Economy

The newest sign of a bad economy

For many libertarians and conservatives, the mainstream media isn’t the most friendly ground for news.  A perceived bias – real or not – turns many of us off.  However, CBS News has a report that seems to confirm my post yesterday that there is no recovery, despite what Washington is trying to tell us.

From CBS News (emphasis added):

Tinong Nwachan, for example, has far too much time on his hands. When CBS News met the former truck driver he had been out of work for two years.

“I don’t really tell too many people this but I’m not ashamed or nothing, I’m homeless,” Nwachan said.

His day job is looking for work at a jobs center in Hollywood. He has plenty of company, including Fabian Lambrecht, who wonders when the economy’s improvement will affect them.”They’re saying there are more jobs. I’m just wondering where those jobs are,” Lambrecht said.

About 6.2 million Americans, 45.1 percent of all unemployed workers in this country, have been jobless for more than six months – a higher percentage than during the Great Depression.

And this is supposed to be a recovery?  I don’t think so.

The truth is that what little recovery-like behavior we’ve seen hasn’t particularly been sustained.  There’s been a lot of talk about a jobless recovery, at least earlier on in the process, but frankly people don’t give a damn about recovery unless there are jobs.  Let’s be honest for a moment here, is there anyone who really thinks it’s not a big deal when we can find a statistic dealing with this economy where we are actually worse off than during the Great Depression?

Pawlenty unveils economic plan

With voters increasingly blaming President Barack Obama for the nation’s economic woes, Tim Pawlenty, former Governor of Minnesota and a Republican presidential hopeful, hoped to capitalize by laying out his economic plan; making it clear that the policies of the man he hopes to replace are hurting the nation:

Offering a “Better Deal,” a construction in the economic messaging tradition of Democrats beginning with Franklin Roosevelt’s New Deal, Pawlenty will promise a target of 5 percent yearly economic growth, which hasn’t been seen in the United States since the economy expanded at a 7.2 percent clip in 1984. To his benefit and likely no accident, his prescription of how to equal that achievement is similar to the policies of then-President Reagan.

Pawlenty offers a breathtaking series of tax cuts, beginning with a reduction in the corporate tax rate to 15 percent, and an income tax policy that closely mirrors Ryan’s fiscal 2012 budget framework, offering only two rates, 10 percent and 25 percent, for households that make up to and more than $100,000, with a generous minimum exemption for cuts of nearly one-third to individual tax bills. The plan also eliminates taxes on capital gains, dividends, and estates, representing a dramatic reduction in overall revenue.

There is no recovery

Last week, it was announced that unemployment had risen .1%.  The economy only gained 54,000 jobs.  The Dow was moving in the wrong direction, which affects millions of Americans who don’t remotely qualify as “rich”.  What does all of this mean?  It’s simple.  That’s the idea that we’re in a recovery has as much basis if fact as unicorns and leprechauns.

While we may not be having the collapse we were just a couple of years ago, we’re clearly not in anything approaching a recovery.  In a recovery, people go to work.  The stock markets builds.  Things start moving in a much more positive direction.  However, that just ain’t happening.

Instead, we have a great deal of instability.  While unemployment may improve over several months, it can then drop over the next month or two.  Even with a generally downward trend, that instability doesn’t exactly engender confidence in the US economy.

Things are rough all over though.  Greece is looking to the EU for yet another round of bailouts (and people are already protesting the necessary austerity measures to go along with it). Portugal has had a recent change in government due to their economy as well.  No one seems to really be doing well.

Now, it’s easy for people to see a couple of indicators and say “See?  It’s getting better.”  Honestly, I wish that was the truth.  However, that just ain’t the case.  Instead, those are false indicators of recovery…or so they seem at this point.  Had indicators improved over a longer period of time, it might have been fine.  Instead, investors are unsure what they should be doing with their money.  They seem to decide that it’s best to just sit on their money for the time being.  That means money isn’t being invested, money needed to create new jobs.

