Friday, March 5, 2010

This Is the Most Optimistic News of the Week?

When did an unemployment rate at 9.7%, 36k job loss, and a third of adults between the ages of 18 and 29 unemployed become good news? At least that is what the media is reporting today. Hallelujah! The unemployment rate held steady and we lost 36k jobs instead of the estimated 50k!!! Let's celebrate and bring out the Mission Accomplished banner, y'all!

Hold on for a second.

Economist's View has posted a list of news links about the 9.7% unemployment rate remaining steady but isn't so upbeat about the news:

There is a lot of optimism about this report due to the fact that it appears that the rate of deterioration in labor markets is slowing and perhaps even about to turn the corner. But I find it hard to be upbeat about an economy that is moving sideways, especially when the broad measure of unemployment increased, and hours worked fell.

More unemployment news from the reality based community:

From the Bureau of Labor Statistics…

Nonfarm payroll employment was little changed (-36,000) in February, and the unemployment rate held at 9.7 percent.

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased from 8.3 to 8.8 million in February, partially offsetting a large decrease in the prior month. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.

There was a little more bad news on the BLS summary table of unemployment, which showed an increase of 139,000 in the number of "discouraged workers" who have given up looking for work, between January 2010 and February 2010.

Along with the increase of 500,000 "involuntarily part-time" workers from 8.3 to 8.8 million, there was plenty of bad news, although most of the corporate media described it as "not as bad as expected," and so on.

Some economic cheerleaders also tried to blame the bad numbers on bad weather, although the BLS had taken the trouble to shoot down this excuse before it got off the ground.

In order for severe weather conditions to reduce the estimate of payroll employment, employees have to be off work for an entire pay period and not be paid for the time missed. About half of all workers in the payroll survey have a 2-week, semi-monthly, or monthly pay period.

So unless you were a day laborer, or snowed in for at least a week, your employment status didn’t change, and snow won’t explain away the bad news.

Blogger Ian Welsh posts a great list as to why we shouldn't break out the champagne just yet in his post, Losing 35k jobs is not good:

  1. Lending is down.
  2. There is no reliable source of demand. Who, exactly, is going to buy lots of new stuff from American businesses?
  3. The stimulus last year was inadequate and badly designed. Yes, it created some jobs and saved others, no, it didn’t create enough.
  4. The 15 billion stimulus just passed is a bad joke which will do, for all intents and purposes, nothing.
  5. State and municipal taxes receipts are still dropping, meaning states and municipalities are reducing spending. They don’t have the ability to print money the way the Federal government does.
  6. Oil prices are still too high, hoving around $75/barrel. If there is any sort of recovery, that price will soar even higher, and will strangle said recovery.
  7. The debtor states, aka: Europe and the US, are floundering and going through a period of Hooverism. Meanwhile China, a creditor state, is trying to moderate its growth so it’s only 8%.
  8. It is not in China’s interest for the US to have a robust recovery, because then oil and other commodity prices will spike. Sure they can sell Americans more Walmart crap if the US recovers, but all their inputs go up as well, and why not sell crap to their own people and other Asians, instead of Americans?
  9. China is using this period to continue snapping up as much real wealth in terms of resources which are in short supply or which will be in short supply in the forseeable future. They have the money, after all, and there’s no point in spending it on most US assets.

I still think there will probably be a jobs recovery of sorts in the spring. But I wouldn’t be surprised if I’m wrong. And I expect the next economic down-leg to happen by the fall.

On a side note, I'd like to welcome new blogger Brutus, Esq. to our community. Children of Debt is off to a great start, lots of snark and reality based arguments against going to law school and graduate school, so check him out.


  1. Obama lied. The economy died.

    On the upside, I fed your fish.

  2. Yay, thanks for feeding the fish. At least someone around here is being fed.

  3. The more I think about the problems discussed in this blog and similar ones, the more I am lead to the conclusion that all of these problems could be solved or at least reduced with one major change: make student loan debt dischargeable in bankruptcy. That way, JD's and other post-grads who have been scammed by the industry (that's most of us) would be able to start fresh and not live in constant fear of financial ruin. It would also force lenders to make more intelligent lending decisions. Fewer people would be approved for expensive law school educations and crappy law schools would be forced to reduce their fees or probably just close down all together. The whole law school industry would be seriously deflated by a common sense change like that.

  4. Thanks anon @ 2:51pm. I agree with you that students deserve more breaks than people who have made bad investments in other areas like real estate.



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