Thursday, April 21, 2011
Yeah, There's a Leg Up, But
The four-week moving average is still below 400K at 399K. The lowest initially-reported 4 week MA for initial claims was 389.5K. This could be mostly seasonal adjustment, although some should be the impact of Japanese supply chain changes.
However we finally made it "There" in April. "There" was finally an increase in covered employment to 125,572,661 compared to the previous quarter's 125,560,066. Covered employment in this cycle peaked at 133,902,587 in 2008. Our low this cycle was below the low of the previous recession (April 2004) of 126,084,041.
To understand why this has been weighing on my mind so much, you have to know that covered employment in the third quarter of 2000 was 126,084,568. In the last decade the population rose by over 8 million. This explains a lot about joblessness. It is not laziness but lack of jobs. I am now expecting some problems due to gas prices. Some people are no longer able to afford to get to work, especially for short hours/lower paying jobs. This should slowly show up over the next 8 months.
I made you a chart because this is so inconceivable:
A decade, no increase in state unemployment accounts as compiled by Dept of Labor. More than a decade.
PS: Philadelphia Fed survey showed drops in future indicators but is still quite strong. Prices, of course, are steadily increasing. Diesel 4 week supply popped up in the EIA crude inventories report, so we know the end is not nigh. Gas supplied continued to drop at 1.8% YoY.
Home prices continue their relentless slide. FHFA index has it down 5.7% YoY. There is going to be a whole new round of losses when those HAMP mortgages are set to adjust. They got a five year deal on rates which mostly will expire from late 2013 to 2015. Many will still be underwater.
I feel Japanese, but I am hoping that we can skip the massive earthquake part of the deal.
Did you all know that under current law, it looks like the US will have to cut disability payments in 2018? The DI fund will be totally exhausted somewhere around then, and at that point payments to beneficiaries would be cut at least 12%. Every six months the projections are getting worse. In January, CBO figured 2017, and a benefits cut of 18%.
As Sarah would say, it's here, it's clear, get used to it. A lot of politicians are still pretending that they have the option to do nothing. 2017 is six years away. I don't think Congress will let this happen, but it will have to pass some legislation to prevent it from happening.
This chart should have more red on it to fit the subject matter! The figures are solid (but in no sense good). They tell me it's not a depression, but although dumping money did push incomes up, it did not change the economic nuts and bolts. Our fiscal problems are so severe because of these nuts and bolts.
What it means in practice.
This isn't rocket s...narky.
End the snark?
Here end the snark!
Would you, could you, end the snark?
I would not, could not, end the snark.
36 Million Missing Jobs
If the "rock solid" 61 year trend from January 1939 to January 2000 was still in place, then we would have 36 million more employed workers right now. That's what the chart shows.
Wishful thinking is a veeeerrryy frightening thing! I just spent five hours last night and early this morning arguing on DU that no, you couldn't count on 3.1% average growth annually, and I didn't convince the bozo.
All we need is one more lost decade and we'll be Japanese.
(Oh, yeah, and national debt 200% of GDP.... But we're working on it.)
((Plus the exploding nukes.))
(((Alrighty, we still have a ways to go)))
"This country appears to have an off-balance-sheet, unrecorded debt burden of close to 500% of GDP! We are out-Greeking the Greeks, dear reader."
Strictly speaking, I don't agree with the methodology. Medicare/Medicaid is technically an expense, not a debt, and Congress can change (or even eliminate) the expense at will. But there's an awful lot of people who wouldn't agree with that statement, and net present value of the presumed obligation puts the problem in perspective.
But coming back to your point:
Even if you look at the current balance in the Medicare trust funds, plus all the balances in the OASDI funds, which constitute permission to borrow, we still have debt a fraction less than 100% of GDP.
And we are not going to get much further on the borrowing jag, because people are slowly working up to the realization that they have to become fiscal conservatives to get their SS, and they WANT THEIR MONEY.
"Yikes, Mark. That chart is the sum of all economic fears, right there."
"The graph that makes people jump off buildings...."
Perhaps robots can save us.
Real Net Worth Per Capita
I've taken the net worth from the Fed's Flow of Funds reports, subtracted off the federal, state, and local debt as seen in those same reports, then adjusted the total for inflation and population.
On average, we're no better off than we were in 1997.
Of course, it's only average per capita, so the rich can get richer and the poor can get poorer and the graph makes it all look OK.
Wonder what the average net worth per capita for the bottom 4 quintiles looks like over that same time span.
I wonder if we are going to have any republican candidates with sense enough to ask voters if they are better off now than they were four years ago?
Technically, if you lower the marginal tax rate you can offset some of the negative implications of higher taxes.
"Mark, that graph makes the late 90's/early 00's an outlier. If anything, it makes now actually seem back to normal."
The late 90's/early 00's doesn't look like an outlier to me. It is just below trend. Since it is below trend, if I removed it then the exponential curve would actually be even steeper.
In other words, it took a massive dotcom bubble to nearly get us back on trend but even that wasn't enough. That should have been our first warning sign that the long-term employment trend was breaking down and therefore the long-term stock market trend was also at risk.
"Mark - what you see in that graph is the long-term effect of our trade deficit."
That's certainly some of it. I think there is a perfect storm of reasons though.
Here's another one I'm pulling from my own comments on that post.
"In 1964, 32% of the nonfarm payroll workers were women.
In 2000, 48% of the nonfarm payroll workers were women.
In 2010, 50% of the nonfarm payroll workers are women.
The trend of more and more adults in the household working has pretty much hit a wall."
It is not impossible to keep the employment trend alive. We just need to have both adults in the typical household have a job AND one of them having a second job.
In the distant future, can't you just feel the prosperity once we have both adults each working two jobs?
Meanwhile, we'll be doing all we can to automate and outsource jobs away. Win win! *sarcasm*
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