Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. 10% Unemployed: Change We Can Believe In?Just about everyone was caught off guard by the November employment reports, which indicated that the US unemployment rate had actually declined .2% to 10.0%, and that a mere 11,000 jobs were lost during the month (forecasts had called for 130,000, and the ADP private sector report released only days earlier tipped the scales at 160,000). Moreover, the September and October readings were reduced significantly, confirming the sentiment that large-scale corporate reductions have ceased to be the major factor in the employment picture. Hence, concern shifts to whether or not the still anemic economy can actually generate any kind of jobs growth. Here, the picture is in many ways a tad more optimistic than that which followed last month's report, but with some major exceptions.The underlying upward trend was driven by slowing declines in construction and manufacturing. In the case of the latter, the savage inventory rundown that ran from last October to late this spring ensured that a certain level of restocking was necessary, especially given the partially-restored wealth effects from surges in financial and commodity markets that resulted from unprecedented monetary laxity and financial-sector coddling. And demand for capital goods seems to be perking up, so further gains in the sector are possible in the months ahead (barring any further financial catastrophes). But in construction, the picture is blurred because of the state of the commercial real estate sector, which is currently poised to take major hits, given poor performance in the retail sector (i.e. possible bankruptcies), so it's hard to see continued strength here. One sector in which things really picked up was in temporary work. An uptick in temp hours is a usually a good sign that overall employment demand is picking up, but it's perhaps helpful here to put the rise in context by juxtaposing it with a welcome, but ever-so-slight reversal of the drastic decline in the average workweek, which has, during the last few months, hit--and stayed at--record lows. Together, these data suggest that employers are, kicking and screaming all the way, easing up on besieged workers just enough to keep them ticking over the heroic gains in productivity by hiring a few temps, and offering just a bit of overtime. These productivity gains have, in the decided absence of revenue growth, alone accounted for a truly impressive--given the weak economic backdrop--corporate profits performance registered in the third quarter. But this activity may be of very questionable durability and quality: after all, many new hires, especially amongst newly-graduated college students (a group which has been one of the most severely affected by the crash in the labor market), are coming on as interns, or at much reduced rates of pay, and that reduction means that employment spending multiplier effects that generated further hiring (even at the dreadfully slow levels characteristic of the last two recoveries) in past cycles could be diluted still further. Another area experiencing positive movement of a sort was retail: in this sector, too, the positive development consisted of the lack of a negative one, as the pace of losses continued to slow. But holiday hiring, which had been dangerously subdued in October, picked up significantly in November. Still, many of these people will be junked after Christmas like so many of the useless gadgets and packages they had worked so hard to flog in the preceding weeks. And in restaurants and taverns, employment actually slowed. The government continued to add jobs, but an 8,000 monthly figure seems, frankly, pathetic (if not insulting) given the enormous size of the stimulus and bailout packages. And the stimulus money is about half gone, now. It's unacceptable that an economy this devastated (and in such desperate need of public works) is being so neglected. But the folks on Wall Street are getting nervous about spending, and Friday's numbers, which foreign investors saw as positive, pushing the dollar up, were seen on the Street as evidence that the Fed might be all the quicker to raise interest rates and exit from its support programs for the banks: so US stockmarkets posted only slight gains. This illustrates that any further stimulus will be hard fought over by the corporate whores in Congress, though some Democrats are now talking about redirecting returned TARP money to a second stimulus. One very negative development concerns the long-term unemployed: the roll of persons unemployed for longer than 26 weeks continued to expand. And though the U6 reading, which counts underemployed persons seeking full-time work also reversed its downward spiral at last, registering a 17.2% reading from November's 17.5%, the fact that so many have been out of the workplace for such extended period of time merely increases the likelihood that they will not be hired as long as the labor market is decidedly slack (an increasingly popular tenet of employer propaganda has it that such persons' *skill sets* deteriorate when they've been idle for this long, and it's better to go with someone else, especially with some 6 applicants looking for each available job--that figure is from about a month ago, I think). So, all in all, the reversal in layoffs seems certain (for now), but any substantial uptick in hiring will have to wait for next year, at least. And, though some sectors show room for one-off or even sustainable gains, the potential levels of gains, at best, remain extremely subdued. Labels: ADP private sector employment report, economic indicators, employment, real unemployment rate, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Santa Needs Extended