Weatherdem's Weblog

Bridging climate science, citizens, and policy

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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.


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Official Pronouncements: Recession and Secretary of State

I’m back after some time away from blogging.  Lots of things were made official today.  We’re in a recessionSen. Hillary Clinton is President-elect Barack Obama’s nominee for Secretary of State.  There are others, but those two stand out in the news to me today.

It’s interesting to me that the National Bureau of Economic Research, the group charged with assigning official starts and ends to U.S. recessions, waited until Dec 1, 2008 to announce the beginning of this recession.  When did it begin?  December of 2007: one year ago.  What numbers did they look at in the past three months that didn’t exist in the previous nine that pushed them over the threshold?  I’m sure the 2008 election had nothing to do with the timing.  So George W. Bush presided over the worst economic downturn since the Great Depression.  Bush’s recession has been apparent to most Americans for most of this year.  Which is the biggest reason why John McCain didn’t win last month.

CNN’s recession article upset me with this:

Many people erroneously believe that a recession is defined by two consecutive quarters of economic activity declining.

I read article after article in the past six months on CNN’s website how it was unlikely a recession had started because economic activity hadn’t been negative for two consecutive quarters.  And CNN wasn’t the only corporate “news” source that dispensed that talking point.  The fact that they ignored their own reporting is very disappointing.  I also remember articles treating most Americans as idiots when American’s confidence fell through the floor.  Citing the misleading “two consecutive quarter” talking point, economists and reporters attempted to portray Americans as out of touch with America.  We just didn’t understand what was going on with the economy.  Our economic oppressors were wrong for months and the rest of us have suffered more because of it.

Onto Sen. Clinton’s nomination to be Obama’s Secretary of State.  I don’t think it’s a good idea.  I think Hillary and Bill Clinton are in politics for themselves first and for Americans second.  I didn’t trust Hillary to be President.  I don’t trust her to be Secretary of State.  I have no specific example of what I think she’ll do to subvert Obama’s agenda at this time, something a lot of liberals online and on the radio are asking for in response to people who don’t think this was the Greatest. Idea. Ever.  I’m not sure how this really qualifies as “change”, the amorphous feel-good motto of Obama’s campaign.  Do most Presidents nominate people that didn’t run against them for office?  I think so and I think that’s happened with good reason.  I can think of a number of candidates that I would have felt more comfortable with for Secretary of State.  Those candidates could have been characterized as change agents, whereas Hillary cannot.

Actually, while I’m on the subject, what about Secretary of War Robert Gates?  Who nominated him?  George Bush!  Obama is going to keep him in place.  The main reasoning I’ve heard behind this makes even less sense than the Clinton nomination.  It seems the War Secretary needs to stay on to provide an effective transition between Bush’s policies and Obama’s policies.  Say what?  In nearly every arena, Obama’s policies will be a U-turn from Bush’s policies.  What is so challenging about the War Department that requires a continuation of failed policy enactment?  No, the truth is likely to be that Obama came under tremendous pressure to stay the course with respect to the Iraq occupation.  I expect Obama to continue to call for a reasonable cessation of the occupation of Iraq.  I would not be surprised however to hear about a change in his plans.  I hope that Iraq’s recent call for occupation forces to leave by Jan. 1, 2011 will provide strong pressure to maintain his campaign’s occupation cessation talk.  The American people voted to move in a different direction than the one we’ve been on under Bush.  Gates was a part of Bush’s direction.  There is no reason to keep him as War Secretary under an Obama administration.

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And the Bad Economic News Just Keeps Piling Up

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.