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Monday, December 10, 2012

Economic Stories of Relevance in Today's World -- December 8, 2012

More Phony Employment Numbers - Paul Craig - November 8, 2012 - Statistician John Williams ( calls the government’s latest jobs and unemployment reports “nonsense numbers.”                 There are a number of ongoing problems with the released numbers. For example, the concurrent-seasonal factor adjustments are unstable. The birth-death model adds non-existent jobs each month that are then taken out in the annual downward benchmark revisions. Williams calculates that the job overstatement through November averages 45,000 monthly. In other words, employment gains during 2012 have been overstated by about 500,000 jobs. Another problem is that each month’s jobs number is boosted by downside revision of the previous month’s jobs number. Williams reports that the 146,000 new jobs reported for November “was after a significant downside revision to October’s reporting. Net of prior-period revisions, November’s seasonally-adjusted monthly gain was 97,000.”                            Even if we believe the government that 146,000 new jobs materialized during November, that is the amount necessary to stay even with population growth and therefore could not be responsible for reducing the unemployment rate from 7.9% to 7.7%. The reduction is due to how the unemployed are counted.                            The 7.7% rate is known as the “headline rate.” It is the rate you hear in the news. Its official designation is U.3.                      The Bureau of Labor Statistics has another official unemployment rate known as U.6.                      The difference is that U.3 does not include discouraged workers who are not currently actively seeking a job. (A discouraged worker is a person who has given up looking for a job because there are no jobs to be found.) The U.6 measure includes workers who have been discouraged for less than one year. The U.6 rate of unemployment is 14.4%, about double the headline rate.                           The U.6 rate does not include long-term discouraged workers, those who have been discouraged for more than one year. John Williams estimates this rate and reports the actual rate of unemployment (known as SGS) in November to be 22.9%.

Unemployment Is Not Going Down: The Employment Rate Has Been Under 59 Percent For 39 Months In A Row
- The Economic Collapse Blog - The mainstream media is heralding the decline of the official unemployment rate to 7.7 percent as evidence that the U.S. economy is improving. But it is a giant lie. The truth is that unemployment in America is not actually going down. The percentage of working age Americans with a job actually dropped slightly in November. During the last recession, the percentage of working age Americans with a job fell from about 63 percent to under 59 percent and it has stayed there for 39 months in a row. In September 2009, during the depths of the last economic crisis, 58.7 percent of all working age Americans were employed. In November 2012, 58.7 percent of all working age Americans were employed. It is more then 3 years later, and we are in the exact same place! So how in the world are they able to pretend that the "unemployment rate" is going down steadily? Well, they get there by pretending that hundreds of thousands of unemployed workers "leave the labor force" each month. According to the government, another 350,000 Americans left the labor force during November, and when you keep pretending that huge chunks of workers "disappear" each month it is easy to get the "unemployment rate" to go down. But any idiot can see that there is something really funny about these numbers. Barack Obama has been president for less than four years, and during that time the number of Americans "not in the labor force" has increased by nearly 8.5 million. Something seems really "off" about that number, because during the entire decade of the 1980s the number of Americans "not in the labor force" only rose by about 2.5 million. At this point the official unemployment rate is so manipulated that it is of very little value at all.                       But the mainstream media is just eating up this "good news". They are very excited that the "unemployment rate" has fallen from its peak of 10.0 percent in October 2009 to 7.7 percent now...                           But if unemployment was actually going down, we should be seeing the percentage of Americans with a job go up.                      Unfortunately, that is NOT happening.
As I mentioned above, the "employment rate" fell below 59 percent during the last economic crisis and it has stayed there for 39 consecutive months...

