Jobs Still Disappearing, But Confidence Is Returning 26 comments
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The unemployment rate, now 10.2%, is just about as high as it's ever been since the Depression (see top chart). Job losses keep mounting, and so far it's another jobless recovery. In fact, jobs haven't grown at all for about 10 years.
It's painful, and it's miserable. It's terribly unfortunate that the Obama administration dumped so much "stimulus" money down a black hole earlier this year, when cuts in marginal tax rates could have unleashed the power of the private sector instead of redistributing a trillion dollars from the haves to the have-nots.
But things could be a lot worse, as the second chart shows. That's the so-called "Misery Index" that was invented in the late 1970s to capture the dual problem back then of very high unemployment and very high inflation. Today we're fortunate that inflation is still relatively low. We worry that inflation might rise in the future, but for now that remains tomorrow's problem.
Most of the changes on the margin that I see are quite positive. Despite the lack of jobs, it is still the case that the pace of job losses is slowing. We're well past the worst part of the recession and in the early stages of a recovery. Financial markets have undergone tremendous healing. The private sector has already reorganized itself to become extremely productive. The productivity of the workforce surged at an 8.1% annual pace in the six months ended September, and productivity is likely still improving. Businesses are becoming more profitable. There is plenty of cash out there. Confidence is returning. The velocity of money is picking up. Global economic activity is rebounding. It is only a matter of time before we see net job gains. It still pays to be optimistic, but one needs to be patient.
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This article has 26 comments:
LOL. Oh my god. This is classic Calafia Beach Pundit "everything is just dandy crap.
As per his own sentence, the Misery Index was "invented".
In other words it is bullshit. It is made up.
Another phony, nonsense item that is used as a rationalizing tool to offset the truth.
What freakin nonsense. This outright lying by this man is just beyond disgusting.
Trust me folks, unlike the 20% of Americans now unemployed and another 20% or so at poverty level to begin with, this author, along with his buddies, Larry the Krudlow, Dr. Mark Perry & Brian Wesbury have no concept, none, about the daily plight of average Americans.
What a disgusting display and pack of lies by this elitist.
Period.
On Nov 06 04:11 PM Archman Investor wrote:
> <<But things could be a lot worse, as the second chart shows. That's
> the so-called "Misery Index" that was invented in the late 1970s
> >>
>
> LOL. Oh my god. This is classic Calafia Beach Pundit "everything
> is just dandy crap.
> As per his own sentence, the Misery Index was "invented".
> In other words it is bullshit. It is made up.
> Another phony, nonsense item that is used as a rationalizing tool
> to offset the truth.
> What freakin nonsense. This outright lying by this man is just beyond
> disgusting.
> Trust me folks, unlike the 20% of Americans now unemployed and another
> 20% or so at poverty level to begin with, this author, along with
> his buddies, Larry the Krudlow, Dr. Mark Perry & Brian Wesbury
> have no concept, none, about the daily plight of average Americans.
>
>
> What a disgusting display and pack of lies by this elitist.
>
> Period.
I could help but laugh at the title of the article: "Jobs Still Disappearing but Confidence Returning." Who picked that one?
This is from the Beach Pundit and it's powerful:
"It's terribly unfortunate that the Obama administration dumped so much "stimulus" money down a black hole earlier this year, when cuts in marginal tax rates could have unleashed the power of the private sector instead of redistributing a trillion dollars from the haves to the have-nots."
Mr. Pundit: Stay optimistic.
Not to disagree, but I would like clarity. So we cut tax rates, giving Americans more money in their pocket. And hypothetically, let's also say that America is going through a deleveraging process, ie we are paying down debt. The consequence of the tax cut is this : the US Government debt goes up and private debt goes down. In this scenario, what was unleashed? All you have done is redistribute billions of dollars from grandchildren to grandparents.
What I don't understand is this. What is the difference between redistributing dollars from the haves to the have-nots and redistributing dollars from children to parents. In either case, it is just the government stealing from one group in order to bribe the voters who are silly enough to believe that we can "unleash" 500 billion dollars by cutting taxes.
Here is the problem. The government spends too damn much money. At this level of spending, cutting taxes will unleash debt. Public or private it is going to have to be paid back by someone.
I'm not sure if marginal tax rate cuts would have done much in the short term. They would definitely raise the long-term growth potential of the economy. Much better than 1 trillion dollars of pork projects that mostly won't happen until the recession is over.
Increased productivity? Means more unemployment.
China is buying commodities hand over fist? They don't want dollars so they are simply warehousing the stuff.
Velocity is improving? False govt stimulus programs infect the numbers and shift the growth from one quarter to the next.Money goes from the taxpayer to the government which goes to the taxpayer which then goes to the government.
