Weatherdem's Weblog

Bridging climate science, citizens, and policy

And the Bad Economic News Just Keeps Piling Up

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I’m so glad the Cons got to show us how magical their economic theories could be in real-life!  Americans are making so much more money than they were 8 years ago, they’re so much happier, everyone is employed, and ….  Okay, the snark is going to be put away.  I do need a dose of it every now and then, especially with economic numbers that get worse by the week.  And did the morons running things ever blow their perpetually rosy forecasts, or what?  Let’s make the rounds and see what records are being broken, shall we?

Jobless claims totaled the high last seen 16 years ago.  Let’s see – that would be … 1992.  Oh, the end of the Bush I presidency, when we were leaving yet another Con-serative recession.  Could it be coincidence that the number was matched by his son?  I don’t think so.  The historical basis has been laid.  What was the magical number?  542,000.  So between last week and this week … that’s over 1,000,000 jobless claims.  Unemployment insurance claims jumped to 4,000,000 last week.  That’s the highest since 1982, when St. Ronnie was happily enacting Con economic policies.  October’s unemployment rate (under-calculated) was 6.5%  Does anybody want to guess what November’s will be?  7%?  7.5%?  8%?

The Big 3 American auto manufacturer CEO’s went to Washington D.C. this week to “beg” Congress for a loan.  How did they get to D.C.?  Aboard multi-million dollar private jets.  I have an idea where they can get some money….  The Democratic-led Congress wisely didn’t buy into their cock-and-bull story.  It seems they want more assurance that the auto corporations will viably restructure for 21st century business.  I have another idea – how about requiring the dismissal of said executives with no compensation.  They ran their businesses into the ground – they shouldn’t get to walk away with a golden parachute at taxpayer expense.  GM shares sank to their lowest value since the Great Depression.

Wall St. almost found a consolidation point in the past few weeks.  The Dow broke through the 8,000 level yesterday and continued it’s rapid descent again today by closing at 7,552.  The S&P 500 closed at an 11.5 year low of 752.  The S&P has lost 52% from its all-time high last Oct 9th.  The Dow has lost 47% since then.  The NASDAQ has lost 54% from its all-time high since last Oct 31st.

Inflation fell by a record 1% in October from September.  The Consumer Price Index fell to 3.8% year over year, down from 4.8% the previous month.  The drop is the largest since seasonal records were started in 1947.  While inflation easing would normally be considered a good thing, it could portend very, very bad things moving forward.  The problem?  Deflation.  Consumers will likely continue holding off making purchases, as they expect future prices to be lower than today’s prices.  That reduces overall economic activity.  Capacity idles, investment falls, and aggregate demand falls in a cyclical fashion.  Deflation is incredibly difficult to battle, as 1990s Japan can attest.  The current state of government actions make it even more difficult: the Fed can’t cut rates more than they are since their effective interest rate is nearly 0%.  A negative interest rate doesn’t make sense.  So far, we’re only seeing disinflation.  We’d better hope that’s all we see.

Those aren’t the only numbers out there, but the bottom line is this: the Bush recession is well underway.  When will it end?  Your guess would probably be as good as mine.  I’m thinking sometime in the first half of next year.  A lot of interconnected gears have to change directions for it to happen.  Meanwhile, the Cons are running around the country (and world) telling anyone who will listen that unregulated capitalism is still the preferred path to be on.  Just like their refusal to look in the mirror when considering why they lost so many 2008 elections, their refusal to look at their failed economic policies threatens to doom the country to a longer, deeper recession.

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