Chart Of The Day: Jobs "Additions" By Age Group Reveals The Scariest Picture - Zero Hedge - Tyler Durden - December 7, 2012 - While the GETCO algos care only about one thing: the headline NFP number derived by the establishment survey, the reality is that in November this number was strictly a divination of seasonal adjustments (which resulted in the typical for November 1.2 million "gain" in jobs), as well as who knows what other Sandy-related adjustments which the BLS has not broken down, the reality is that a more granular dig through the jobs data reveals a far uglier picture, especially for those in the prime working demographic between 25-54. This has been a sensitive issue for the pundits as ever since the arrival of the Obama administration, all the job gains have gone in the 55 and older job category as we now see age outsourcing, while jobs in the 55 and lower age group have imploded. Sure enough, the November data, when seen through the prism of the Household Survey's age distribution, is frankly horrendous.                    First, what that granular data shows is that instead of a 146K gain in November, there was actually a drop of 114K jobs when broken down by worker "vintage." But where it gets simply stupid, is that of the 4 age group buckets (16-19, 20-24, 25-54, and 55-69), the biggest gainer continued to be America geriatric work force, which added 177 jobs. As for that key segment of the workforce, the 25-54? Jobs here declined by a whopping 359K in November. And this is good news?

UMich Confidence Plunges, Biggest Miss On Record As Outlook Crashes - Zero Hedge - Tyler Durden - December 7, 2012 - After its biggest miss in four years (following the pre-revision spike to the biggest beat in three years), UMich Consumer Confidence came at 74.5 relative to an 82.0 expectation (biggest miss on record). Hugely down from last month's final print of 82.7, this is the first negative print since July to the lowest since August. Expectations for the future crashed its second largest absolute print on record (-13 to 64.6) to the lowest since Dec 11.  In the typical election year we see a rise in hope and confidence into the election and then a drop off after - it seems we are following that path...

Foodstamps Soar By Most In 16 Months: Over 1 Million Americans Enter Poverty In Last Two Months - Zero Hedge - Tyler Durden - December 9, 2012 - And we thought last month's delayed foodstamp data was bad. The just reported foodstamp number for September was a doozy, with 607,544 new Americans becoming eligible for foodstamps, as a record 47.7 million Americans are now living in poverty at least according to the USDA. The monthly increase was the highest since May 2011, and with August's 421K new impoverished America, over 1 million Americans made the EBT card their new best friend. It is unclear just which atmospheric phenomenon will get the blame for this unprecedented surge in poverty, which comes at a time when the pre-election economic data euphoria was adamant that the US economy was on an escape velocity to utopia. Instead what we do know is that in August and September, over three times as many foodstamp recipients were add to the economy as jobs (324,000). We also know that with the imminent impact of Sandy, which will send foodstamp recipients soaring, it is now looking quite possible that the US may end 2012 with just over a mindboggling 50 million Americans living in absolute poverty and collecting the $134.29 average monthly benefit per person, instead of working. Welcome to the recovery indeed. Individual Americans on foodstamps:

End of Jobless Benefit Extension 'the Real Cliff' - AP Thru CNBC - December 8, 2012 - Hovering in the background of the "fiscal cliff" debate is the prospect of 2 million people losing their unemployment benefits four days after Christmas.                "This is the real cliff," said Sen. Jack Reed, D-R.I. He's been leading the effort to include another extension of benefits for the long-term unemployed in any deal to avert looming tax increases and massive spending cuts in January.
"Many of these people are struggling to pay mortgages, to provide education for their children," Reed said this past week as President Barack Obama and House Speaker John Boehner, R-Ohio, rejected each other's opening offers for a deficit deal.                  Emergency jobless benefits for about 2.1 million people out of work more than six months will cease Dec. 29, and 1 million more will lose them over the next three months if Congress doesn't extend the assistance again. (Read More: Boehner: Obama Walking Economy to Edge of 'Cliff')                  Since the collapse of the economy in 2008, the government has poured $520 billion - an amount equal to about half its annual deficit in recent years - into unemployment benefit extensions.

NC unemployment plan hits business, beneficiaries - AP thru Seattle Post Intelligencer - GARY D. ROBERTSON - December 5, 2012 - North Carolina legislators unveiled a long-awaited proposal Wednesday to more quickly pay off the state's nearly $2.5 billion unemployment benefit debt through higher business taxes and scaled back payments to future jobless workers.             The plan presented in a General Assembly study committee would wipe from the books the borrowing from the federal government in 2015, or three years earlier than if nothing occurs. The proposal also is designed to replenish the state's unemployment trust fund after the Great Recession cleaned it out and revealed what Republican legislative leaders called a host of troubles.                          North Carolina is among nearly 20 states that still owe the federal government when unemployment insurance tax payments by businesses failed to keep up with benefits from the flood of applicants starting four years ago. North Carolina's balance is the third highest in the country behind California and New York.                  Employers and those laid off in the future will share the burden of paying the debt and building up the system, a key negotiator said. The proposal would bring the state's trust fund balance to $2.5 billion by 2021, according to projections from legislative analysts.

