16.5 Unemployment Rate OBAMA WHITE HOUSE IS IN FOR A NASTY
Started by McHale
over 17 years ago
Posts: 399
Member since: Oct 2008
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OBAMA WHITE HOUSE IS IN FOR A NASTY SO, the president-elect thinks the economy will get worse before it gets better. As refreshing as his candor is, Barack Obama really doesn't understand what he's up against. Put your ear real close to this column. There are some dirty little secrets I'm going to tell you that I don't think anyone in the Obama Administration should hear. Here goes: unless the... [more]
OBAMA WHITE HOUSE IS IN FOR A NASTY
SO, the president-elect thinks the economy will get worse before it gets better. As refreshing as his candor is, Barack Obama really doesn't understand what he's up against.
Put your ear real close to this column. There are some dirty little secrets I'm going to tell you that I don't think anyone in the Obama Administration should hear.
Here goes: unless the incoming president quickly gets his act together we are going to be hearing the word "depression" a lot next year and he will - in a very short period of time - be as unpopular as the guy leaving the job.
Why is this a secret? Because the folks in Washington just don't seem to deal well with reality.
And their ideas? Phew, they just don't live in the real world! Don't get me wrong. I'm certainly not wishing this on us. And I don't even think I'm telling you anything you don't already know.
But they don't know it.
Last week Federal Reserve Chairman Ben Bernanke, a scholar of the 1930s Big-D, scoffed when a reporter asked him during a news conference if we're headed for horrible economic times.
The Fed head pointed out that the unemployment rate reached 25 percent during the Great Depression and the job market only revived because we had to spend a lot of money to fight the Germans.
Here's what the Obama White House should - but won't want to - know.
Right now, the unemployment rate would be more than twice as bad if you go back to the way this figure used to be calculated.
In 1994 the Clinton White House decided that the unemployment rate needed to be modernized.
So anyone who had been out of work for at least a year was no longer counted as unemployed - they were just too lazy and discouraged to find work.
Those clever Clintons also changed the way the questions were asked, so that more people would drop out of the unemployment statistics.
John Williams, an economist who tracks this stuff on his Web site ShadowStats.com, says today's unemployment rate would be 16.5 percent if we went back to the old way of measuring it.
As it stands, the government announced last Friday that the jobless number climbed 0.2 percentage points to 6.7 percent in November, when an astounding 533,000 positions were eliminated.
And the Labor Department also corrected the previous two months - now admitting that nearly 200,000 additional jobs disappeared right before the election.
The broader unemployment number that the Department does produce - called the U-6 - rose to 12.5 percent in November from the previous month's 11.8 percent.
This figure includes people who want to work full time but can only find part-time gigs.
There's a certain irony in the fact that Obama, the first Democrat to win the White House in eight years, is going to be deceived by employment numbers that were first fudged by the last person in his party.
Here are a few things Obama should know and maybe contem plate for a while.
The new presi dent thinks re building the na tion's infra- structure is the kind of stimulus the economy needs to start cranking again.
But will any of the workers fired last week by, say publisher Houghton Mifflin, DuPont, Viacom, AT&T, Avis and dozens of other white-collar heavy companies, really want to pour cement, dig ditches and engage in the brutal tasks that repairing roads and bridges will create?
When Roosevelt created jobs with infrastructure stimulus in the '30s, America was a blue-collar society that employed mostly men.
We, white-collar prima donnas, aren't going to benefit from this program, no matter how many billions the government spends.
But a lot of illegal workers willing to work hard should do quite well. We'll be getting thank yous soon from the Mexican government, which could benefit more from this than Nafta.
- And the American job situation is worse than anyone can imagine.
Last Friday's disastrous labor numbers included 30,000 jobs that the government thinks were created by companies too small to count.
This is called the Birth/Death calculation. But don't count on these positions really existing.
This is a Labor Department trick: Count the numbers in the current month and subtract them later when the shock won't be so great.
January is the only month when this birth/death model deducts jobs from the monthly count. So the job figure coming out Feb. 6 - just weeks into the new administration - could be mind bogglingly bad.
john.crudele@nypost.com
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Response by w67thstreet
over 17 years ago
Posts: 9003
Member since: Dec 2008
interesting, i for one think we are headed for recession that by modern standards will feel like a depression.
