Some Sobering Economic News

This was a good morning not to get out of bed. All that euphoria about being out of the depression woods got tempered a bit by a good dose of ugly financial news.

Employment

The DOL reported that initial claims for unemployment insurance were up 4,000 last week to 558,000. Of more concern, the four-week moving average increased 8,500 to 565,000. This breaks the down trend in claims but they are still 93,750 below the peak.

The WSJ Real Time Economics blog reports that mass layoffs were still widespread in the second quarter.

Employers engaged in 2,994 mass layoffs last quarter, the Labor Department said Wednesday, taking 534,881 workers off the job. That’s more than 70% higher than the 1,756 mass layoff events in the same period last year, as the economy continued to weaken through the end of 2008 and into the beginning of this year.

Only 38% of the firms that engaged in mass layoffs said they expect to hire back some of the workers. Earlier this year 51% said they planned to recall some of those laid off.

And just to round out this sunny collection, the Kansas City Fed is out with a paper that suggests it could take a decade to get unemployment down to the 6% range. The authors of the report don’t see a recovery that typically follows a recession. They point to the lingering effects of the credit crisis as the reason for the long recovery period. One has to wonder how many mini-recessions we might have in that decade of recovery. (Link Here)

Retail Sales

This was a big surprise. Most economists and analysts expected to see an increase in retail sales driven by “cash for clunkers.” Indeed, car sales increased nicely by 2.4% but the consumer cut back elsewhere. Overall, retail sales were down 0.1% for July and off 8.3% year-over-year. If you throw out car sales, retail sales were down 0.6%.

I think it’s fair to say that the consumer has its pocketbook snapped shut. They’re either rebuilding balance sheets of they are lucky enough to have jobs or hanging on by their fingertips. I’m beginning to think that it may be more of the latter than we suppose.

From Jake at EconomPicData.com, here is a graphic representation of sales by category.

Foreclosures

Realty Trac reported that foreclosures rose 7% from June to July and are up 32% YOY. There were 360,149 foreclosure filings in July or one for every 355 houses in the country. Nevada came in first followed by Arizona and California.

A couple of weeks ago, I wrote that we might be seeing the foreclosure pig work its way through the python and that it didn’t appear that there was more food going in the snake’s mouth. I think I might have been wrong. It seems as if we aren’t as far through the process as I thought.

So there you have it. You can’t spin these numbers, they’re just plain dismal.

Comments

[TinyTim:]

Unemployment may take ten years to recede to an "acceptable" level. Obviously, it depends on GDP growth which is more than consumer spending. Right now GDP growth is mainly govt spending. Fortunately for the statisticians, new college and HS graduates don't show up on the radar as they're not eligible for unemployment.

The real indicator for retail sales will be the Xmas spending season we're heading into and just how much it drops YoverY. Also and closer is Halloween, which some marketeer has deemed the second biggest commercial holiday. This will separate the people who are broke from the people who are just scared or trying to adopt a new thrift (no atheists in a foxhole).

Hate to say it, but those foreclosures and bankruptcies are playing a large part in restarting the economy. They're stabilizing what started as a credit crisis. If only that python would set his sites on the banksters left. Having them with more concentrated power as an oligopoly can only be bad. As it is, they'd rather have squatters than take the foreclosure hit to the books. This will only extend the pain.

One annoying question that keeps appearing- how many people who are still employed are facing involuntary foreclosure? These are the people loan mods should be focused on.

Aug 13 04:07 PM

[Neil459:]

The only numbers that mean anything are the adjusted numbers. Obama and his team are are outright lying with the initial numbers. Things will get worse as one president can only perpetuate a real lie for so long.

Aug 13 04:13 PM

[reveigel@ms...:]

Numbers are dismal. What is more dismal? The leadership in Washington. And it becomes more dismal 'as time goes by'.

Aug 13 07:45 PM

[The Geoffster:]

I think I'll have another drink.

Aug 13 09:03 PM

[Cold Reality:]

Make that two.


On Aug 13 09:03 PM The Geoffster wrote:

> I think I'll have another drink.

Aug 13 09:38 PM

[j-dub:]

This "sobering" news was the inspiration for total and utter inebriation.

All too ironic

Aug 14 01:50 AM

[awake09:]

Make it a double.


On Aug 13 09:03 PM The Geoffster wrote:

> I think I'll have another drink.

Aug 14 02:13 PM

[awake09:]

I think that CNN, et al will be crowing about the "slowing" of the unemployment numbers, which would happen if 90% of the population was unemployed and the new figures reflect a "positive" trend... there just wouldn't be anyone left to get laid off. To them it's reason to believe!

How can we ever get clear data and actionable information when the media is determined to steer us into socialism? How long will free voices like SA be possible in light of their hostility?

Aug 14 02:16 PM

[bebido:]

This note is to thank all of the voters who voted for the Socialist/Communist Nobama. To the older viewers of this post, wait until Nobama is finished with Health Care. Remember from cradel to grave? Nobama will hasten your arrival to the grave, that is a given.

Aug 14 03:51 PM

[Kunst:]

Too late. Bush is already out of office.


On Aug 13 05:04 PM whidbey wrote:

> What are the next steps?
> The impeachment of a failed president should be the next step.

Aug 15 01:56 AM

[Donald Ingram:]

Housing stats out in Canada yesterday;
www.globeandmail.com/b...
The market has bounced back with good numbers.
Further evidence that decoupling is still taking place.

Aug 15 12:49 PM