Archive for the ‘Economy’ Category

ZERO HEDGE: What do the NAR, Consumer Confidence and CBO forecasts have in common? If you said, “they are all completely worthless” you are absolutely correct. Alas, the market needs to “trade” off numbers, which is why the just released CBO numbers apparently are important… And the fact that the CBO predicted negative $2.5 trillion in net debt by 2011 back in 2011 is largely ignored. Anyway, here are some of the highlights.

• 2012 Deficit: $1.1 trillion; 2013 Deficit: $0.6 – yes, we are cackling like mad too…
• Unemployment to remain above 8% in 2012 and 2013; will be around 7% by end of 2015; to drop to 5.25% by end of 2022.
  • This forecast is utterly idiotic and is completely unattainable unless the US workforce drops to all time lows and the US economy generates 300,000 jobs a month for 10 years
• Needless to say, CBO assumes the best of all worlds in this meaningless forecast
• But here is the kicker: “Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent” translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%.

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And if you drill down into the numbers, you’ll find that the real unemployment rate is above 22 percent

The Obama Administration has released another set of fraudulent numbers, saying the unemployment rate is now 8.5 percent.

8.5 percent is pretty dismal. But Obama and the news media are telling us this is great — the “new normal” because of things like ATM machines and scanners at the supermarket checkout line.

So this 8.5 percent unemployment rate news has triggered Party Time at the Obama White House and in news rooms across America.

But the unemployment rate is not dropping due to job creation. It’s dropping because people are dropping out of the workforce because they have become too discouraged to look for work.

When Obama was sworn into office, there were 154.2 million people in the United States labor force. Today there are only 153.9 million. Meanwhile, the U.S. population has also been increasing (due to immigration and new births).  If we had the same labor participation rate today that we did when President Obama first took office, our unemployment rate would be 10.9%.

We have the lowest labor participation rate today since the start of the Reagan Administration. When the labor force shrinks, the percentage of unemployed goes down.

Think of it this way.

Let’s say in this country of 300,000,000 people there were only 100 jobs available and only 100 people in this economy who say they actually want jobs. The unemployment rate would be 0.0 percent. We’d be at full employment, according to this logic — even though only 100 jobs exist in the entire economy.

So the official unemployment rate you see reported in the news is a total fraud.

Also not counted in the unemployment rate are those whose unemployment benefits have run out. It’s a mystery why these people are not counted in the official figures. Aren’t they still unemployed? Would these people still like to have a job if they could find one?

A better gauge of the jobs picture is the broader U-6 rate, which includes part-time workers who would like to find full time jobs, but can’t. When you add these people to the unemployment rate, that makes the u6 unemployment rate a whopping 15.2 percent — which is near Great Depression levels.

But now consider this:

The Population Reference Bureau calculates the U.S. labor force to be just over 157 million people. It is important to note that this number does not include people over the retirement age or disabled people, even if they do have jobs. However, according to the Bureau of Labor Statistics, there are only 131 million jobs in the US. These numbers alone mean that there are 26 million people in the labor force without jobs.

This means the real unemployment rate is 16.5 percent. But then when you add part-time workers to this number who would like full-time work but can’t find it (the underemployed that are counted in the U-6 unemployment rate), you’re up over 22 percent of Americans who are unemployed — that is, who want jobs, but can’t find them.

Also, consider this. Barack Obama has added $6 TRILLION to the national debt since he came into office. The national debt now stands at almost $16 TRILLION. And 8.5 percent unemployment (really 22+ percent when you count correctly) is what all this deficit spending has bought us.

Obama is celebrating the 200,000 new jobs that were supposedly created in December. Watch for revisions in this number. Every time Obama announces economic news it always has to be revised downward later. Keep in mind also that most of these new jobs were temporary hires during the Christmas season — not real jobs. Most of these folks have since been fired.

But even if the 200,000 new jobs created is correct, that’s still pretty anemic. The U.S. economy needs to create 250,000 jobs per month just to stay even with new people who come into the work force every month in a healthy economy — that is, in an economy where the work force is not shrinking every month.

BEN SAYS: Most respected economic forecasting models are now projecting 1.5 to 2 percent economic growth for 2012. Obama wants us to think this is the “New Normal.” Compare this performance to Reagan’s. After the Reagan tax cuts were passed in 1981, the U.S. economy grew 4.3 percent a year on average. The entire U.S. economy expanded by one-third during the Reagan era — which is the equivalent of adding the entire West German economy to the U.S. economy. Of course, liberals denounced the Reagan Era as the “Decade of Greed.”

The average yearly growth under Clinton was 3.55%. That’s good, but is nearly a full point behind Reagan. Also, Clinton was just a lucky beneficiary of Reaganomics. He kept the momentum going because Newt and the GOP Congress after 1994 forced Clinton to rein in spending, pass a capital gains tax cut, and enact Welfare reform. Clinton was a liberal, but not crazy Left the way Obama is. Clinton at least was not actively and consciously trying to destroy the capitalist system the way Obama is. Clinton was smart enough to keep the good times rolling. We also had sane monetary policies from the Fed.

WEEKLY STANDARD: Now that you have read the results of the various economic forecasting models that have served so many so badly in recent years—they are predicting the U.S. economy will grow in 2012 at an annual rate of between 1.5 percent and 2 percent—let me offer an alternative way of looking at things. It is called ‘pick your if.’

