brink”, as MSNBC put it, because they used the money to pay for bonuses and buyouts of smaller banks, not to improve their business standing.  Banks who received billions of taxpayer dollars with no oversight or transparency did things with that money that nobody can trace.  But they want more.  Excuse me?  That malfeasance was exactly why I opposed the TARP program from the beginning: the Bush “administration” pushed it through as fast as they pushed the mis-named patriot act through.  But they said the financial system would collapse without immediate assistance.  Well, the assistance went out and the system is still looking at a collapse.  Hopefully the new President and the 111th Congress tries to solve the real problems and not the made-up ones Bush peddled.

A little oversight and some bank-busting would be a darn good start to any implemented solution.  Smaller banks aren’t having the problems that the mega-banks are.  That’s for good reason: they didn’t bundle people’s risky mortgages and bet on them irresponsibly.  Those who did so should be held to account: executives should lose their jobs and be prosecuted (where applicable) and their corporations should be broken up.  Enforce the Sherman Anti-Trust Act.  Work out plans for troubled homeowners and help maintain foreclosures.  Get some of the TARP money back.  It wasn’t dispensed as dictated by law – it should be repaid in full with interest.  Or how about creating a national bank?  One that is transparent and has oversight.  Let it compete with the rest of the banks and let’s let the “free-market” decide which one does the best job.

Jobless Claims Jumps; Unemployment Number Too Low

The largest number of jobs were lost since Dec. 1974 in Nov. 2008: 533,000.  The already announced September and October numbers were revised … downward.  403,000 jobs were lost in September (284,000 was the previous number) and 320,000 were lost in October (240,000 was the previous number).  Since the Bush/Con-servative recession began, over 1,900,000 jobs have disappeared.  Bush has set yet another milestone: the fewest number of jobs have been created during his presidency than at any time since the Great Depression.  Bush didn’t fail Con-servatism, as right-wing pundits would have us believe.  Bush executed Con-servative policies to the letter.  What’s happening today is, unfortunately, a predictable result of those policies.

The title menioned bad unemployment numbers.  I’ve written about this before and this month’s reported number provides a very good example of what I see wrong with it.  The article says that the unemployment rate catapulted from 6.5% to 6.7% from October to November.  Really?  The largest single month’s job loss in the past 35 years happened and the rate increased a whopping 0.2%?!  If that doesn’t make sense to you, there’s good reason.  And it’s why the rate doesn’t reflect the reality of the job market.  Reading a little further into the article,

The unemployment rate would have moved even higher if not for the exodus of 422,000 people from the work force. Economists thought many of those people probably abandoned their job searches out of sheer frustration. In November 2007, the jobless rate was at 4.7 percent.

So if folks aren’t actively looking for a job, they’re not counted as unemployed.  That makes absolutely no sense.  If they’re not employed, they’re unemployed … that’s what the word means.  The popularized “unemployment rate” is really a “job seeking rate” that is poorly surveyed.  Here’s what happened in the past: the unemployment rate used to count those who weren’t actively seeking work but also didn’t have a job.  As such, the reported rate was regularly higher.  That tended to have an effect on Americans’ psyche.  So in an effort to paint a pretty picture for everybody, the government changed the way the rate was calculated.

What does that mean from a policy standpoint?  It means that if you don’t think there’s a big problem, you’re not going to search for aggressive solutions to that problem.  You’re more likely to go with what Corporate America wants: leave them alone.  They’ve hired millions of overseas workers to fill jobs Americans used to have.  If Americans think the economy isn’t doing well or if they think too many of them are unemployed, or underemployed, they’re going to raise a stink.  Well, our elected officials, and the super-rich corporate interests that hold too much influence over them, can’t have that.  A frustrated populace tends to demand changes that Corporate America doesn’t want.  So things are sugarcoated.

I’ve read that if those not actively searching for jobs were counted, the unemployment rate would be quite a few percentage points higher.  If the underemployed (those working fewer hours than they want) were also counted, the unemployment rate would be more than double that which is popularly reported.  I recently found out that rate is calculated, but the corporate media doesn’t report it.  They’re only protecting us from ourselves, of course, by saying that it’s a complicated number and they’d have to spend time explaining it to Americans.  Thank goodness Americans have benefactors who can save us from our own stupidity.  Of course, it seems to me that the purpose of the press is to report the news, without alteration…

[Update 12/8/08]: I found the number I was looking for.  I also found numbers I wasn’t looking for, but are interesting nonetheless.  From the Bureau of Labor Statistics:
U-1 Persons unemployed 15 weeks or longer, as a percent of the civilian labor force…2.6%
U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force…3.9%
U-3 Total unemployed, as a percent of the civilian labor force (official unemployment rate)…6.7%
U-4 Total unemployed plus discouraged workers, as a percent of the civilian labor force plus discouraged workers…7.0%
U-5 Total unemployed, plus discouraged workers, plus all other marginally attached workers, as a percent of the civilian labor force plus all marginally attached workers…7.8%
U-6 Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers…12.5%

So the U-3 number is the official unemployment rate.  The U-6 number includes the under-employed and is likely the more accurate number.  The U-3 number hasn’t been the historical number reported as the official unemployment numbers.  In the past, calculations were closer to the U-6 number.  In the latter part of the 20th century, additional measurements were created (that counted fewer and fewer people) and were reported as the official number.  The value of the official number hasn’t changed much sine that process began, giving the impression that unemployment was lower than it actually was (and is).  That puts artificial pressure on workers and unfairly manipulates the labor market.