Thursday, January 08, 2009
Employment And Other
Initial SA claims went down a bit in the first week of January.
Last week Wisconsin attained the dubious honor of the highest increases in initial claims per state - over 16,000. Since Wisconsin is about 20th in population, they had to meet and exceed all reasonable expectations to attain this honor. The scrappy, innovative and progressive state pulled out all the stops to get there, assembling a package of "Layoffs in the construction, trade, service, transportation, and warehousing industries" in order to make it to the top of the list. Well done, Wisconsin!
However the field is competitive, with many bright states jostling for top positions:
The highest insured unemployment rates in the week ending Dec. 20 were in Oregon (6.1 percent), Idaho (5.3), Michigan (5.2), Nevada (5.1), Puerto Rico (5.0), Pennsylvania (4.7), Wisconsin (4.7), South Carolina (4.4), Arkansas (4.3), Indiana (4.2), New Jersey (4.2), and Washington (4.2).Wisconsin's banner performance this week may be enough to move it up in the top insured unemployment list next week, but Oregon will be hard to catch. The east coast progressive states are beginning to rouse themselves and join the fight now. New Jersey and Massachusetts don't want to be left in the dust.
The largest increases in initial claims for the week ending Dec. 27 were in Wisconsin (+16,081), Michigan (+10,524), Kansas (+10,485), Massachusetts (+10,265), and New Jersey (+7,330), while the largest decreases were in Texas (-13,232), California (-9,702), Florida (-8,566), Virginia (-5,943), and South Carolina (-4,678).
November's BLS release of unemployment by states will show you about where in the cycle some of the states are. When you see California, with a state unemployment rate of 8.3%, but a major metro rate of 8.7%, you know that they are further along in the cycle than say, Illinois or Florida, both of which states have major metro areas with lower unemployment than statewide.
Florida's switch over the year is impressive. In November 07 unemployment was 4.3%; in November 08 it was 7.3%. North Carolina, the state of bankerdom, managed to move from 4.6% to 7.8%.
November NSA unemployment rates in the (old) top ten states by population, with increase over the prior ten months:
01: CA: 8.3%; 48%Of course I would like to point out that my home state is the clear, outstanding winner in the unemployment sweepstakes. When you combine rate and yearly increase (really 71.4%), we shine like a star of federal grant applications.
02: TX: 5.6%; 33%
03: NY: 5.9%; 34%
04: FL: 7.3%; 70%
05: IL: 6.9%; 44%
06: PA: 5.9%; 44%
07: OH: 7.0%; 32%
08: MI: 9.1%; 34%
09: GA: 7.2%; 71%
10: NJ: 5.8%; 49%
11: NC: 7.8%; 70%
Wikipedia has a list as of July 1, 2008, in which North Carolina edges out NJ, and the positions are somewhat moved around (TX over NY, for instance). Therefore I have added NC to the above list. Because of the pronounced effect of illegals leaving, I doubt that list. The list above certainly represents more than 53% of the US population.
There are reports of swamped unemployment telephone lines and online application services in various states including Illinois and Ohio, so we are well on our way to another gut-busting list. It will be very interesting to see tomorrows federal employment release.
Before I end this post, a couple of notes:
One: David Foster of Chicago Boyz and Photon Courier had posted about the new federal law to require lead testing for children's products, noting that the law's effective date of February 10th, 2009 is being referred to as "National Bankruptcy Day". See his post for why.
In yet another knock-on effect, Goodwill and other salvage stores are concerned that they will have to stop selling second-hand children's clothing and items such as car seats. In this economic environment, this will be extremely painful for many lower-income families. It would be best if the law were drasticallyt amended before the effective date.
Two: Claims that Americans are driving more because gas prices have dropped are certainly somewhat exaggerated. It is more likely that many of those who are driving more are doing so because persons out of the workforce have secured parttime jobs, or because full time workers have shifted to multiple jobs due to loss of hours or full time employment, or because workers have had to secure jobs further from home due to loss of local employment. It is a truism regarding the American economy that gas usage rises as unemployment escalates for these reasons. What is quite surprising is that overall gas usage has declined so much. That is the effect of fleet replacement, which takes a long time and cannot be sped up significantly during times such as these.
Since many workers are losing jobs or income, a substantial increase in the gas tax at this point would be a very, very bad economic idea. There are a lot of lower-wage workers who must drive to secure work, and the marginal effect becomes significant in conditions such as these. Because of the rural effect (unemployment still highest in rural areas in many states), enhancing economic flexibility should be a major goal of whatever short-term measures are taken.
Three: Because Americans are facing a policy debate on economic stimulus, I would strongly recommend reading Alice Cook's UK Bubble blog. Sometimes it is really helpful to see a parallel situation in order to gain perspective on one's own. The blog is an excellent economic blog covering the UK primarily, and the UK problem of household debt and public debt is similar to ours. Also, Alice is a very good, entertaining blogger. Recently, when contemplating a UK property pushing TV program, she responded to a bit of housing propaganda:
I had to laugh at Kirsty’s “cold hard look at the housing market numbers.” She studiously avoided any mention of the double digit declines. Instead, she looked for the remaining housing hotspots. Hartlepool is leading the charge with a five percent house appreciation over the last year.One of the greatest blog put downs ever! This sort of asperity is combined with a lot of in-depth data. Take a look at her post on the German bond auctions, the prospect for UK gilts (equivalent to US treasuries), and the implications. Do US citizens really believe that we can rack up trillion dollar deficits for years on end? We have to pay the interest on that debt even if we can sell the junk.
Well, Hartlepool is the town where a shipwrecked monkey was once mistaken for French spy and hanged. We shouldn’t be to(o) surprised if the same town now mistakes a housing crash for a bubble.
If the US tries to run multiple trillion dollar deficits for years in order to pass major social programs, the end result will be that the US pulls a South American gambit of basically seizing retirement savings and rolling them into treasuries with long forward dates. That is the fundamental that has already been recommended to the US Congress. The result would be dire. True, because of the non-payment of interest now, we would make things currently look a lot worse. But we'd ensure bankruptcy later on.
We are just going to have to get with the program and deal with our problems honestly. Otherwise, you will see capital flight out of the US on a south American scale in about 5-7 years. And I'll be one of them. I'm not paying the price for other people's delusions of fiscal grandeur.
Four: I have been reading Democratic Underground nearly every day for several years. Threads about taxation and Social Security are starting to pop up. Many of these could be threads on FreeRepublic. There is a political firestorm in the works because no real economic issues were debated in the last election, partly due to the candidates, and partly due to the coordinated press drive for Democrats which stifled any discussion of reality.
Obama promised stuff that cannot be delivered, and in doing so he set up a very bad political situation which placed an additional burden upon a strikingly dysfunctional US Congress to negotiate economic reality. Watch what happens over the next two years..
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