DUDE, where’s our jobs??

By Cato the Elder

joblessMost of us who live in metro DC area aren’t living with the absolutely dismal unemployment numbers the rest of the country is experiencing.  With our relatively rosy 4.9% rate, our region has been somewhat insulated against the staggering job losses thus far.  Don Peck over at the Atlantic has a great article up this weekend about how persistently high unemployment rates will change the complexion of America for generations to come:


“The Great Recession may be over, but this era of high joblessness is probably just beginning. Before it ends, it will likely change the life course and character of a generation of young adults. It will leave an indelible imprint on many blue-collar men. It could cripple marriage as an institution in many communities. It may already be plunging many inner cities into a despair not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years to come.”

The four week averages for unemployment claims have started moving in an ugly direction, and considering this is happening when all these people are supposedly being hired for census jobs it suggests that there will be continuing losses in February when the NFP report hits this Friday.  By the way, the last NFP number for January of -20K jobs had the seasonal adjustment for all the temporary Christmas workers.  Without this adjustment, I’m looking for ugly numbers in February and March.

WeeklyClaimsFeb25

This is a four week moving average of weekly claims since 1971.  The current level of 496K is quite high and the worst since last November.  We need to see these numbers start to come in sub 400K before we can start to have any hope of chipping away at the real unemployment rate.


The durable goods number is also of concern, declining 0.6% ex-aircraft.  This is telling us that we’re still a ways off from having capital investment lead us out of the Depression the recovery, as is what normally happens. And consumer confidence?  It plunged 10% in January.  Now, consumer confidence is probably the most unreliable indicator out there granted, but we usually don’t see it take a ten percent hit in a month.  Something wicked this way comes.

saupload_fredgraph

The bottom line is that we have an effective unemployment rate of 20%.  For some reason, Americans have trouble coming to grips with how much trouble we’re in.  Once this starts to sink in consumers will pull in spending, small retailers will shutter, investors will hibernate in caves, etc.  The only thing that will stop the slide is to convince capital to take more risk. There are policy levers available to facilitate this, but they include elimination of taxes on capital income, everything from interest to dividends to capital gains, so I can almost guarantee you they won’t be pulled by this administration.  Indeed, since they’re proposing the diametric opposite in all these categories to finance their health care monstrosity, they’re likely to aggravate the problem.

The news isn’t all bad: at least we’ll have free health care.


flow

Obama Administration Employment Flow Chart


Comments

  • Brian S says:

    Friday’s unemployment numbers aren’t going to be very rosy. I’m expecting to see the rate back over 10%, given the spike in first time unemployment claims. As Cato noted, it’s going to be especially grim without the seasonally adjusted numbers included.
    .
    I will note that the only union folks who are happy with the Administration at this point are the public sector unions. The private sector guys are just as frustrated with Obama as the rest of us are. Some of them, including some extremely senior union leaders, can’t even get phone calls returned from the White House. I expect 2012 is going to be an interesting time for some of these unions.

  • James Young says:

    Like that last chart, but the second level is less accurate that you might think.

    DoL statistics for 2009 (the ones that show that public-sector union member numbers exceed private-sector union members for the first time ever) also show a 900,000 drop in the number of private-sector employees represented by a labor union.

    I’ll leave it to others to comment on that, save to note that it’s not as rosy a scenario as you might imagine. President Barry is killing jobs THROUGHOUT the private sector.

  • Loudoun Insider says:

    Scary situation, and welcome to the TC stable, Cato!

  • G. Stone says:

    ” The only thing that will stop the slide is to convince capital to take more risk. There are policy levers available to facilitate this, but they include elimination of taxes on capital income, everything from interest to dividends to capital gains, so I can almost guarantee you they won’t be pulled by this administration. Indeed, since they’re proposing the diametric opposite in all these categories to finance their health care monstrosity”
    Here you have nailed it. This administration is indeed living in opposite land. Capitol is retracting, frozen in place by uncertainty. This administration has even managed to screw up the one and only thing Keynesian s and Supply Siders agree, they are raising the level of taxation in the midst of a deep economic downturn.

  • edmundburkenator says:

    “The private sector guys are just as frustrated with Obama as the rest of us are. Some of them, including some extremely senior union leaders, can’t even get phone calls returned from the White House.”
    .
    The FUCK YOU box must be in the wrong place.

  • Cato the Elder says:

    Who needs the phone? Andy Stern is over there twice a week.

  • edmundburkenator says:

    From the WH records, Andy Stern has been there five times.
    .
    But hey, who believes those records. I believe the guy with the funny flow charts!

  • Brian S. says:

    Cato, if you aren’t SEIU, no one is returning your calls. This is a big complaint with the AFL-CIO and some of the larger non-public employee unions.

  • Cato the Elder says:

    Hey Pinocchio, you must be looking at the “other” records: http://blogs.wsj.com/washwire/2009/10/30/seius-stern-tops-white-house-visitor-list/

  • edmundburkenator says:

    There are a lot of Sterns listed. I counted five separate visits by Andrew Stern, not 22. Perhaps the WSJ is counting Stern visiting several different people on the same day.
    .
    The WSJ never gets it wrong.
    .
    Of course, I really don’t believe either one, WH list or WSJ… as I said.

  • Let's Be Free says:

    Wondering how long it will take Obama to give his malaise speech. He’s blamed everything that’s gone wrong on others — just a question of time before he blames the American people as a whole, not just those who live in small towns, work in insurance or finance, or who drive a black truck.

  • Cato the Elder says:

    “The WSJ never gets it wrong”
    *
    Frankly I think it’s a conspiracy between CNN and the WSJ: http://www.youtube.com/watch?v=j_H-qBTMB1U

  • Brian S. says:

    The White House is already trying to spin the unemployment numbers due Friday.
    .
    http://www.reuters.com/article/idUSN0111549320100301?type=marketsNews

  • edmundburkenator says:

    Twenty-two times. Gotcha. But I counted again and only saw five.
    .
    I did see on 10/29 he had a dozen or so meetings. I’m starting to wonder if visits = meetings to those in our elite super terrific media.
    .
    By why get all bogged down in that?
    .
    Back to the flow charts!

  • Cato the Elder says:

    I can see how it might be confusing. After all, the number “22″ could be interpreted as “2+2″ and then if you add a “1″ you may arrive at “5.” Especially with all those redundant visitor checkpoints that are set up outside each meeting space in the West Wing where the visitor in question logs in and out each time he enters another meeting room.
    *
    Regardless, I’m not begrudging an American President some quality time with his BFF. He needs all the emotional support he can get.

  • edmundburkenator says:

    Cato, a few non-Andy Stern questions:

    Can you put a sharper point on the administration’s proposal to raise taxes on capital income, interest on dividends and capital gains? What are the levels proposed?

  • Cato the Elder says:

    Roughly 330B, in a proposal to tax “unearned” (AKA gains and dividends)income versus taxing gold-plated plans.

Leave Comment