Unemployment in America

Still a U, not a V
Jan 7th 2011, 16:27 by G.I. | WASHINGTON, DC

RETAIL sales, manufacturing activity and stock prices all show the American economy shook off its mid-2010 lethargy and picked up a head of steam as the year closed. But to anyone who thought a V-shaped recovery was taking hold, the December employment report is a sobering reality check. Non-farm payrolls rose by 103,000, or 0.1%. Private payrolls, a better gauge of the economy’s underlying momentum, rose 113,000; declining state and local government employment held back the total. That was rather deflating after a private tally on Wednesday predicted a gain of as much as 300,000.

The Labor Department revised up the totals for October and November by a combined 70,000, so the total report is mildly encouraging. Private employment has grown an average of 126,000 per month since July, comfortably above the roughly 75,000 to 100,000 needed to keep up with growth in the working-age population. (The government numbers have been heavily distorted by hiring and firing for the federal census.) But growth of more than twice that pace is typical of recoveries. This morning, Ben Bernanke, the Federal Reserve chairman, told Congress it could take four or five years "for the job market to normalize fully."

There was a bolt of unexpected good news in the unemployment rate, which plunged to 9.4% from 9.8%. It’s common for payrolls and the unemployment rate to behave differently because they’re drawn from different surveys (the first from a large sample of employers, the second from a much smaller sample of households). The unemployment rate dropped because household employment rose 297,000 while the number of unemployed dropped 556,000, meaning the overall labour force shrank. Such big changes to household employment and unemployment are routine and should be discounted. The unemployment rate, though, is quite stable, and a 0.4% drop is unusual, the sharpest since April, 1998.

It does not suggest the underlying economy has suddenly picked up momentum. If anything, other indicators from the household survey are frustratingly weak. An improving job market usually draws a flood of job hunters into the labour force, raising the participation rate—the share of the working-age population either working or looking for work. Instead, the participation rate fell to 64.3% in December, the lowest since 1984. True, the average work week ticked up to 33.6 hours, but evidence of latent demand for labour remains scant.

So why did the unemployment rate drop so much? Probably because it was inexplicably high to start with. A traditional macroeconomic rule of thumb known as Okun’s Law predicts that, given the performance of gross domestic product in the last few years, the unemployment rate should only be around 8.5%, reckons Alan Krueger of Princeton University. Why it reached 10% remains a mystery. In any case, December’s drop may be part of a long overdue return to a more normal level. Sometimes, the most powerful explanation for economic behaviour is reversion to the mean.

I don't think it's a mystery why the unemployment rate hit 10%. I wonder if Okun's Law takes into account an administration that expressed nothing but out-and-out hostility to private-sector businesses? I wonder if that Law factor's in the signals sent by a government who is looking to regulate the very life out of private-sector businesses? "Health care reform" "finance reform" "cap-and-trade" "card-check" all of these measures being pushed by the current Administration represent nothing more than massive new tax and regulatory burdens on ALL private-sector businesses.

It's a miracle the unemployment rate isn't even higher - well, actually it is if you count those who have given up looking for a job altogether.

dblboggie wrote:I don't think it's a mystery why the unemployment rate hit 10%. I wonder if Okun's Law takes into account an administration that expressed nothing but out-and-out hostility to private-sector businesses? I wonder if that Law factor's in the signals sent by a government who is looking to regulate the very life out of private-sector businesses? "Health care reform" "finance reform" "cap-and-trade" "card-check" all of these measures being pushed by the current Administration represent nothing more than massive new tax and regulatory burdens on ALL private-sector businesses.

It's a miracle the unemployment rate isn't even higher - well, actually it is if you count those who have given up looking for a job altogether.

that's what we have been say for years.. Obama has kept America and therefor the rest of the world out of a 1930's style depression.. with the health care reform being part of saving America from the right wing's national-self-distruction

Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

TexasBlue wrote:Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

Who do you blame?.. mayhap the person responsible?.. O' once you decide who is to blame, what do you do then?.. punish that responsible person? or help the person who is working to improve matters?

cable2 wrote:

TexasBlue wrote:Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

Who do you blame?.. mayhap the person responsible?.. O' once you decide who is to blame, what do you do then?.. punish that responsible person? or help the person who is working to improve matters?

We did help him. We fired the people in congress that passed the laws in the last two years. Believe it or not, this GOP controlled House might make Obama look good by 2012. But we also won't forget that he was part of the problem. He could've took the high road and outgunned the GOP by doing most things they were saying. Instead, he relied on Nancy Pelosi and Harry Reid to pass bills that have gone no where.

cable2 wrote:

TexasBlue wrote:Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

Who do you blame?.. mayhap the person responsible?.. O' once you decide who is to blame, what do you do then?.. punish that responsible person? or help the person who is working to improve matters?