Troubles at the USPS

The United States Postal Service is in trouble.  Like private enterprise, the postal service has taken a hit in this economy, and that is for an entity that’s been taking a hit for years due to the rise of email and so much of business being handled via the internet rather than by stamp.  However, the postal service isn’t a private enterprise.  It’s a government entity.

From MSNBC.com:

Since 2007 the USPS has been unable to cover its annual budget, 80 percent of which goes to salaries and benefits. In contrast, 43 percent of FedEx’s budget and 61 percent of United Parcel Service’s pay go to employee-related expenses. Perhaps it’s not surprising that the postal service’s two primary rivals are more nimble. According to SJ Consulting Group, the USPS has more than a 15 percent share of the American express and ground-shipping market. FedEx has 32 percent, UPS 53 percent.

The USPS has stayed afloat by borrowing $12 billion from the U.S. Treasury. This year it will reach its statutory debt limit. After that, insolvency looms.

On Mar. 2, Postmaster General Patrick R. Donahoe warned Congress that his agency would default on $5.5 billion of health-care costs set aside for its future retirees scheduled for payment on Sept. 30 unless the government comes to the rescue. “At the end of the year, we are out of cash,” Donahoe said. He noted that the unusual requirement was enacted five years ago by Congress before mail started to disappear.

Now…just imagine what the hell will happen with the government trying to grab control of more and more?  That just can’t be good.

Unemployment rate rises to 9.1%

As has been speculated, the unemployment numbers for May show a slowing job market and an unemployment rate that has increased to 9.1%; according to figures released this morning by the Bureau of Labor Statistics:

The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1 percent.

Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.

The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.

“There are plenty of reasons to expect the third quarter will be better. But the question is now becoming how much better?,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Economists had pinned the economy’s sluggishness largely on high energy prices, supply chain disruptions stemming from Japan’s earthquake and tornadoes and flooding in the U.S. Midwest and South. The department said it found “no clear impact” from weather on the jobs figures.

The private sector, which has shouldered the burden of job creation added just 83,000 jobs, the least since last June, while government payrolls dropped 29,000.

Adding to the gloomy labor market picture, about 39,000 fewer jobs were created in March and April than previously estimated.
[…]
Payrolls had been expected to rise 150,000, with private employment gaining 175,000.

About that economic recovery…

There are worries, despite several months of job growth and signs of an economic recovery, that the economy is slowing down:

The drumbeat of bad news about the U.S. economy got louder on Wednesday, rattling financial markets and driving stocks to their biggest drop in a year.

The U.S. factory sector, which has been an engine of the recovery, notched its biggest one-month slowdown since 1984 as companies hit the brakes on hiring and production. Another report showed private-sector hiring dropped precipitously in May, prompting economists to ratchet down their expectations for the closely watched nonfarm payrolls report due on Friday.

The Dow Jones Industrial Average tumbled 279.65 points, or 2.2%, to 12290.14, its biggest point decline since June 4 of last year. Investors piled into the safety of Treasury bonds, sending yields on the 10-year note below 3% for the first time this year. Yields move in the opposite direction of price.
[…]
Wednesday’s reports marked a notable shift in sentiment, particularly among stock investors, who have largely shrugged off signs of economic weakness, choosing to focus on strong corporate-earnings growth. The slowdown of manufacturing output could crimp those profits.

The disappointing U.S. economic data followed poor manufacturing reports around the globe. The numbers, together with evidence of a continuing downdraft in housing and signs that companies and consumers remain apprehensive about spending, suggest the economy is rapidly losing speed.

No agreement on debt ceiling, 150 economists back increase with spending cuts

House Republicans met with President Barack Obama yesterday to discuss raising the debt ceiling, for which an increase was shot down on Tuesday evening. As you have probably guessed, we’re no closer to any agreement:

With time running out before the U.S. defaults on its debts, President Obama met with the House Republican Conference on Wednesday, and as GOP members emerged from the session they described talks that were modestly cordial and, well, not terribly productive.

