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No News is Good News
By David Glenn Cox
April 3 (Bloomberg) -- "The biggest increase in employment in three years makes it 'pretty clear' the deepest U.S. recession since the 1930s has ended, said the head of the group charged with making the call.
"Payrolls rose by 162,000 workers last month, the third gain in the past five months and the most since March 2007, figures from the Labor Department showed yesterday in Washington."
Ain’t that great? The author thought it was so great they titled the article “NBER’s Hall Says Payrolls Make It ‘Pretty Clear’ Recession Over” Yep, the recession is officially over. You may resume your regular activities, except that’s not what the Labor Department report actually showed yesterday.
“In March, the number of unemployed persons was little changed at 15.0 million, and the unemployment rate remained at 9.7 percent.” Department of Labor report April 2, 2010
What Hall says makes it pretty clear the recession is over is the 162,000 new jobs, except 48,000 of those jobs are temporary jobs as census takers. That means the actual number of new jobs is only 114,000 in an economy that needs 150,000 new jobs per month. This is claimed as good news because it is said that it proves the number of job losses is slowing. It assumes that there are an infinite number of jobs to lose.
With a civilian workforce of approximately 140 million the addition of 114,000 jobs is miniscule.
“The number of long-term unemployed (those jobless for 27 weeks and over) increased by 414,000 over the month to 6.5 million. In March, 44.1 percent of unemployed persons were jobless for 27 weeks or more.” Department of Labor report April 2, 2010
“The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) increased to 9.1 million in March. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” Department of Labor report April 2, 2010
The goal is simple, it's to create an illusion that the depression is over and to coax the skittish and nervous wealthy to invest in the economy. So despite what the Labor Department report actually says, it is information cherry-picked to create a picture of life as a bowl of cherries.
These media fruit pickers like to tweeze the data by comparing this month with last month. If you lost your job in January and lost your home in February then March has been a great month because you didn’t lose a thing in March.
Total non farm in thousands, February 2010 - 129,588 March 2010 – 129,750
Total non farm in thousands, February 2009 – 132,070 March 2010 – 129,750
Deduct the census workers and the new March number is 129,702, year over year job losses of 2,368,000.
Meanwhile, back on the ranch, 200,000 Americans are about to lose unemployment benefits because of Republican obstructionism. When Congress begins its new session the benefits should be restored. But the unemployed will face late fees and utility shut offs just so those politicians could score points. It should be remembered that unemployment insurance is life support; it’s not a cure. Thousands of Americans fall off the radar each month when even their extended benefits run out.
“Among the marginally attached, there were 1.0 million discouraged workers in March, up by 309,000 from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.” Department of Labor report April 2, 2010
“In March, average hourly earnings of all employees on private non-farm payrolls fell by 2 cents, or 0.1 percent, to $22.47, following a 4-cent gain in February. Over the past 12 months, average hourly earnings have risen by 1.8 percent. In March, average hourly earnings of private production and non-supervisory employees fell by 2 cents,” Department of Labor report April 2, 2010
The monthly inflation rate in February was 2.6 percent and in March it was 2.1 percent. Of course, these numbers are divined by the same folks who tell you that the actual unemployment number is at 9.7 percent.
Ready to pack your bags for Disneyland yet?
The default rate for commercial mortgages climbed to the highest rate in sixteen years this month at 3.4 percent. The worst on record is 4.1% in 1993. Analysts predict that before Santa comes to your house again the default rate on commercial properties could be as high as 8 percent, double the record high. Across the country marquee, premiere real estate developments are going belly up in droves, luxury hotels, golf courses, shopping centers and even the most expensive commercial space in the country, Manhattan.
Does this sound like the depression is over? Or anywhere near over? To paraphrase Churchill, “This isn’t the beginning of the end, but it is perhaps the end of the beginning.” As long as the federal government continues to live on Fantasy Island it becomes impossible to gauge landmarks of beginning, middle or end. As long as the media obfuscates, spins and weaves fairy tales of recovery, there is no bottom.
The Republicans do have a point that $50 billion for unemployment benefits is just kicking the can down the road. Where is the vision? What’s the cure? How are we going to fix this problem?
FDR’s WPA employed, at its height, three and a half million people. It taught them new skills and practical experience. The CCC employed half a million young men, getting them out of the house and off the porch, and out of trouble.
After World War II the German government paid people to stack the rubble from bombed-out buildings. The Japanese had an unemployment program where the unemployed were given a card that might say, “Report to the XYZ shipyard Monday at eight.”
“But I don’t know anything about shipbuilding?”
“Don’t worry, you’ll learn.”
The Japanese government paid the XYZ shipyards to build ships; then the government sold the ships on the open market. It was a jobs program that built a domestic industry.
“You say you’re a bookkeeper? Report to the accounting department.”
All of these programs paid government monies to put people to work. Yet they benefited the society in the process. The WPA taught classes in aircraft mechanics and radio repair. Where did we need aircraft mechanics and radios repaired? The WPA built 851 airport landing fields making it possible for civil aviation to expand. Out of work musicians on Bourbon Street were paid to give music lessons; out of work teachers taught people to read. Out of work contractors built roads with heavy equipment while workers were taught heavy equipment repair.
It is a vision thing, to admit that there is a problem and then to take concrete steps to correct the problem. Or you can just keep pumping money into the banks. But with almost $1.1 trillion in commercial loans and $211 billion in apartment loans that 8 percent default rate looms large as serious coin. Remember, too, that the 8 percent number is from the same people who estimated that home foreclosures would peak at three million in 2009, and we are now on track to 4.5 million home foreclosures this year.
Will we bail out the banks again? Or maybe this time we will bail out the rest of the country.
“True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.” Franklin Delano Roosevelt.
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