I blame the people who enacted the CRA. I blame the people who protected the criminals at Fannie Mae and Freddie Mac. And I blame the criminals at Fannie Mae and Freddie Mac as well. ALL of this could have been avoided if Barney Frank and other Democrats had not blocked and filibustered the call for increased federal oversight and regulation of Fannie and Freddie's destructive practices that ultimately lead to the housing and financial market meltdowns.

We can blame Bush and the Republicans for a lot of crap, no doubt about it. But we cannot blame them for this mess. This one sits squarely in the Democrats court. This is what happens when you try to social engineer without regard to economic reality.

dblboggie wrote:

cable2 wrote:

TexasBlue wrote:Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

Who do you blame?.. mayhap the person responsible?.. O' once you decide who is to blame, what do you do then?.. punish that responsible person? or help the person who is working to improve matters?

I blame the people who enacted the CRA. I blame the people who protected the criminals at Fannie Mae and Freddie Mac. And I blame the criminals at Fannie Mae and Freddie Mac as well. ALL of this could have been avoided if Barney Frank and other Democrats had not blocked and filibustered the call for increased federal oversight and regulation of Fannie and Freddie's destructive practices that ultimately lead to the housing and financial market meltdowns.

We can blame Bush and the Republicans for a lot of crap, no doubt about it. But we cannot blame them for this mess. This one sits squarely in the Democrats court. This is what happens when you try to social engineer without regard to economic reality.

While this is true, the high price of oil and financial specualtion had just as much, if not more, of an effect on the start of the recession.

BubbleBliss wrote:

dblboggie wrote:

cable2 wrote:

TexasBlue wrote:Your statement is without merit. His economic policies have made our unemployment situation worse than it need be. I've been out of work (full time) for 736 days now. Who do I blame? The last congress and this president for the extension of the misery.

Who do you blame?.. mayhap the person responsible?.. O' once you decide who is to blame, what do you do then?.. punish that responsible person? or help the person who is working to improve matters?

I blame the people who enacted the CRA. I blame the people who protected the criminals at Fannie Mae and Freddie Mac. And I blame the criminals at Fannie Mae and Freddie Mac as well. ALL of this could have been avoided if Barney Frank and other Democrats had not blocked and filibustered the call for increased federal oversight and regulation of Fannie and Freddie's destructive practices that ultimately lead to the housing and financial market meltdowns.

We can blame Bush and the Republicans for a lot of crap, no doubt about it. But we cannot blame them for this mess. This one sits squarely in the Democrats court. This is what happens when you try to social engineer without regard to economic reality.

While this is true, the high price of oil and financial specualtion had just as much, if not more, of an effect on the start of the recession.

This is not true. Yes, high oil prices do have a negative impact on the economy, but not nearly the impact that Fannie and Freddie's demise had on both housing and financial markets.

But just to be clear, the high price of oil can be dropped into the Democrats laps as well. It is the Democrats who have prevented our domestic energy companies from utilizing our own energy resources. We have massive reserves of oil, natural gas and coal. And they have also prevented us from utilizing nuclear energy, we could be building nuclear plants from one end of the country to the other and saving billions of barrels of oil. But the green lobby have the Democrats by the balls and we've gotten no where with nuclear.

As for financial speculation, could you be more specific?

Well the whole reason why Fannie and Freddie collapsed was because people couldn't pay their mortgages anymore because their expenditures on gas more than doubled.
Nuclear power doesn't replace gasoline.

BubbleBliss wrote:Well the whole reason why Fannie and Freddie collapsed was because people couldn't pay their mortgages anymore because their expenditures on gas more than doubled.

Nuclear power doesn't replace gasoline.

No, that is not the reason that Fannie and Freddie collapsed. They collapsed because they were engaging in activities they should NEVER have been engaged in, and the Democrats blocked any attempts to reform them and to put in place much stricter oversight and regulation.

If you want to know more about this, try THIS ARTICLE here. It’s the Washington Post, so you will not read about the Democrats involvement in this, but it covers the basic mechanics behind their failure fairly well.

Then, you need to view these videos. Most of these are C-SPAN, which is just a camera rolling with no commentary from a “reporter” or talking head – or as I like to say... just the facts. These videos expose the Democrats role in blocking any reform of Fannie and Freddie and their role in encouraging them to continue to push for home ownership by those who should never have gotten home loans (something not covered in the Washington Post article).









And this video shows just how duplicitous Barney Frank could be, blatantly lying to Larry King.



So you see, the collapse of Fannie and Freddie had absolutely NOTHING to do with gas prices. It had to do with corruption within Fannie and Freddie and Congress, mostly by the Democrats who blocked any meaningful reform of those two GSE’s.

As for nuclear power, I never said it replaced gasoline. But it DOES replace the oil used to power oil-fired electrical power plants; and that’s a LOT of oil saved. It can also replace natural gas in generating electricity; also a carbon-based product. Nuclear power could save of a LOT of oil.