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Friday, July 16, 2010


The June survey is here. Look at the graph on page 6. We had first formed a floor and then sprang off that floor in the spring, but June's survey was quite bad. Optimism is now back at 89.

You know what's so freaking depressing about this? The large April/May move just got us to the normal recession low range. And now we're back below that.

If this holds for another month, the odds are going to switch to a new contraction. Small businesses account for a lot of spending.

I work for a small business. I missed the 4th quarter spike that you saw, because in my work that spike wasn't present for the company I work at, nor its customers, nor its suppliers. You are now seeing what I have never stopped seeing. I've been on reduced hours for two full years now.

Here it comes again.
July 15, 2010
Number of small business bankruptcy filings on the rise, according to study

The comprehensive analysis, conducted by Equifax, found that the 24 million small businesses in the United States had reported a higher number of bankruptcy filings as compared to the same period last year. The research focused on the top 15 metropolitan statistical areas, which the study showed had seen an increase in filings in 11 of the regions. Representatives from Equifax said that the results reflected the ongoing struggle that small businesses face.
John - I hope not, but IMO failing to extend unemployment benefits is kind of like standing in front of Dirty Harry and cocking your pistol.

We have a lot of accumulated economic stresses, and we just are not strong enough to absorb some of these shocks.

In terms of small businesses:
A) I expect many doctors' offices to be cutting employees.
B) Retail and small business BKs are still mounting and probably will be for years,
C) And you are right - spending on food constrained on average and has not rebounded.

So we are seeing a widespread drop in real living standards. It takes a long, long time to haul out of credit over-expansions.
IMO failing to extend unemployment benefits is kind of like standing in front of Dirty Harry and cocking your pistol

M-o-M, M-o-M, M-o-M

Stop thinking in terms of demand and start considering supply. Until the unemployed are willing to drop their wage requirements, they will remain unemployed. The extension of unemployment only allows them to hold out hope that things are as they were.

They aren't.

Robbing M-o-M to pay Craig is a fool's errand.
Craig - there literally are not jobs out there for most of these people. Seriously. Part of the problem is that older folks need work to support themselves. This is driving up unemployment rates among teens and young twenties to depression-era levels.

On the whole, counter-cyclical measures do work to limit the severity of recessions.

I think the GOP is correct that we should eliminate other spending to pay for it, but I think unemployment benefits should be extended.

Ideally, there would be some sort of work requirement or better yet, a ratcheting down of benefits, which would encourage workers to find other sources of income.

In other words, add some new tiers with lower benefits, but allow workers to earn some money to compensate without losing benefits. That might really spur some job creation as people tried to start up sideline businesses with at least some bread-and-butter money to tide them over in the form of benefits.

I just cannot repeat often enough that there are no jobs for many of these people at any wage, and when I say "no jobs", I do not mean "no well-paid jobs", I mean no jobs whatsoever at any legal wage.

What's happening right now is that all too many of these folks will transition from unemployment to welfare - if they qualify. It's not as if you are saving money.

Now conditions are not uniform across the country, and in fact the extended unemployment benefits were always contingent upon state unemployment rates - if a person was in a low-unemployment state they never qualified for most tiers, and some tiers were only available to those in really high unemployment areas.

A lot of people were never eligible for unemployment either, such as recent graduates. One of the things that unemployment benefits do is allow those people to get some jobs.
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