Tag Archive | "Jobless rate"

Horrible job report delivers knock out punch to incumbents and stocks

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Horrible job report delivers knock out punch to incumbents and stocks

Posted on 01 June 2012 by admin

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Financial markets plunged as the May’s unemployment numbers added  69,000 jobs  to the economy, a number far less than 125,000 jobs needed just to keep up with the labor force requirements. The disappointment was  widely felt in political arenas and financial markets.

The stock market plunged at the opening bell and most stocks followed suit. The bleeding was heavy in many names and issues. Hence the bears are out in force pummeling every name and issue into a red pulp. European bad news and Greece’s exit from Euro zone are still hanging overhead, in addition to the domestic data. The stock market has been hitting its 200 day moving average as of this writing.

After three months of a fragile economic recovery in the US it seems that the economy has definitely stalled into a slow growth pattern and a tail spin in the financial markets have taken hold of the downward momentum . This week the GDP numbers were also revised from 2.2 percent growth in the first quarter to 1.9 percent growth. This again disappointed the markets and that too was a significant factor in evaluating the economic health. The unemployment claims also rose more than expected to 383,000 this week further shedding light on the struggling job market.

In an election year when thing should get rosy as it happens this year things have soured a lot. The voter angst and disappointment is all too visible to see. In an election year stable and strong financial markets follow suit but this time around just five months to go its the opposite equation. This in turn would spell disappoint and disaster for the incumbents and the rivals are well poised and positioned to capture the White House.

According to Los Angeles Times David Lauter says “Friday’s jobs report — only 69,000 new jobs created in May and job creation for March and April revised downward — was close to the worst possible news for the President. For the third year in a row, the economy appears to have stalled “

The voters are highly responsive towards economic prospects, a fact that the current campaigns are taking into account , and the they will vote with their wallets and nothing else , and they know it. If this job creation and economy stays stagnant into the next few months, there is no way the incumbents should hope to stay in power and win a second term. The democrats are unlikely to get a second chance with this type of performance. Republicans were voted out in 2008 and just the same would repeat here.

The mere fact is this economy never got out of gate in the last four years. There has been no concentrated efforts to push the horse out of the gate. It starts and stalls and consumers go back to the fears of a double dip recession. Consumers have little confidence and the ability to defend themselves should the economy falls back like in 2008. The fear of 2008 happening again scares the hell out of consumers and the financial markets as well. They constantly look for clues and become hyper vigilant in their outlook. There is hardly any air of certainty and stability in 2012. As a result the consumer confidence keeps falling off the horse every two or three months and never gets a good ride.

Until a layer of certainty is wrapped around the minds of voters and employers in particular they will keep postponing hiring and freeze everything and it can go on indefinitely into the next year 2013 and 2014. At some point that layer of certainty may come back and we shall see a rebounding job market and a rebounding stock market till than all hell will be breaking loose like today.

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Why America’s job deficit is more important than budget

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Why America’s job deficit is more important than budget

Posted on 03 February 2012 by admin

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The most significant aspect of January’s jobs report is political. The fact that America’s labor market continues to improve is good news for the White House. But as a practical matter the improvement is less significant for the American work force.

President Obama’s only chance for rebutting Republican claims that he’s responsible for a bad economy is to point to a positive trend. Voters respond to economic trends as much as they respond to absolute levels of economic activity. Under ordinary circumstances January’s unemployment rate of 8.3 percent would be terrible. But compared to September’s 9.1 percent, it looks quite good. And the trend line – 9 percent in October, 8.6 percent in November, 8.5 percent in December, and now 8.3 percent – is enough to make Democrats gleeful.

But the U.S. labor market is far from healthy. America’s job deficit is still mammoth. Our working-age population has grown by nearly 10 million since the recession officially began in December 2007 but many of these people never entered the workforce. Millions of others are still too discouraged to look for work.

The most direct way of measuring the jobs deficit is to look at the share of the working-age population in jobs. Before the recession, 63.3 percent of working-age Americans had jobs. That employment-to-population ratio reached a low last summer of 58.2 percent. Now it’s 58.5 percent. That’s better than it was, but not by much. The trend line here isn’t quite as encouraging.

Given how many people have lost their jobs and how much larger the total working-age population is now, we’ve got a long road ahead. At January’s rate of job gains – 243,000 – the nation wouldn’t return to full employment for another seven years.

When they’re not blaming Obama for a bad economy, Republicans are decrying the federal budget deficit and demanding more cuts. But America’s jobs deficit continues to be a much larger problem than the budget deficit.

In fact, we can’t possibly achieve the growth needed to reduce the budget deficit as a proportion of the total economy unless far more people are employed. Workers are consumers, and consumer spending is 70 percent of economic activity. And cutting the budget means fewer workers, directly (as government continues to shed workers) and indirectly (as government contractors have to lay off workers) and therefore fewer consumers.

Yet deficit hawks continue to circle. State and local budgets are still being slashed. The federal government is scheduled to begin major spending cuts less than a year from now. Republicans are calling for more cuts in the short term. Austerity economics continues to gain traction.

Meanwhile Congress is debating whether to renew extended unemployment benefits. This should be a no-brainer. The long-term unemployed, who have been jobless for more than six months, comprise a growing share of the unemployed. (In January they rose from 42.5 percent to 42.9 percent).

Republicans say unemployment benefits are prolonging unemployment, that people won’t get jobs if they get unemployment checks from the government. That’s claptrap, especially when there’s only 1 job opening for every 4 people who need a job. Republicans also say we can’t afford to extend jobless benefits. Also untrue. Jobless workers spend whatever money they get, and their spending keeps other people in jobs.