Benefits, TooThe October employment reports were released today, and the unemployment rate zoomed above 10%, to 10.2%, to be exact, earlier than most economists expected. The number of jobs lost in October also surprised on the negative side, at 190,000 (v. the projected 175,000). The unemployment rate is the highest it's been since the dreadful winter of 1982-83, when it hit 10.8% for two months running. The so-called "underemployment rate," which covers part-time workers looking for full-time work and suchlike, rose at an even higher clip, to 17.5% from 17.0%. The average workweek was unchanged at 33.0 hours, which matches readings in August and October for the lowest recording ever. Manufacturing production actually increased its average workweek length, to 40.0 hours (but lost net jobs for the month), but this is a small consolation given the heroic increases in GDP, and especially productivity, that have been reported in the past week. Oh, and lest we forget, the amout of workers unemployed more than 26 weeks rose to a stunning 3.6% of the entire workforce, which is the highest it's been since records began in 1948. All told, some 8.2 million jobs have been destroyed during this downturn--whatever name you want to give it--began some two years ago and change. It'll take 3 1/2 years of continuous, strong job growth to make that up, and that in an atmosphere starved of capital and averse to debt (unless you're the government or a big bank, and neither of them are going to be chalking up stellar jobs growth numbers anytime soon).Some are arguing that the truly remarkable productivity statistics announced yesterday (an increase of over 9% annualized), most certainly presage an uptick in employment: you simply can't work the plebs much harder than this. But this comes off a series of strong performances for this year after which analysts said essentially the same thing. And there's still room to cut unit labor costs without cutting hours: by cutting or eliminating benefits. And there is anecdotal evidence to the effect that a good number of workers are actually accepting cuts in pay. But it may not come to this: the vast inventory restocking that took place once the executive committee of the world bourgeoisie made it clear that governmets would guarantee all major financial institutions no matter what, may be overshooting future demand. You may be able to reestablish a global supply network in a relative jiffy, but recreating bloated living and investing standards may be a more arduous, or even impossible task. But stock markets, commodity markets and, strangely, bond markets (well, not so strangely: governments are buying heaps of their own bonds to keep interest rates down) are all way up since the near-death expereince of March. But one other employment indiccator shows how flimsy this tidal wave of risk-taking has been: holiday retail sales for October are languishing at last year's low levels, which were the lowest since, well, 1987: the month of the 1987 stock market crash. Santa's worried, too. Labels: economic indicators, employment, real unemployment rate, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Friday's Jobs ReportWell, the August jobs report came in, and while not a complete disaster, revealed that job losses are not declining any faster (as July's did). Meanwhile, the unemploment rate, which had shown a small reversal in July, jolted vigorously back in the wrong direction (to 9.7% from 9.4%). 15 million Americans are now out of work. And the percentage of Americans working continues to plunge precipitously (this chart--thanks to Calculated Risk--is really a shocker: it shows that the drop is the biggest and fastest during a recession since 1960, and that by rather a long shot): it's a bit above 59% now, compared with almost 63.5% in January, 2007. All told, 216,000 jobs were lost in August. June and July's losses were also revised upwards, by 49,000. The 9.7% reading is the worst since July, 1983. And the U-6 measure, which includes people working part-time who need (they say "want") full-time work, broke another record, arching to 16.8% from 16.3% in July.The average work week (thanks again, Calculated Risk!) blipped upwards, though, in a surprising--well, sort of--development. Like the employment-to population ratio, it has been undergoing a dramatic decline, but this since January of '08. It fell a almost a full hour, to 33 hours, in that short amount of time. The uptick no doubt reflects the enormous productivity gains employers are squeezing out of shellshocked workers to pad up the bottom line given the fact that they're not selling much of anything to the same shellshocked workers. Squeezing them even more should be really helpful in this regard.... Calculated Risk also shows the "diffusion index"; this shows how job losses are spread amongst the industries that make up the productive--using that term loosely, of course--economy. This is what the writer of the blog has to say about that: Before last Summer, the all industries employment diffusion index was in the 40s, suggesting that job losses were limited to a few industries. However starting in September the diffusion index plummeted. In March, the index hit 19.6, suggesting job losses were very widespread. The index has recovered since then to 35.2 in August, suggesting job losses are not as widespread across industries as early this year - but losses continue in many industries. So the outlook for US workers is more of the same: private-sector employers very reluctant to hire or invest if they can get the job done (i.e. tease out any profits) with workers who fear for their jobs (and healthcare) in a way many of them have never done before, and government stimulus either held-up or not doing very much by way of