Unemployment up to 8.9%!

well at some point a 38% rally in 8 weeks will have priced in the slower pace of deterioration. overall, no, its not good that we lost 540,000 jobs, especially that 66K of those are jobs hired by govt for 2010 census. 13.7 million are now unemployed. 70% of our economy is consumer driven. So growth, if any, will be muted in near future. I say Q4 may show slightly positive GDP.

if GM shuts down all those plants, how can that help though.

GM and all the suppliers will most likely be laying off a lot more people. average hourly earnings were also down which is very negative.

Ive also come to the conclusion that in the short and medium term there is no relationship between equities and RE. The bottom line is that real estate used to be easy for anyone to buy...now its not. anyone can buy equities. seems very simplistic, but I belive there is truth to it. more to follow.

there are a few other issues that need to be considered. The census bureau needs to hire (I believe they've already begun) 1.4 million temporary workers to conduct the 2010 census.

there are about 1.6 million(this is a number i'm pulling from a vague memory, correct me if I'm wrong) graduates about to enter, or not, the workforce.

the state and local governments have just started their layoffs, as well as the health care industry.

this is why i'm not so happy with the decline in new unemployment claims(along with the fact that there are so few jobs being created). usually it would be a fairly good indicator that a recession is waning. this time i'm not so sure.

great chart from calculated risk.

http://3.bp.blogspot.com/_pMscxxELHEg/SgQwUGhEJKI/AAAAAAAAFNQ/TdLayYMbKbc/s1600-h/PercentLosses.jpg

AR - I agree that it's a mixed-bag at best. being happy over 539,000 jobs lost is like losing the football game by 35 points and being happy you covered the spread. If there is anything good in it, I guess that it would be that this is the least amount of jobs lost in 6 months (it could have been worse).

In my opinion, if the jobs number continues to go down each of the next 2-3 months, then we will be on to something, but I would pop any champagne today.....actually, I completely advocate popping open some champagne today, just not to celebrate the jobs report.

and then there's wage deflation. is it too early for the champagne? sadly, yes, even though it's friday.

It's never too early for champagne....just too early to celebrate anything having to do with the jobs report.

seems the data is coming in slightly better then EXPECTATIONS. it'll be interesting to see how the #'s look when the hundreds of billions of stimulus kick in.

banks are raising the cash needed to repay TARP. in addition, they're benefiting tremendously from one of the steepest yield curves in history

bart, the stimulus already IS kicking in. and it wasn't nearly enough.

i know you'd like to think so. yet a short while ago, another package was a certainty, now its doubtful another is needed. time will tell

saying that i'd like to think so displays your lack of understanding of my personal and political bent. i would love to think so, as it would mean less pain for the real people. otherwise i might feel just a little bit pissed off about the amount of money the american taxpayers, those real people, are forking over so that the banks don't have to feel any pain for the shit they have caused.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a7ciX0gcQioY&refer=home

The real, ultimate bottom line here is that the world is fast resetting to equilibrium. Not possible for a system where 10% (maybe less) of population flushes their crap down a toilet and the other 90% eat, shit & sleep in the same place. I'm not going to step up and volunteer to be part of the other 90% but neither am I so foolish to believe that we can "stay on top" forever.

on a macro level, you cant solve a problem of over spending by spending more. eventually the dollar will be trashed and rates will go through the roof. if the chinese decide they dont need us anymore and dump thier treasuries...good night.

They are not "giiving" the banks money. They are lending it or getting stock in return. In other bank resucues (the Swedish, Finish, etc) the goverments ended up making money. We may break even or loose some, but we may make a profit. Either way, its not a handout.

Yeah, everyone knows this. The Chinese can take a big giant dump on us tomorrow. As of today, the oligarchs are still sending their kids over to be educated and live in the U.S. The Chinese regime is under tremendous internal pressure - one lucky thing for the rest of the world is that they are an empire of dynasties (peasant to prince) every couple of hundred years.

Well actually I often make the point that the banks did not get "our" money, they got the Chinese's money, since WE borrowed the money to give to the banks from them.

Interesting that Stiglitz is being published in the Guatemala news:

http://www.guatemala-times.com/opinion/syndicated/i-dissent-unconventional-economic-wisdom/1096-the-spring-of-the-zombies.html

"Fixing the financial system is necessary, but not sufficient, for recovery. America's strategy for fixing its financial system is costly and unfair, for it is rewarding the people who caused the economic mess. But there is an alternative that essentially means playing by the rules of a normal market economy: a debt-for-equity swap.

