Unemployment Claims Release Chart

As close to a newsless release as we could get.

With third-quarter real GDP growth estimates now at 3% per year, and with work hours projected to fall at a 3% per year rate between the second quarter and the third quarter, it looks like we may have another 6% productivity quarter when the July-September numbers come out at the end of October.

Yes, my friends in the Inner Palace, I agree that the stimulus and the banking-sector recapitalization and the expansionary monetary policy are working, but more of each could be working even better.

Comments

[Dave Wrixon]

Well, much depends if you believe the numbers. I doubt GDP is doing 3% per annum, and I also doubt that what is being measured is actually meaningful. Having said that the productivity is probably rising even faster because I don't believe the unemployment stats either.

2009 Aug 14 05:24 AM

[Dave Wrixon]

The one thing this does, however, seem to confirm is that much of America was and still is being paid for sitting around on their butts.

2009 Aug 14 05:25 AM

[Moon Kil Woong]

Clearly the economy is not being fueled by consumer growth. That means the standard of living is not really increasing. Government spending adds to GDP but is not really beneficial to Americans. Banking sector profitability helps economic stability but paying almost nothing on savings, borrowing from the Fed at Zirp and hoarding cash to get Fed interest on deposits, and gambling on stocks and commodities doesn't do much for long term economic viability. Au contraire, it make this economy even more disfunctional than before we hit this recession.

Although I am smart enough to ride a cash infused bull when I see it, I certainly will be the first to hedge next time I see another market slowdown. Pray tell what mess the government will implement after this time around. Pretty much the only things they didn't do was close banks, make it illegal to hold gold (they're working on illegalizing owning oil), and institute price controls and rationing. Other than that, the US is looking more and more like a cold war relic (the USSR) every day.

2009 Aug 14 05:47 AM

[CautiousInvestor]

We may have growth in the third quarter but I'm inclined to believe it will be driven by the widely anticipated restocking of inventory. This could easily be a one quarter event absent final demand.

Yesterday's release on retail sales speaks to the muted role the consumer is likley to play in the forseeable future. The combination of persistently high unemployment and increased savings will act as a brake on the economy for the forseeable future. Ironically, its the draconian cuts in employment that have given rise to productivty increases.

With growth in consumer spending contracting, the only remaining economic model is one that involves exports and investment. And this where I believe current policies have failed us as most of the stimulus spending was in the form of income transfers and social safety netting. This spending will be provide a short term fillip to GDP but it offers no enduring value. Most of the stimulus and investment should have been directed at stimulating private investment in promising technologies capable of supporting new industries with high export potential.

As I have said before, this administration and other before it have a planning horizon that extends to the next election; there is no long-term thinking because politics and special interests trumps national interests. Unless the administration and congress abandon their Jacobin inclinations, this country is doomed to a new normal of mediocrity.

2009 Aug 14 09:11 AM