jobs creation in the first place. And the consumer spending outlook, regarding that other means to increase those profits, must remain biased on the downside. With government programs set to be drawn down, the authorities cagily mentioning "exit strategies" once again, and expensive legislation and escalating wars to be paid for, it's devilishly hard to see where those profits could possibly come from. Labels: Calculated Risk, economic indicators, employment, real unemployment rate, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Crisis Impact on US CitiesFrom The Financial Times. Worthy of note:Because of assessment cycles, for example, it often takes several years for city property taxes to reflect changes in property values. For this reason, cities will feel the deeper effects of the recession beyond 2009, with the worst years being 2010 and 2011, the survey predicted. Recession hits US cities' finances By Nicole Bullock in New York Financial Times Published: September 1 2009 13:44 | Last updated: September 1 2009 13:44 The finances of US cities continue to deteriorate as the ripple effects of a national recession reach local revenues, according to research. For 2009, 88 per cent of city finance officers said their cities were less able to meet fiscal needs than in 2008, amid declining house values, restrictive credit markets, slowed consumer spending and rising unemployment, a survey conducted by the National League of Cities and released on Tuesday shows. Read the rest of the article Labels: employment, financial crisis, fiscal policy, housing market, meanest cities, municipal finance Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Weekly Indicator Outlook/Monday's IndicatorsFirst, setting the tone for market performance as the week starts is a Shanghai stockmarket loss of no less than 6.7% on Monday, which has led Asian and European (but not British, as of 10.30 am EST--3.30 pm GMT) stocks lower.Japanese Industrial production rose 1.9% in July, raising the string of consecutive rises to 5. But critical export growth is lacking, and the figures, viewed from a year-to-year perspective, remain quite depressed. The fact that production continues to grow robustly, while exports and imports decline, or, at best, level off throughout the region, makes me quite concerned that the much-remarked-upon post-Lehman inventory restocking will be seen to have overshot on the upside in the next few weeks. One can only hope that the fact that the swingeing declines have led to such meager advances, viewed from a yearly perspective, will keep inventory restocking aligned to a much-reduced capacity of consumers to buy, and businesses to invest. In the US, the Chicago Purchasing Manager's Index, which provides a snapshot of the bosses' propensity to invest, rose to a post-Lehman high in August. Later in the week, all eyes will be on Friday's US employment reports. The nonfarm payroll figure is expected to be down by *only* 220,000 for August, a slight improvement on July's 240,000 loss, but the unemployment rate is expected to climb a notch, back up to June's 9.5%, as discouraged (and uncounted) workers re-enter (presumably encouraged by July's downward movement in unemployment) still horrific labor markets. But other gauges of employment are also due out: on Thursday, US weekly new and existing unemployment claims figure comes in, ehile Eurozone unemployment indicators are slated for tomorrow. Unemployment there is forecast to rise .1% to 9.5%, which would, if it--and the US projection--materialize represent another noteworthy development in the crisis, when European and American unemployment rates finally converge after decades of mainly large divergence. It's a fool's errand as to which side will come off looking better.... US revised productivity and unit labor costs are due on Wednesday. Both figures are expected to be trimmed from their spectacular heights (inversely for ULCs), but the story of workers lucky enough to have steady jobs being squeezed implacably by the boss to make up for lack of sales and revenues is expected to stick. Finally, indications on the health of the all-important US service sector will be released Thursday. This sector has contracted since September of last year, albeit at a slowing rate. Improvement is key for the US outlook, because it has such a large service sector. Regarding housing, US July pending home sales is out tomorrow. US retailers will also report comparable stores-sales on Thursday, providing a look at the increasingly important back-to-school sales in the retaiing calendar, and of the state of the US consumer. Labels: corporate profits, economic indicators, employment, eurozone, housing market, industrial production, Japan, productivity, retail sales, service industries, stock markets, unemployment, United States Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). This Week's Economic IndicatorsThe first important reading of the week already came in from the Far East: Japan joined Germany and France in pulling out of recession, at least temporarily. It chalked up a .9% increase in GDP in the second quarter.Tomorrow a few reports in the US will concern inflation, as July producer prices are announced. July US housing starts are also scheduled. The other thing to watch in the middle of the week is Thursday's UK retail sales. This indicator has been jumping all over the place since the meltdown last autumn. Manufacturing data from euro country and euro-zone economies come in on Friday, as does US existing home sales. And the US initial claims make their weekly appearance of Thursday Labels: economic indicators, employment, Inflation, retail sales, unemployment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Goodbye, Green ShootsThe FT's John Authers (video