Confidence is improving? Stock market is manhandled by Goldman and the press swoons with excitement
Inflation is low? Companies don't have pricing power and workers can't get a raise.
Banks are profitable again? They are now simply hedge funds with special bank privileges
Real estate prices going up? Govt stimulus is making housing more expensive for the buyer, which crowds out other purchasing
Auto sales up? Do I even need to say?
On Nov 06 05:51 PM a fat panda wrote:
> "It's painful, and it's miserable. It's terribly unfortunate that
> the Obama administration dumped so much "stimulus" money down a black
> hole earlier this year, when cuts in marginal tax rates could have
> unleashed the power of the private sector instead of redistributing
> a trillion dollars from the haves to the have-nots."
>
> Not to disagree, but I would like clarity. So we cut tax rates, giving
> Americans more money in their pocket. And hypothetically, let's also
> say that America is going through a deleveraging process, ie we are
> paying down debt. The consequence of the tax cut is this : the US
> Government debt goes up and private debt goes down. In this scenario,
> what was unleashed? All you have done is redistribute billions of
> dollars from grandchildren to grandparents.
>
> What I don't understand is this. What is the difference between redistributing
> dollars from the haves to the have-nots and redistributing dollars
> from children to parents. In either case, it is just the government
> stealing from one group in order to bribe the voters who are silly
> enough to believe that we can "unleash" 500 billion dollars by cutting
> taxes.
>
> Here is the problem. The government spends too damn much money.
> At this level of spending, cutting taxes will unleash debt. Public
> or private it is going to have to be paid back by someone.
On Nov 06 08:35 PM Angel Martin wrote:
> Seems like the most primitive elements of SA have hit this comment
> stream all at once. Cal Beach Pundit is just laying out how this
> recovery is just like other recoveries. There is a sequence of events.
> Employment growth does not instantly change from -500,000 per month
> to +500,000.
>
> I'm not sure if marginal tax rate cuts would have done much in the
> short term. They would definitely raise the long-term growth potential
> of the economy. Much better than 1 trillion dollars of pork projects
> that mostly won't happen until the recession is over.
Second I would question the productivity numbers he references. It is virtually impossible to have rising productivity and rising unemployment. (unless of course you exclude the unemployed) 8.1% is a government statistic that probably bears no more significance on actual productivity than the number of touchdowns LSU scores tonight.
Ask yourself : A government statistic may rise but what does the 8.1% measure. In the 90s, a time when PCs became standard in the workplace, productivity, as measured by the government, was rising 1%.
Here is an example of how much productivity rose. When I entered banking, we had a group of 30 people which supported 17,000. When I left 5 years later, the same group was processing 168,000 accounts with only 5 people. Is that really 1%. It wasn't even a stand alone group anymore.
Note : there was no unemployment in this group. People got computer skills and left to get better wages, even though the bank doubled the wages of the workers. Higher productivity leads to less unemployment.
On Nov 06 09:24 PM fwi wrote:
> I could not disagree with the author's very optimistic assessment
> more.
>
> Increased productivity? Means more unemployment.
>
> China is buying commodities hand over fist? They don't want dollars
> so they are simply warehousing the stuff.
>
> Velocity is improving? False govt stimulus programs infect the numbers
> and shift the growth from one quarter to the next.Money goes from
> the taxpayer to the government which goes to the taxpayer which then
> goes to the government.
>
> Confidence is improving? Stock market is manhandled by Goldman and
> the press swoons with excitement
>
> Inflation is low? Companies don't have pricing power and workers
> can't get a raise.
>
> Banks are profitable again? They are now simply hedge funds with
> special bank privileges
>
> Real estate prices going up? Govt stimulus is making housing more
> expensive for the buyer, which crowds out other purchasing
>
> Auto sales up? Do I even need to say?
I do not believe we are in the new Industrial Revolution similar to the end of 19 century. There is no indication worldwide to that effect. Computer revolution of end of 20th Century did not decrease employment in this country. It only required more educated labor force. Therefore, I believe that the current unemployment issue is temporary, and I agree with Calafia Beach Pundit conclusions.
On Nov 06 04:11 PM Archman Investor wrote:
> <<But things could be a lot worse, as the second chart shows. That's
> the so-called "Misery Index" that was invented in the late 1970s
> >>
>
> LOL. Oh my god. This is classic Calafia Beach Pundit "everything
> is just dandy crap.
> As per his own sentence, the Misery Index was "invented".
> In other words it is bullshit. It is made up.
> Another phony, nonsense item that is used as a rationalizing tool
> to offset the truth.
> What freakin nonsense. This outright lying by this man is just beyond
> disgusting.