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Response by McHale
over 17 years ago
Posts: 399
Member since: Oct 2008
Many people here also don't like to deal with reality. This is another guy who has been right on for years that I've been reading his column.
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Response by lowery
over 17 years ago
Posts: 1415
Member since: Mar 2008
You do all know John Crudele's column already, right? Because they all have one thing in common: they always say things are much worse than the official government statistics show. He was predicting disaster for the past five or six years. I read him whenever I can, but like Krugman's column, after the 25th issue I begin to suspect that the world could be perfectly hunky-dory and they'd still say we're living a Road Runner moment.
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Response by lobo
over 17 years ago
Posts: 264
Member since: Feb 2008
OK, I happen to agree that we are headed for the worst economic downturn since the depression as well, but, to imply that government injections into infrastructure and education are merely going to put people to work mixing cement is idiotic. These injections trickle down much more quickly than throwing billions of dollars at failing banks and automakers. Construction companies hire accountants, project managers etc. ... those are only the direct beneficiaries. Then come the consulting firms that advise them, the advertising agencies that advertise for the consultants etc.
We can throw as much money at the banks as we want but it doesn't mean that they are going to lend it back or spend it wisely. At least fiscal policy (direct government injections) puts money directly back into the economy.
At least if the government is going to spend large sums of our money then I would like to see it going back into tangible things that I can see and use. The infrastructure in this country is disgraceful considering that we are the world's largest economy. Even the Chinese have better trains than we do. I would want to see what these levels of infrastructure investment even without an economic downturn...or, we could just lend 80 billion dollars to AIG, who has already spent half of it...and I am still riding on leaking subway cars...
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Response by lobo
over 17 years ago
Posts: 264
Member since: Feb 2008
also, yes, I do agree that the new way of counting unemployment is misleading in a downturn. In a way it made sense in a heated economy because it is fair to assume that people who can't find work for a year just don't want to; however, in a downturn some people can easily still go for a year without work and actually want a job. Personally, I don't need someone to report the figures for me. When every other company is laying-off 10 - 15% of their workforce, it becomes very clear that things are not good. No matter what the unemployment statistics say.
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Response by jgr
over 17 years ago
Posts: 345
Member since: Dec 2008
Yep. Ignore the U-3 number reported in the news, the U-6 at 12.5% is the real number.
We are headed toward 10% U-3 / 16% U-6 before the end of 2009. The difference between 3.7% and 6.7% is very different from the difference between 6.7% and 9.7%. If it that doesn't feel like a depression in modern times, I don't know what will.
New York, with it's non-Government service economy, will feel it the worst of the big 4 in the BOSNYWAS corridor. Good if you are a renter, not good if you are an owner.
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Response by bugelrex
over 17 years ago
Posts: 499
Member since: Apr 2007
Infrastructure projects = big dig project in Boston x 1000
do a search to see how corrupt and incompentent that state project was ran!
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Response by McHale
over 17 years ago
Posts: 399
Member since: Oct 2008
There are also millions of underemployed which include part-timers and temporary workers who would love to work full time with benefits. Instead they end up working 2 or 3 part-time jobs to make ends meet......hey they also brought million dollar mansions too....they now deserve to be bailed out!!!
"At least if the government is going to spend large sums of our money then I would like to see it going back into tangible things that I can see and use."
I completely agree. The only thing that gives me pause is that it was a campaign of Bill Clinton in '92, and I think it was just swept under the rug once he got into office. In addition to rail, I'd like to see housing built. Yes.... housing. Rental housing.
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Response by aboutready
over 17 years ago
Posts: 16354
Member since: Oct 2007
Regarding the u-3/u-6 debate, one I often take part in, Brad DeLong, a UCBerkeley economist who specializes in employment analysis, says that a depression would take u-3 numbers hitting 12% or staying at 10% for three years. He didn't opine as to whether or not they will. Paul Kedrosky, at Infectious Greed, has been vocally among those who believe we are headed for double-digit headline unemployment numbers. Krugman just revised his opinion, up to a few months ago he didn't feel 10% u3 was possible, now he says there is a one in three chance.
For the most part the stimulus package will only be able to stem some of the losses. Calculated Risk anticipates a sharp decline in non-residential construction expenditures, and states are already forecasting a $200 billion shortfall. Many of the "shovel ready" projects would have and should have been considered part of normal expenditures, often they've been long delayed already, so paying for them isn't really adding jobs, it's preventing losses in that sector from accelerating. Our economy needs to add over 100,000 jobs a month just to break even, if he is able to create 2.5 million jobs in two years that would be less than breaking even, assuming there aren't job losses in other sectors, which is highly unlikely.
