The Continuing Myth Of Recovery

Feb 4, 2010 by

Everybody buckle up because Friday (2.5.2010) morning is going to be a doozy. Since the east coast is 5 hours ahead of my local time, I know there isn’t going to be any light reading with my morning coffee due to whatever the markets are doing worldwide, and the jobs report from the Bureau of Labor & Statistics.

Here is a preview of “how’s that reckless spending working out for ya?”

Global Markets Shudder

Doubts About U.S. Economy and a Debt Crunch in Europe Jolt Hopes for a Recovery

Concerns are growing that the world hasn’t seen the last of the economic crisis.

Jitters about the U.S. economy and signs that Greece’s debt woes are spreading across Europe roiled markets on Thursday, driving the Dow Jones Industrial Average briefly below the 10000 mark.

U.S. stock investors, waking up to a turbulent European trading session, were further unnerved by an unexpected rise in the latest report on initial claims for jobless benefits. Ahead of a key January employment report due out Friday, the claims numbers revived on-again, off-again concerns about the strength of the U.S. economic recovery.

The resulting selloff took the Dow below the psychologically important 10000 level in the final moments of trading. It managed to finish at 10002.18, but nevertheless had a 2.6% decline, led by big drops in financial stocks. The 268.37-point fall was its biggest one-day loss since last April.

Asian markets, which had eased modestly Thursday, opened sharply lower on Friday, underscoring the global impact of the market tremors.

and this….

US Recession Job Loss May Have Been Undercounted By 824,000

In a blow that could come down on the Obama administration and U.S. economy like Thor’s Hammer, the US may have lost 824,000 more jobs than the government said it did between April 2008 and March 2009. According to Bloomberg, which provided the numbers for the possible adjustment, the revision would be posted by the Bureau of Labor Statistics tomorrow, February 5th. That would increase the number of jobs lost due to the recession from 7.2 million to 8 million.

The change in the numbers would be based on what is known as the “birth/death model” which has its foundation in the premise that most jobs lost at old companies are made up at new ones.

The numbers, if correct, would add a nearly unbearable load to the economic recovery which has caused huge deficits due to government programs led by the Obama $787 billion stimulus package. The package was meant to save or create 3.5 million jobs. Unemployment has risen above 10% despite the government spending. The Administration and some members of Congress have proposed that the government spend another $80 billion on jobs programs. These expenditures would be part of a federal budget which would create a $1.6 trillion deficit in the government’s 2010 fiscal year.

The higher unemployment numbers would also indicate that the number of people who are chronically unemployed is greater than expected. That would mean the efforts by Congress to extend unemployment benefits would have to be increased to accomodate hundreds of thousands of job seekers that the government did not even know existed.

Jobs have been especially hard to come by. Productivity numbers show that companies are getting more work out of fewer workers. Government data also show that the number of jobs available to the jobless is at a historic low. The number of people who have stopped looking for work or work part-time but would like full-time employment is also at a high-water mark compared to at any time since the Great Depression.

It is not difficult to guess the impact that the news will have on the financial markets which have recovered in large part due to the belief that the jobs problem has improved. If the data from April 2008 to March 2009 could be off by such a large margin, how inaccurate are the numbers from April of last year until now?

Douglas A. McIntyre

I’m the first one to say “don’t believe everything you read”, always look at what is happening around you. More stores shuttered, more people unemployed, more people carrying calculators and reading labels at the grocery store? When these day to day examples start turning around, THEN I will believe we are in recovery.

10 Comments

  1. grannygripes

    Here on the LEFT COAST it is more dismal than ever.

    Checked homestate of MN only 7.4% unemployment
    and their state budget is kinda “OK”

    In the socialist State of Oregon, the home of the parasties who
    left CA, we have a 17% under-employment rate and growing.

    SO what are the DEMS doing, setting up another expensive government controlled operation called “plastic bag police” enforcement act.
    think they could have covered that with a year or more of PSA announcements : NOPE more POLICE STATE

  2. grannygripes

    And it was so cute:

    The Liar in Chief commanded us to STOP READING THE MONSTER!
    and turn off FOX
    and TURN off TALK Radio

    and ONLY LISTEN TO HIM! IMAGINE THAT, HE is the truth teller?
    So how has that been working out for US?

  3. Kathy

    I am afraid the other shoe is about to fall and how many will be scratching their heads believing the worst is behind them.

    By the way did you ever find out who your visitor from the mid-west is, seems to be visiting early am est a lot.

  4. I think we all know that unemployment in the U.S. is FAR higher than whatever they admit. One can only lie so much before the trail turns and starts to burn them in the behind. It is only a matter of time…

    I watched the tickers this week and the market dove for cover the minute the job news emerged. The sad joke is that THOSE figures are the very BEST they could do with them; you KNOW that whatever they’re claiming is vastly higher than the actual figures. If *They* only knew….

  5. no-nonsence-nancy

    I know nothing about the market but I do know that I am one of the under-employed and when I go to the grocery store or the gas pump (the only places I can afford to go) I just keep paying more for less. I have resigned myself, as many of my friends, that I will always have to work. Just bury me right from my job; that is if I die on one of the few days I am lucky enough to be working. I wonder how many families in this country are dying financially but are not eligible for unemployment checks? A lot I’m sure.

  6. The Continuing Myth Of Recovery | Logistics Monster: http://bit.ly/cHQmOn

  7. Ron

    Hello from the snowy Mid-Atlantic where we’re about to get about 3 feet of snow. That’d be a record for this area.

    The market is down on the jobs news, though the unemployment rate declined to 9.7%. No good news in that report since payrolls declined again. Read all about it:

    http://www.marketwatch.com/story/conflicting-signs-from-the-labor-market-2010-02-05

    I see this market as one big opportunity. We’re due for a significant correction over these next few months followed by another rally into and through the summer. The second half of the year could be really bad again. This kind of volatility is what’s needed to make big bucks in the market. Tax rates are gong higher next year so make hay while the sun shines.

    The reason the big banks were able to repay the TARP money was by making huge profits with investments. Great market swings result in big profits if you buy low and sell high.

  8. At least this humongous snowfall has cut off most of the hot air coming from the Capitol. The scenery is beautiful and even if you can’t get out in it the pictures are great.

    I can’t get out in it, and my tv reception was very poor, but when I look out the window I can see how beautiful our country is when God decides to show us where the real power is and blankets us with the elemenats.

    Where is Al Gore and his global warming? So far in my neighborhood I understand they have measured 28 inches, and it is still drifting down.

    While in your bailiwick, Diamond, all is sunny and calm. Peace.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Bad Behavior has blocked 678 access attempts in the last 7 days.