> Trust me folks, unlike the 20% of Americans now unemployed and another
> 20% or so at poverty level to begin with, this author, along with
> his buddies, Larry the Krudlow, Dr. Mark Perry & Brian Wesbury
> have no concept, none, about the daily plight of average Americans.
>
>
> What a disgusting display and pack of lies by this elitist.
>
> Period.
We have:
- a drop in credit spreads to normal levels
- a steep yield curve
-a stock market up sharply
-commodity prices up
-imports up
-industrial production growing
-retail sales up (slightly) since july
-gdp turned positive
-unemployment claims down
-employment losses slowing
-fridays employment report had significant employment gains in Business Services, especially Temp Help Agencies
-high multiple techs like AMZN, AAPL, GOOG as well as some financials like AFLAC and Fairfax have yr-over-year revenue and profit gains (high PE techs lead the cycle, followed by financials)
It's all happening just like it always does, with the same sequence of events.
The doom and gloom boys are increasingly in denial. With each new data point that shows an improving economy they have to come up with more elaborate explanations of why labour market data, gdp data, industrial production data, international trade data, retail trade data, wholesale trade data, unemployment claims data, and corporate earnings data are all fake, manipulated or irrelevant.
It's a cyclical recovery and it doesn't have anything to do with Obama and his bad policies and stimulus packages (most of which hasn't happened yet anyway).
On Nov 07 04:45 AM Dave Wrixon wrote:
> The problem is neither he or you have understood that this is no
> bog standard recession and it will not be a bog standard recovery.
> All Obama has achieved to date is to mask the worst of the symptoms.
> A cure has not be effected. Indeed, whilst some palliative has been
> administered, the patient has received no medicine that is going
> to cure him.
This statement is totally false. Money velocity (measured by the Fed M1 Money Multiplier) has fallen to its lowest level since the Fed began tracking it in 1984:
research.stlouisfed.or...
Perhaps the author was referring to the M1 money SUPPLY, which has exploded this year.
What I'm seeing is inflation, go to a supermarket and see what these companies are doing, the boxes are shrinking, the cans are shrinking, and yet prices remain the same.
But not to worry, Obama is going to spend on infrastructure to rescue the day. But wait did he promise that last year when he got elected. Funny I thought he had already squandered all the money. Not to worry Ben will just wave his wand and the whole place will be teaming with white bunny rabbits!
On Nov 07 09:58 AM Angel Martin wrote:
> I won't speak for the author but I think this is a "bog standard
> recession" and a "bog standard recovery".
>
> We have:
> - a drop in credit spreads to normal levels
> - a steep yield curve
> -a stock market up sharply
> -commodity prices up
> -imports up
> -industrial production growing
> -retail sales up (slightly) since july
> -gdp turned positive
> -unemployment claims down
> -employment losses slowing
> -fridays employment report had significant employment gains in Business
> Services, especially Temp Help Agencies
> -high multiple techs like AMZN, AAPL, GOOG as well as some financials
> like AFLAC and Fairfax have yr-over-year revenue and profit gains
> (high PE techs lead the cycle, followed by financials)
>
> It's all happening just like it always does, with the same sequence
> of events.
>
> The doom and gloom boys are increasingly in denial. With each new
> data point that shows an improving economy they have to come up with
> more elaborate explanations of why labour market data, gdp data,
> industrial production data, international trade data, retail trade
> data, wholesale trade data, unemployment claims data, and corporate
> earnings data are all fake, manipulated or irrelevant.
>
> It's a cyclical recovery and it doesn't have anything to do with
> Obama and his bad policies and stimulus packages (most of which hasn't
> happened yet anyway).
>
>
> On Nov 07 04:45 AM Dave Wrixon wrote:
While I'm glad to hear that you're up 70%, might I be so rude as to ask what you had lost in the meltdown prior to the current run up?
I knew that US Government would save largest banks. Otherwise, we would be in depression worse that in 1929. I wish I would of been brave and buy and hold Bank of America. I traded it with 20% profit, but I did not kept it long term. I bought large capitalization technology stocks. I made several mistakes, too. Right now I buy stocks like Home Depot, UPS, Apple, large cap oil stocks, and Caterpillar.
On Nov 07 10:38 PM Old Trader wrote:
> Alex,
>
> While I'm glad to hear that you're up 70%, might I be so rude as
> to ask what you had lost in the meltdown prior to the current run
> up?
Nice work, then...so that puts you back to just under even, according to my calculator. I tend to have more stocks/positions in my portfolio....usually, around 15-17. I don't short stocks, either, but use inverse ETFs as hedges, when I feel they're called for.
How optimistic are you regarding next year economic/unemployment recovery? As an example, regarding VZ. With 6.3% dividend, improving economic condition in US, strong cash-flow base, Verizon should be a performance leader in the market. What do you feel stagnating it performance? After all, we are out of recession.