Nov 06 2009
Obamanomics Still An Abomination
As I noted yesterday the topic driving the electorate is the unemployment, which shot up dramatically again in October:
The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.
While the pace of job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.
There will be no relief because the stimulus bill is a liberal fiction, government cannot spend any significant money in any short period to impact an economy it basically lives off of..
The unemployment numbers that came out for October were pretty bad at 10.2% (red lines – U3 – in the chart below), which was another 26 year high . When we look at the underemployment rate (blue lines – U6) we find an even more tragic 17.5%. (Click to enlarge)
The government defines the two metrics U3 and U6 thusly:
- U3: Total unemployed, as a percent of the civilian labor force (official unemployment rate)
- U6: Total unemployed, plus all marginally attached, plus total employed part time for economic reasons, as a percent of the civilian force plus all marginally attached workers
What is clear from the graph is we have passed the summer, part time job lift and are once again losing jobs. Not at the same rate as last spring, but there is no economic recovery for the the voters, and there will not be for some time. While the Administration touts misinformation on jobs created/saved, the reality is over 2,000,000 have been added to the EUC rolls, the last slice of safety net available from the government for the fatally unemployed. (click to enlarge)
This jump in unemployment came in the face of so called ‘good news’ on weekly first time jobless claims (still running over 500,000 per week!)
If the Democrats do to our Health Care system what they did to our nation’s employment picture, we are all going to be in for a world. of hurt. And it is clear the Democrats are heading into an electoral disaster in 2010 that will make 1994 look mild in comparison. In 1994 the one saving grace for the Democrats and Clinton was the economy had been turning around for 2+ years. That will not be the backdrop for the 2010 cycle.
The nation will now be going through Thanksgiving, Christmas and New Years with little to celebrate and little hope. And they will be turning their fear and anger on those who screwed up and did not make good on their promises.
The other day I checked the BLS stats for January 2007 when the Democrats took over Congress. The unemployment rate was 4.6% and the number of unemployed totaled 7 million. Today, both numbers have more than doubled. I was a local Washington, DC TV news reporter covering the economy during the Reagan era recession. Anytime you have double-digit unemployment, it’s bad. What is worse this time is that stock portfolios and home values have taken a 30 to 40% hit, more in some cases. I’m selling my former home in Maryland right now. Value down more than $200,000 (close to 40%) from just a few years ago. Both political parties are to blame. The GOP spent like Republicans when they were were power. The Dems just upped the ante since they took control.
While we may have a jobless recovery for another year, even when employment starts to grow, that will not restore personal balance sheets, ie, it will not return home values or stock portfolios to their former levels. So, while the “wealth effect” provided by increasing stock prices and home equity spurred consumer spending on the way up, a negative wealth effect will no doubt tamp down consumer spending even as people return to work. Couple that with the inability of small business to get loans or expand the use of credit cards to finance their business (in fact financial institutions have severely cutback on loans, credit cards and lines of credit), I’m afraid the world’s greatest economic engine will be sputtering for quite some time.
As you’ve written many times, the road to recovery does not go through the federal bureaucracy. Yet tomorrow Pelosi wants to pass a bill that would ultimately lead to more dollars going through Washington. When will these people learn?
I enjoy the blog. First time commenter.
I watch “Craig list”, there are many part time jobs for the Christmas season advertised. I would not be surprised if the slow down in joblessness is due to some getting part time jobs or temporary jobs, then the rate will go up again. We are in for a very rocky ride. People are hoping for a strong Christmas season, which I think won’t happen. The disappointment to anger is going to be awful.
It seems inconceivable that Obama is spending so much time on a new trillion dollar entitlement program, plus the job killer, cap and trade, and so little on the war in Afghanistan and the economy. Surely nobody is still fooled into believing that restructuring medical insurance is a jobs saver? I wonder why so few are concerned about who is going to pay for the new program and how it will impact any growth who so ever. Obama must have flunked economics, really what do they teach at his various alma-maters?
And in the face of this and record deficits the Fascists think they are going to ram through a takeover of 1/6 of the economy.