If you believe that the recent decision of the European Central Bank to make unlimited cash available to eurozone banks for the next three years, and that the meeting next week of German chancellor Angela Merkel and French president Nicholas Sarkozy will solve the problems created by excessive debt of some eurozone countries, you will heave a sigh of relief. You will then not have to worry whether the inevitable Greek default will be the first step towards a Lehman Brothers moment, with liquidity drying up, bank credit shrinking, and a deep recession settling over Europe, hurting American banks and exporters.

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It’s so sad that America (once the envy of the world) is being reduced to an impoverished Third World country under Obama.

ASSOCIATED PRESS: Squeezed by rising living costs, a record number of Americans — nearly 1 in 2 — have fallen into poverty or are scraping by on earnings that classify them as low income.
The latest census data depict a middle class that’s shrinking as unemployment stays high and the government’s safety net frays. The new numbers follow years of stagnating wages for the middle class that have hurt millions of workers and families.

“Safety net programs such as food stamps and tax credits kept poverty from rising even higher in 2010, but for many low-income families with work-related and medical expenses, they are considered too ‘rich’ to qualify,” said Sheldon Danziger, a University of Michigan public policy professor who specializes in poverty.

“The reality is that prospects for the poor and the near poor are dismal,” he said. “If Congress and the states make further cuts, we can expect the number of poor and low-income families to rise for the next several years.”

Congressional Republicans and Democrats are sparring over legislation that would renew a Social Security payroll tax cut, part of a year-end political showdown over economic priorities that could also trim unemployment benefits, freeze federal pay and reduce entitlement spending.

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WASHINGTON POST: Typically, I try to tie the beginning of Wonkbook to the news. But today, the most important sentence isn’t a report on something that just happened, but a fresh look at something that’s been happening for the last three years. In particular, it’s this sentence by the Financial Times’ Ed Luce, who writes, “According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent.”

Remember that the unemployment rate is not “how many people don’t have jobs?”, but “how many people don’t have jobs and are actively looking for them?” Let’s say you’ve been looking fruitlessly for five months and realize you’ve exhausted every job listing in your area. Discouraged, you stop looking, at least for the moment. According to the government, you’re no longer unemployed. Congratulations?

Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7 percent to 58.5 percent. That’s millions of workers leaving the workforce, and it’s not because they’ve become sick or old or infirm. It’s because they can’t find a job, and so they’ve stopped trying. That’s where Luce’s calculation comes from. If 62.7 percent of the country was still counted as in the workforce, unemployment would be 11 percent. In that sense, the real unemployment rate — the apples-to-apples unemployment rate — is probably 11 percent. And the real un- and underemployed rate — the so-called “U6″ — is near 20 percent.

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FORBES: Wall Street enjoyed a big jump Wednesday morning, after a coordinated action by central banks around the world to provide more liquidity to the global financial system.

The U.S. Federal Reserve, after a similar effort in September, will “lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap (OIS) rate plus 50 basis points.”

Wednesday’s move from the Fed was matched by corresponding actions from the Bank of Canada, Bank of England, Bank of Japan, European Central Bank and Swiss National Bank. The new pricing applies to operations conducted as of Dec. 5, and the authorization of the swap arrangements has been extended to Feb. 13.

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Here’s What’s Happening Explained in Layman’s Terms . . .

That’s more than half the total size of the U.S. economy

BLOOMBERG: The amount of money the central bank parceled out was surprising even to Gary H. Stern, president of the Federal Reserve Bank of Minneapolis from 1985 to 2009, who says he “wasn’t aware of the magnitude.” It dwarfed the Treasury Department’s better-known $700 billion Troubled Asset Relief Program, or TARP. Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year.

“TARP at least had some strings attached,” says Brad Miller, a North Carolina Democrat on the House Financial Services Committee, referring to the program’s executive-pay ceiling. “With the Fed programs, there was nothing.”

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CNBC: The U.S. jobs market remained stuck in neutral during October, with the economy creating just 80,000 new jobs as the stubbornly high unemployment rate nudged lower.

Amid few expectations that the employment picture has improved, government numbers Friday confirmed the obvious: The unemployment rate is stuck at 9.0 percent where it likely will be for many months to come.

The report comes just days after the Federal Reserve delivered its own body blow, saying the unemployment rate will go no lower than 8.5 percent to 8.7 percent by the end of 2012 and will remain in the 6.8 percent to 7.7 percent through 2014.

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WALL STREET JOURNAL: Nearly 15% of the U.S. population relied on food stamps in August, as the number of recipients hit 45.8 million.

Food stamp rolls have risen 8.1% in the past year, the Department of Agriculture reported, though the pace of growth has slowed from the depths of the recession.

The number of recipients in the food stamp program, formally known as the Supplemental Nutrition Assistance Program (SNAP), may continue to rise in coming months as families continue to struggle with high unemployment and September’s data will likely include disaster assistance tied to the destruction and flooding caused by Hurricane Irene.

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Here’s what China’s GDP growth rate looks like

2.5% growth is the first slightly-less-than-horrific economic news Obama has had since the start of “Recovery Summer” 2009

THE QUESTION IS: Will this prove to be fools gold, just like “Recovery Summer” 2009, or will we continue to see modest improvement?

NEW YORK TIMES: Economic growth in the United States picked up in the third quarter, the Commerce Department said Thursday, in an encouraging sign that the recovery, while still painfully slow, has not stalled.

Total output grew at an estimated annual rate of 2.5 percent from July to September, still modest but almost double the 1.3 percent rate in the second quarter, the department reported.

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