I'm fairly certain Obama is aware of all of this. Henry Blodgett has a very interesting piece in The Atlantic about bubble mentality, and why the naysayers are discounted for so long. With a bubble someone CAN be right for years, before the crisis actually occurs. It's not just a question of "if you say it long enough eventually you'll be right."
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Response by waverly
over 17 years ago
Posts: 1638
Member since: Jul 2008
Ohhhh, if Henry Blodgett said it, then it must be true.
He would never lie or mislead anyone for personal gain.
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Response by waverly
over 17 years ago
Posts: 1638
Member since: Jul 2008
In all seriousness, the correct number is 150,000 jobs added each month to break even. Since we have lost 1.9 million through 11 months of 2008, we are really down 1.9 million + 1.65 million to break even.
I actually heard a conservative knucklehead on CNBC the other night saying how all the liberals were crying over 533,000 jobs lost in November when they should be celebrating the 8 million jobs Bush vreated in the previous 6 years (2002 to 2007). See how bad information gets passed around? 72 months at 150,000 jobs created gives you 10.8 million jobs. The truth is the Bush administartion was 2.8 million jobs underwater BEFORE 2008 started.
This administration cannot end soon enough.
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Response by aboutready
over 17 years ago
Posts: 16354
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Well Waverly, The Atlantic is a fairly well-respected publication, and Blodgett is one of the few who lived and failed rather spectacularly through a previous bubble, and is now on the outside writing in, so to speak. By the way, don't you find it supremely ironic that Spitzer was the one who took him down, and now they are both writing for Slate? Also, as Blodgett does point out, his own portfolio went down in flames along with his clients'.
You are absolutely correct. Job creation in the Bush administration was pathetic, which is one of the (many) reasons this downturn will be so painful and protracted. Usually we begin our post-expansion downward spirals with interest rates that can be cut and a few years of reasonable job numbers. Not this time.
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Response by nyc10022
over 17 years ago
Posts: 9868
Member since: Aug 2008
> CITY FULL OF SAD 'SACKS'
> LAYOFFS UP AS US JOB WOE WORST SINCE '74
Note that they keep making the job loss comparisons, and then forget that we're on a completely different base. I believe you'd need job losses to double to represent the same % as 74...
interesting, i for one think we are headed for recession that by modern standards will feel like a depression.
Many people here also don't like to deal with reality. This is another guy who has been right on for years that I've been reading his column.
You do all know John Crudele's column already, right? Because they all have one thing in common: they always say things are much worse than the official government statistics show. He was predicting disaster for the past five or six years. I read him whenever I can, but like Krugman's column, after the 25th issue I begin to suspect that the world could be perfectly hunky-dory and they'd still say we're living a Road Runner moment.
OK, I happen to agree that we are headed for the worst economic downturn since the depression as well, but, to imply that government injections into infrastructure and education are merely going to put people to work mixing cement is idiotic. These injections trickle down much more quickly than throwing billions of dollars at failing banks and automakers. Construction companies hire accountants, project managers etc. ... those are only the direct beneficiaries. Then come the consulting firms that advise them, the advertising agencies that advertise for the consultants etc.
We can throw as much money at the banks as we want but it doesn't mean that they are going to lend it back or spend it wisely. At least fiscal policy (direct government injections) puts money directly back into the economy.
At least if the government is going to spend large sums of our money then I would like to see it going back into tangible things that I can see and use. The infrastructure in this country is disgraceful considering that we are the world's largest economy. Even the Chinese have better trains than we do. I would want to see what these levels of infrastructure investment even without an economic downturn...or, we could just lend 80 billion dollars to AIG, who has already spent half of it...and I am still riding on leaking subway cars...
also, yes, I do agree that the new way of counting unemployment is misleading in a downturn. In a way it made sense in a heated economy because it is fair to assume that people who can't find work for a year just don't want to; however, in a downturn some people can easily still go for a year without work and actually want a job. Personally, I don't need someone to report the figures for me. When every other company is laying-off 10 - 15% of their workforce, it becomes very clear that things are not good. No matter what the unemployment statistics say.