Well Joe the plumber got it out of the lying Pinnochio Presidente, he wanted to redistribute the wealth and he is well on his way!
A part of me hopes they do so we can have the real blood bath that will follow.
The disemboweling of the Democrat party that the American Patriots will perform with glee, unless there’s enough on the dole and newly arrived lookin for handouts to save their sorry Anti-American behinds.
A part of me says Ram it so we can get it on.
The other part hopes there’s still sanity, that despite Party the politicians would do whats best for the American People and NOT a failed president and his far left liberal fantasys.
AJ consider a link to his disgraceful speech in the wake of 13 dead service members at the hands of another Muslim.
Had this been a Christian shouting God is Good there’s no doubt the way the news would be portrayed.
Pinnochio was more dismayed at the death of an abortion doctor than the death of 13 of Americas best patriotic defenders and it showed in his pathetic attempt at remorse.
The child like Obama is a disgrace!
I still don’t see any turning point.
It is possible that there has been a turning point, and there were false signs of a turning point back in July.
But it looks like the rate of increase in unemployment has picked up since then.
.
Real stimulus:
Waive federal income tax on sole proprietors and corporations having fewer than 10 employees up to the first $1 million of gross income.
This is really sad news for our country. I know we can do better. We just need to get the government out of the way of private industry…..and let private industry know they are in the lead without future worries about what the government may do to put a stranglehold on them (tax increases, Cap & Trade, Gov’t takeover of Health Care or other businesses, etc). I don’t think Obama has a clue about what he is doing; and, he is clearly listening to the wrong advisors. We need a real shake up. Most of the economic experts I have been reading (that have been credible in the past) think things will remain bad for a while yet.
This is the inevitable result of having the village idiots direct traffic. They are more impressed by the carnage they can create because their spouse’s auto repair business will be booming but have no qualifications to direct traffic.
Sleepless—as to home values returning you have to ask as to whether the levels they were at and how they got there ever made economic sense. The rates of increase over the years preceeding were unsustainable and predicated on flipping of homes and lax lending standards. Another interesting chart is the stock market index from the point when it became apparent to the market that a socialist was going to be elected—straight down to close to book values—-the component of market value reflecting hope in the future evaporated. I think this started around Dec 2007–Jan 2008.
AJ—do you know if any of the porkulus money has been allocated to building that fence along the southern border. Think of the jobs that would have created. But I guess that problem is gone—-did I miss something.
Lastly–God bless those effected by the events at Fort Hood.
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The timing of yesterdays mob in Washington DC protesting health care by the government and unemployment numbers today was very good, for those of us who want to find another way.
What is interesting is that in his remarks this morning Obama was starting to make noises to do the things that the “stimulus” should have already done.
KauaiBoy
Yes indeed those home values were inflated due to monetary policy among other things. You’re right. No question about it. My point is, and I think we agree on this, that equity isn’t coming back. Someone can go from unemployed to a good paying job and see their income bounce back. But their balance sheet isn’t bouncing back. Even with a job, people will feel poorer than they were before the collapse and that will continue to depress consumer demand.
I owned that house for more than 30-years…lived there, then rented it when I moved out of town. The equity vaporized. It’s gone, gone, gone…in the words of a Montgomery Gentry song, it’s
“Gone like a freight-train, gone like yesterday
Gone like a ’59 Cadillac
Like all the good things that ain’t never coming back”
Under the Pelosi plan, if you don”t buy a $15,000 a year policy, you get 5 years in prison and willful avoidance of having health insurance is a felony.
[…] of Emergency Unemployment Compensation expanded by millions and millions of out of work Americans (see here for all the numbers from the federal government). Going through that period with this mess will only make these numbers expand to historic levels […]
[…] In October the nation lost 190,000 jobs, which means November’s stunning 11,000 jobs lost represents a 90+% reduction in job losses, all the while first time unemployment claims dropped only 10%. What happened in November? What magical economic spurt caused such a drastic turn around? And why did it not effect other key numbers? […]