With such a swap, confidence could be restored to the banking system, and lending could be reignited with little or no cost to the taxpayer. It's neither particularly complicated nor novel. Bondholders obviously don't like it - they would rather get a gift from the government. But there are far better uses of the public's money, including another round of stimulus."

And some very real evidence of where the money is going can be found at the GSEs:

http://dealbreaker.com/2009/05/fannie-scratches-for-more-scra.php

nyc10023, no worries that the Chinese will decide to take us down if things go poorly there?

They're too disorganized. If they did have imperialist tendencies, they'd try to take out Japan first. The Sino-Japanese war/occupation/whatever has never been forgotten. OTOH, they've never really forgiven the West for the Boxer Uprising aftermath either and the looting of the Imperial Palace :)

I meant with the currency/debt thing. wouldn't take too much methinks. and, yes, they do have long memories despite efforts to erase history.

They're hoist on their own petard. They hold so much in the way of Treasuries that if USD goes to zero so do their holdings and their best customers. That's why they are trying to focus on building up supplies of raw materials via deals with Africa & various ex-CSSR republics. However, the regimes they have negotiated with are inherently unstable and prone to collapse, which leads to doubt as to whether deals will really be honored. Unless, of course, they try to prop up dying regimes (and history has proven that be so... easy). This is a vast simplification of what is going on.

Then there is the tricky matter of self-respect. They are treading carefully on the world stage now, a little unaccustomed to their economic weight. No doubt they'll start throwing that around soon.

This is a good thread.

I agree entirely. But I said if things go poorly there, which I could foresee happening. If they feel they are going down the shitter, why not have some fun with us on the ride?

Talk about oversimplification, I'm the queen!

All depends on who's in charge at that moment. I suspect #1 priority is to make sure their starving hordes don't storm the castle gates first and #2 priority is to make sure they have a well-padded bolthole (typically U.S. or U.K.).

Is it possible that the reason we're losing fewer jobs is that there are simply fewer jobs to lose now?

waverly, I'm sure you're aware, but here is an example of the extent of the education cuts that could be coming. This is the worst I've seen so far, but the budgets need to be finalized soon, so barring a miracle stimulus package, I think we'll see this on a fairly widespread basis. 1300 job cuts in Charlotte, SC education possible.

http://www.charlotteobserver.com/597/story/711716.html

cheers

The 1.4 million census employment number I gave was wrong (somebody's got some 'splainin' to do). It's 500,000 and they've hired around 70,000 thus far.

layoffs on high earners seemed to have accelerated since Feb09 but those groups hit first (latino, blacks and teenagers) seemed more stable from there. obviously there's a lot of trickle-down effects when a high paying job that sustains others (nanny, cleaning lady, ... & those might not be in anybody's payroll) is lost. that's part of why i think this is just the beginning.

look at table A-9, the % of unemployed for more than 6 months jumped 40% year-over-year, omg!

it's surprising how construction is still adding job losses at more than double the rate of last year even though the RE crash happened more than 2 years go already. guess that's gonna go on till projects that were planned close to the peak get finished and the pipeline gets empty.

admin, also those "shovel-ready" projects from the stimulus package.

the b/d model added 220,000 jobs this month. that's just bogus.

abovethelaw wrote today about the summer associate lunch policy this year. it's fairly hilarious on the face of it, but you're right in that it will trickle down. for every fewer table of ten eating too much a waitperson is going to lose a hefty tip, and the restaurant owner is going to see a very lucrative component dwindle.

the b/d model added 220,000 jobs this month. that's just bogus.

i'm talking about the household survey. the payroll survey is the one with the death/birth model, which in normal circumstances is not such a weird idea. it gives ground for conspiracy theories, but i think it's a good idea to try to attempt to estimate extra payroll coming from new biz.

got it. re the b/d model, yes generally, but now?

yep, it's going to deteriorate and also more people (young and old with "experience") will fight to get a menial job below their capabilities. it's gonna get tougher for almost all imho. as far as i've read there weren't many really shovel-ready nor a policy to favor those, the decision making process seems too centralized and vague for that to be the case. most of the $ to state/local govs went there to help pay for unemployment benefits and medicaid.