The Republicans arrived in a convoy of navy blue tour buses more befitting a spring-break tour of the capital monuments than a hard-headed negotiation. But this was serious business, and both the president and the GOP understand that the time for coming up with a debt-ceiling compromise is growing short.

“Let’s not kick the can down the road,” House Speaker John Boehner, R-Ohio, quoted himself as saying to the president, meaning the time had come for spending cuts.

Eager to show some measure of compromise, White House press secretary Jay Carney described the meeting by saying that the president agreed with some of the Republican assessments, including a statement by Republican Conference Chairman Jeb Hensarling, R-Texas, that “Any day Republicans and Democrats are actually having a dialogue, this is a good day.”

Does that signal progress? Not really. “That doesn’t mean we don’t disagree on some fundamental issues—of course we do,” Carney said.

New poll shows Americans fear more debt over default

A new poll from the Washington Post and Pew Research shows that Americans worry more about Congress increasing the debt ceiling than defaulting on debt payments:

[W]hen pressed to name their biggest concern, nearly half of respondents say they are alarmed by the prospect that the debt could grow beyond its current limit of $14.3 trillion, according to a new Washington Post-Pew Research Center poll. Only 35 percent say they are more worried about the risk of default and economic destabilization if Congress does not raise the debt limit.
[…]
Among those who believe they are well-informed, 52 percent say they worry more about Congress raising the limit and permitting additional borrowing. By comparison, 37 percent worry more about the possibility of default. Those who consider themselves less well-informed are more evenly split, with 45 percent more worried about borrowing and 34 percent more concerned about default.

The poll also notes that independent voters, which strongly rejected Democrats in last year’s mid-term election, are mostly siding with Republicans over Democrats:

Independents — crucial to the reelection prospects of as many as a dozen Senate Democrats, as well as President Obama — tend to side with Republicans. Among independents, 49 percent say they worry more about additional debt, while 34 percent say their bigger fear is the risk of default.

And even Bill Clinton isn’t buying the predictions of armageddon that Tim Geither and other Democrats would have us believe, as Dave Weigel notes:

Is Jon Huntsman the new Charlie Crist?

Over at Slate, Dave Weigel offers up an interview by Neil Cavuto from early 2009 with Jon Huntsman, former Governor of Utah, Ambassador to China and likely GOP presidential candidate, where he not only expressed support in the concept of economic; but believed the package being pushed through Congress wasn’t large enough (emphasis Weigel’s):

CAVUTO: Were you against the stimulus, Governor?

HUNSTMAN: Well, if I were in Congress, I probably would not have voted in favor because it didn’t have enough stimulus and probably wasn’t big enough to begin with.

Huntsman has been playing down his support of the stimulus. For example, in a recent interview with George Stephanopoulos, Huntsman said that he wanted more in terms of tax breaks; including a corporate income tax cut. However, Weigel points to a post at Washington Monthly by Steve Benen, who breaks down that claim; posting video of Huntsman in his on words:

More on Tim Pawlenty and the GOP race

As I noted yesterday, Gov. Tim Pawlenty (R-MN) announced his bid for the Republican presidential nomination in Iowa. In his speech - which his team is calling “A Time for Truth,” Pawlenty warned that the mounting debt and liabilities and economic policies of President Barack Obama will lead to troubles that will make our most recent troubles seem like a cakewalk.

Here is some video from the announcement:

Pawlenty made a bold move in his speech by explaining that ethanol subsidies, which are supported by some other candidates for the GOP nomination; including Newt Gingrich, will need to be phased out.

Pawlenty also received praise from Dick Armey, former House Majority Leader and current chairman of FreedomWorks, who was interviewed on CNBC by Joe Kernan about the GOP field:


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