Government should extend unemployment benefits, and not cut spending until the nation’s rate of unemployment is down to 5 percent. Then, and only then, should we move toward budget austerity.

The job situation is better than it was but it’s still awful. The jobs deficit is still our number one economic problem. Forget the budget deficit until we tame it.

Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including The Work of Nations, Locked in the Cabinet, Supercapitalism, and his most recent book, Aftershock. His “Marketplace” commentaries can be found on publicradio.com and iTunes. He is also Common Cause’s board chairman.

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discussion – Copy

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US Economy adds 103,000 jobs, but..

Posted on 07 October 2011 by admin

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US economy added 103,000 non farm payroll in the month of September higher than analyst expectations which called for 60,000 jobs. The unemployment rate stayed at a high of 9.1 percent according to Bureau of Labor Statistics. Even though new jobs were added to the economy, it was barely enough to keep up with growing labor force and the population.

Prior months job data was also revised and it showed that 99,000 more jobs were added in July and August. This places the jobs data in much better perspective than we had before. Both hourly rates and hours worked increased in September. Health care, retail and services sector contributed to most gains while manufacturing lagged behind shedding 13,000 jobs last month.

Economists expected at least 60,000 new payrolls originally. The number 103,000 is much higher because 43,000 striking Verizon workers were included in this report, otherwise the overall job additions are just around a non-impressive 60,000 as expected.

US economy needs to expand at the rate of 2.5 percent and add about 125,000 jobs per month just to keep up with the jobless rate.

Economist consensus is that job growth is falling short of the required numbers and thereby the 9.1 percent unemployment rates will not change over next few months at least. “It underscores the belief that the economy has skirted a recession but that’s not to say it’s out of the danger zone because there are significant risks out there,” said Millan Mulraine Senior Economist at TD securities.

Even though this unemployment report was a “non-horrible” number according to Jim Cramer, the number were not good enough to assure a meaningful and a strong recovery. The economy is definitely showing sluggish growth which underscores a point that a double dip recession is not in the cards, at least not yet. These kind of reports don’t work well for the stock market and it lost all of the gains and ended the day in red.

A lackluster recovery and a high unemployment rate will keep the pressure on President Obama and the Federal Reserve to do more and put more people to work. President has proposed his 447 billion dollar job plan two weeks ago, but a reluctant Congress has not implemented any provisions whatsoever. Members of Congress including the Speaker of the House John Boehner have in fact rejected those measures. With a divided Congress its impossible to see what will come out of it.

Whatever these numbers may be, ordinary American cannot feel at home and take solace even though the Great recession is over two years ago. There are 14 million unemployed people and another 6 to 7 million under unemployed. There at least 2.5 million people who have dropped out of labor market discouraged and not seeking work.

This in the end spells trouble for President Obama, whose Republican challengers are gaining ground and using these numbers against him in the political arena. Meanwhile protests on Wall Street are getting stronger day by day.

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Bad Economy only ticket for GOP  WhiteHouse

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Bad Economy only ticket for GOP WhiteHouse

Posted on 11 May 2011 by admin

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President Obama hit 60% ratings this week in the aftermath of Bin Laden assassination. The ratings spiked like George Bush Sr in the aftermath of Iraqi invasion. Its was a confirmation of sorts and approval nod from the American public. But that is not the only reason the ratings have spiked for Obama. Improving  job numbers in May where 244,000 jobs were added also fueled public’s confidence. So far this year about 800,000 jobs have been added yet the unemployment rate stayed at 9 % and some states like in California the rate is 12.2% . With the improving job situations public’s perception of the economy also changed a lot. The President is basking in 60% rating which are considered decent for his re-election bid. While the ratings are doing good for the short term a growing economy provides tremendous challenge to the Republican candidates.

The only way Republican can win the White House if the economy tanks and President Obama is proven a failure unable to create jobs and take the country out of this Great Recession. There is no doubt that if he creates enough jobs in the range of 200K to 300 K per month that will drop the jobless rates and unhook any hopes for Republican hopefuls to successfully bid against Mr. Obama. A worsening and dragging economy will help foster a feeling of change in the impatient voters and and they will toss out the incumbents just as they did with George Bush and the Republican party and reduced them to a minority.  There is no doubt the democrats will lose the Senate and the White House in 2012.

So what does the Republicans need to win the White House? A weak and nagging economy and poor job numbers and frustration among the likely voters that can make  Obama a one term President. So what do the newly elected Republican Congress can do? You guessed right ! Don’t not create new jobs. Stop the spending or programs that can expand economic growth or shore it up. Pound on deficit fears which are real fears though and just break the pace of recovery to stall any meaningful economic growth.

It may sound like they would want to undermine the national economy but if you look back 2 years that is what they did exactly and won back enough seats to elect their own speaker of the House John Boehner. Obama railed and hemmed and hawed with his Car-in-a-ditch stories and how the Republicans wont help him push the car out of the ditch. That worked exactly as it should have.

There are signs that the economy is recovering slowly and its slides back often. One great factor that can kill any recovery are the gas prices north of $4 dollars. they hurt the consumers badly when they can not spend on other things since most of the money goes into paying for gas. That is why first quarters GDP which is 70% of consumers spending came in very low at the rate if 1.8% growth compared to 3.5 % and above for earlier quarters.

So if Mr. Obama wants to retain the White House- better tackle the gas prices now or it may be too late. Last time gas prices rose to $4  and above look what happened to that President and his party ! Its no fun riding out $4 dollar gas for the hard hit recession weary folks, none at all and when they get in the polling booth they pull the lever the other way !

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