Yep. Ignore the U-3 number reported in the news, the U-6 at 12.5% is the real number.
We are headed toward 10% U-3 / 16% U-6 before the end of 2009. The difference between 3.7% and 6.7% is very different from the difference between 6.7% and 9.7%. If it that doesn't feel like a depression in modern times, I don't know what will.
New York, with it's non-Government service economy, will feel it the worst of the big 4 in the BOSNYWAS corridor. Good if you are a renter, not good if you are an owner.
Infrastructure projects = big dig project in Boston x 1000
do a search to see how corrupt and incompentent that state project was ran!
There are also millions of underemployed which include part-timers and temporary workers who would love to work full time with benefits. Instead they end up working 2 or 3 part-time jobs to make ends meet......hey they also brought million dollar mansions too....they now deserve to be bailed out!!!
CITY FULL OF SAD 'SACKS'
LAYOFFS UP AS US JOB WOE WORST SINCE '74
http://www.nypost.com/seven/12092008/news/regionalnews/city_full_of_sad_sacks_143389.htm
"At least if the government is going to spend large sums of our money then I would like to see it going back into tangible things that I can see and use."
I completely agree. The only thing that gives me pause is that it was a campaign of Bill Clinton in '92, and I think it was just swept under the rug once he got into office. In addition to rail, I'd like to see housing built. Yes.... housing. Rental housing.
Regarding the u-3/u-6 debate, one I often take part in, Brad DeLong, a UCBerkeley economist who specializes in employment analysis, says that a depression would take u-3 numbers hitting 12% or staying at 10% for three years. He didn't opine as to whether or not they will. Paul Kedrosky, at Infectious Greed, has been vocally among those who believe we are headed for double-digit headline unemployment numbers. Krugman just revised his opinion, up to a few months ago he didn't feel 10% u3 was possible, now he says there is a one in three chance.
For the most part the stimulus package will only be able to stem some of the losses. Calculated Risk anticipates a sharp decline in non-residential construction expenditures, and states are already forecasting a $200 billion shortfall. Many of the "shovel ready" projects would have and should have been considered part of normal expenditures, often they've been long delayed already, so paying for them isn't really adding jobs, it's preventing losses in that sector from accelerating. Our economy needs to add over 100,000 jobs a month just to break even, if he is able to create 2.5 million jobs in two years that would be less than breaking even, assuming there aren't job losses in other sectors, which is highly unlikely.
I'm fairly certain Obama is aware of all of this. Henry Blodgett has a very interesting piece in The Atlantic about bubble mentality, and why the naysayers are discounted for so long. With a bubble someone CAN be right for years, before the crisis actually occurs. It's not just a question of "if you say it long enough eventually you'll be right."
Ohhhh, if Henry Blodgett said it, then it must be true.
He would never lie or mislead anyone for personal gain.
In all seriousness, the correct number is 150,000 jobs added each month to break even. Since we have lost 1.9 million through 11 months of 2008, we are really down 1.9 million + 1.65 million to break even.
I actually heard a conservative knucklehead on CNBC the other night saying how all the liberals were crying over 533,000 jobs lost in November when they should be celebrating the 8 million jobs Bush vreated in the previous 6 years (2002 to 2007). See how bad information gets passed around? 72 months at 150,000 jobs created gives you 10.8 million jobs. The truth is the Bush administartion was 2.8 million jobs underwater BEFORE 2008 started.
This administration cannot end soon enough.
Well Waverly, The Atlantic is a fairly well-respected publication, and Blodgett is one of the few who lived and failed rather spectacularly through a previous bubble, and is now on the outside writing in, so to speak. By the way, don't you find it supremely ironic that Spitzer was the one who took him down, and now they are both writing for Slate? Also, as Blodgett does point out, his own portfolio went down in flames along with his clients'.
You are absolutely correct. Job creation in the Bush administration was pathetic, which is one of the (many) reasons this downturn will be so painful and protracted. Usually we begin our post-expansion downward spirals with interest rates that can be cut and a few years of reasonable job numbers. Not this time.
> CITY FULL OF SAD 'SACKS'
> LAYOFFS UP AS US JOB WOE WORST SINCE '74
Note that they keep making the job loss comparisons, and then forget that we're on a completely different base. I believe you'd need job losses to double to represent the same % as 74...