got it. re the b/d model, yes generally, but now?

sure it'll make sense to give it less weight when there's less econ growth (cause even if they are born and don't die right away, they'll generate less employment) and when credit to small biz is more scare (measuring all: cost, lending standards and availability, now cost is not too bad but the other 2 are).

admin, or to fund projects that had already been started and budgeted for previously, like the $79 million to be spent on the 2nd avenue subway. may prevent some from losing their jobs, but won't necessarily create any new ones.

exactly. china same thing. a lot of their stimulus will go to projects they intended to do anyway. politicians are cut with the same scissors, whatever their political system... "we are doing what's needed to end the recession!!!" bla bla bla

sure, like that's possible. to get out of a debt fueled recession by accumulating more debt is nonsense. clearly those using keynes as an excuse for their policies never read it.

the chinese are already working on deals that dont include the US. as soon as those efforts gain some traction theyre gonna blow out the dollar fast than you can say PFR. and beleive me...from the repoprts Ive heard of people who have been to china recently...they hustle and wanna make money even more than we do.

they're hoarding gold, trading without the dollar with Brazil.

for now they need our consumer, battered though he/she might be.

they're also lying through their teeth about their gdp gains, unless they're making Bratz dolls and storing them in empty reeducation centers in the provinces.

"they're hoarding gold, trading without the dollar with Brazil."

it's very inefficient to trade using a 3rd party currency anyway. i don't believe any number given by the chinese, neither the time of the day, they are not coherent with each other. take energy usage going down like a rock... it would be the 1st country in history not experiencing a gdp contraction while using less energy.

they have the same demographic issue as usa, rapid aging accelerated by the 1 child policy that's kicking the labor mkt as we speak. anybody read that article "will china get rich before it gets old" ... for the most part i don't think so.

"they hustle and wanna make money even more than we do"

will that go on when they see that years of effort went into collecting a huge reserves of depreciating confetti?

admin, a big "oops" on that population policy.

hey, i also have doubts about people in usa working so hard and defining themselves through work. take the rat race, will gen x and gen y put on so many hours when more than half of them believe they will have to work till they drop?

if the rainbow just doesn't end, so why running so hard? anybody thinks this might bring a change of attitude and bring more work/life balance?

admin, my husband left a top law firm to go to a smaller one a few years ago. When he left, a friend of a friend asked if she could interview him for a book on professionals making changes to improve their quality of life. He said sure, and did the interview.

One year later and he was so depressed I couldn't stand it. As he said, the hours weren't much better and what was worse was that he had even less control of them, the quality of the work was far worse, and the people were less interesting. at least, he said, i'm making less.

he went back to the big firm. about a month later the book came out quoting him as leaving the big firm for quality of life issues. the author had promised not to quote him without receiving written permission first, which he hadn't provided. he didn't make partner. impossible to know if anyone read the book, but it was fairly widely reported upon at the time.

now he's at a firm that allows a balance, but shit, it was hard to find. i sure hope it brings change. you shouldn't have to give up your soul to have a non-life.

This is funny, sort of:

http://www.ritholtz.com/blog/2009/05/private-sector-payroll-changes/#comments

the charts in the article are good, but I found this in the comments section:

Just a little sidelight to this, Barry. I am retired and am one of those hired for the 2010 census. I was hired, spent one week in class with 23 other new people and 2 weeks doing census database verification activity, before being terminated along with almost everyone else. It looked to us like someone did a poor job of planning of how many people were needed and when and had hired too many, too soon. A friend doing census work in the upper Mid-West ran into the same problem. After reading your blog this morning, a theory could exist that they may have done a lot of hiring to “pump” the numbers when something good was needed in the employment figures.

wow! that's a good find ar, so that source (gov census) should just be disregarded when it comes to analyzing the labor mkt, it's not only temporary but also done in a bernanke/neither way, in total disarray.

the story of your husband reminds me of the idealization with self-employment and small biz. many times it leads to working more hours for less money.

or that working at a not-for-profit law firm will be better. (same hours, less pay, malfunctioning xerox machines, no extra bodies, etc.)

still, when young, i used naively to think that i'd have a lot more input into and control of my destiny. i guess long-term elevated unemployment will take away such thoughts for many.

http://streeteasy.com/talk/discussion/14274-unemployed-staying-at-home-increases-costs-for-landlords