clip) on market reaction to today's US payrolls data, which were far worse than expected.Labels: bailout, economic indicators, employment, financial crisis, John Authers, US employment Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Job Creation Proposal from 1973From Bob Feldman:Perlo's 1973 Alternative Jobs Creation Proposal Revisited Most hip anti-war people in the United States (and most long-time readers of Dollars & Sense) probably realize by now that the U.S. government's recently passed "economic stimulus" legislation won't really create enough high-wage jobs for U.S. workers to really restore economic prosperity for most U.S. working-class people; or quickly stop the rapid rise in long-term unemployment rates for U.S. blue-collar and office workers. Yet until anti-war left dissidents in the United States are able to quickly present some kind of anti-militarist alternative left jobs creation program for U.S. working-class people to mobilize in support of on the U.S. streets, the suffering of U.S. working-class people in the current U.S. historical "era of permanent war abroad and economic depression at home" will probably continue to increase--until there's finally some kind of upturn in U.S. capitalism's business cycle. In a 1973 book, The Unstable Economy: Booms and Recessions In The U.S. Since 1945 (International Publishers), a Marxist economist named Victor Perlo indicated what an anti-war alternative left jobs creation program for the U.S. economy might look like by proposing the following: "Nationalization and government operation of major economic units are essential for overcoming monopoly domination of the economy to the extent necessary for realizing significant progressive reforms. "Plants abandoned by private owners, or left with substantially curtailed operations, are prime targets for nationalization. Conspicuous in this respect are enterprises in the aerospace and other armament-connected industries, whose private owners have proved unwilling or unable to shift to civilian production. Also there has been large-scale phasing out of electornic plants, as multinational corporations have shifted output to foreign lands. There continues a constant flow of industrial enterprises from urban areas, where workers are organized into relatively strong unions, into rural areas, and especially to open-shop southern areas offering special tax concessions and a prospect of low wages and no resistance to inferior working conditions. "The government should take over all such plants, fully maintain employment, and charge the corporation with all transitional costs. "It should take over munitions plants generally, thereby weakening the economic base of the notorious `military-industrial complex.' "The transportation system should be nationalized...The entire system should be made into an integrated public system for freight and passengers, covering all modes of transportation, with lowered fares and rates, greatly increased and improved service. "The telephone system and other `public utilities' should be made really public, to end the superhigh charges and corresponding private profits now guaranteed by business-dominated regulating commissions. "Along with a system of socialized medicine, available without charge to all, there should be nationalization of the drug industry, hospitals, and related industries. "The construction of new housing should be nationalized. That is the only way to build quickly the tens of millions of units needed to decently house America at rents the illl-housed can afford, with adequate employment opportunites for Black and other minority workers... "Nationalization of industry should not be like that of the `public authorities' and some quasi-government corporations run by boards of directors and managers from the officialdom of the private big corporations and banks, for the profit of these enterprises rather than service to the public. "Democratic nationalization is required, involving direct, major participation by the workers of the nationalized enterprises in their management, and a real voice for the users of the services. It calls for boards of directors to be elected directly by the voters and by the enterprise workers... "Aa whole series of measures would be directed towards cutting unemployment...A major element in the fight against unemployment is to win a shorter work week and the elimination of overtime. This, of course, would directly add millions of jobs... "...The demand has become popular among workers for continuation of unemployment insurance for the full term of unemployment. This should be accompanied by expanding coverage to all workers, minimizing the waiting periods, ending the exclusion of strikers and other categories of workers, and ending the humiliating compensation offices with their pressure on the client to take sub-standard jobs at sub-standard pay. "A uniform Federal system should be substituted for the state systems, and the payments should be financed out of general revenues. "Every enterprise, private and public, should be required to employ Black and other minority workers at least in proportion to their numbers in the area's population at each occupational level, including the highest managerial and professional levels... "All Government support for and privileges granted to existing foreign investments would be ended. New private corporate foreign investments would be completely prohibited or sharply curtailed. This would encourage economic growth in the United States, by making it not longer possible for big corporations to give priority to overseas operations while cutting back at home..." --b.f. Labels: 1973, employment, jobs, militarism, nationalization, Victor Perlo Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