Fiscal cliff worries may rub off on consumers - USA TODAY - Tim Mullaney - December 4, 2012 - Who understands the economy better: businesses or consumers?                  The question holds the key to the U.S. economy, as the nation confronts the prospect of $560 billion a year of tax increases and federal spending cuts that could cause another recession.                     In a nutshell, consumers have acted as if Congress and President Obama will work out a deal to delay some planned austerity measures and keep the economy growing. Businesses haven't been so sure — and there are signs consumers are coming around to their point of view.                  The conflict came into sharp focus with Thursday's report on third-quarter economic growth.                     Business investment in equipment and software dropped 2.7% — the first drop since the recession's end.                      At the same time, consumers boosted housing-related investment, including new homes and renovations, at an annual rate of more than 14%, one of the strongest quarterly results since the recession ended in mid-2009. And their spending on durable goods, such as cars and refrigerators, climbed at an 8.7% clip, the best since early 2011.            Overall, consumer spending increased 1.4% in the third quarter, compared with 1.5% in the second.               But consumers may be starting to move closer to Big Business' wariness.                   A group of 18 retailers, including Macy's and Target, reported disappointing November sales on Thursday, as Black Friday crowds didn't make up for sales lost after Hurricane Sandy, said Scott Hoyt, an economist at Moody's Analytics.                        Also, surveys by Gallup and Rasmussen Reports in the past two weeks show an increase in consumers who are pessimistic about.......

Amid 'Fiscal Cliff' Stalemate, Main Street Deteriorates - CNBC - Heesun Wee - December 6, 2012 - Anxiety over the "fiscal cliff" isn't just affecting Wall Street. Many entrepreneurs report slower activity as uncertainty swirls about how tax hikes and government spending cuts will affect them. Faced with unanswered questions, entrepreneurs are stuck contemplating trimming costs and laying off workers—not creating Main Street jobs, which has traditionally fueled economic recoveries. (Read more: Four Reasons Why Companies Are Still Reluctant to Hire)                          Arnold said there's a "huge gap" between entrepreneurs' economic reality and the stalemate between Congress and President Barack Obama. "The longer they bicker, the worse my business is," he said. (Read more: The Fiscal Cliff Explained)                    Tax Implications for Entrepreneurs
Changes to tax laws is the major overhang for entrepreneurs. The National Association for the Self-Employed or NASE estimates a self-employed individual making between $60,000 to $88,000 a year would see a tax hit of $2,700 to $3,700 annually if a debt deal isn't reached by year's end. That's when the current tax rates, compliments of the Bush era, expire.                      While that figure may appear small at first glance, that's a lot of money for a self-employed individual or small-business owner. In their world, robust monthly cash flow can mean the difference between staying afloat or drowning financially.                         Roughly $2,700 to $3,700 more in taxes a year, "is huge," said Katie Vlietstra, director of government affairs for the self-employed association. "That is one or two paychecks they won't see in the course of a year," Vlietstra's group includes micro businesses with 10 employees or less. "The self-employed, small businesses, we're not being addressed." (Read more: November Private Sector Jobs Growth Misses Forecasts)...

1 comment:

Harry Hipps said...

People have already slowed down in retail purchasing. They may flock back in if retailers cut prices (and wreck their margins), but it's not a robust season. It's also becoming sickening to hear politicians of both parties (who are all addicted to spending), clucking about the debt "our children will have to pay". They don't give a hoot about the next generation and by the way, you may be hearing from the next generation by email from Australia, Canada, or Singapore when they decide they don't want to pay the US debt pack and want better prospects in a better economy. Those fools may want to consider that multiculturalism, and a global economy may lead to a talent drain FROM the US if we continue on the path to decline or collapse. After, if, as the libs in the school system have taught the dumbed down texting crowd, the US is the source of all sins and problems, why stick around to clean up the stupidity of the past?