Here comes the other economic shoe dropping...

[Coito ergo sum]

Well, what did the "adjusted" employment numbers look like earlier, when the official ones were even worse? And by the way - government employment is way down from three years ago. Not to mention what the bastards in Congress have done to our pay. So that's hardly something that's buoying the employment numbers. As for record numbers leaving the job market, that's quite debateable. Plenty of people left a while ago. But how many have returned, now that hiring is way up?

It's not debatable - the job market just went down to its lowest level in 30 years. Government numbers.

As for the "worst year in housing history" - perhaps you haven't noticed that foreclosure rates are way down! So that statement is just not correct. 2009 and 2010 were worse.

I didn't say foreclosures were the highest ever.

2011 Worst Ever for Sales: http://bestplaces.nydailynews.com/stori ... ever-sales


There were 1.9 million foreclosures in 2011. http://www.usatoday.com/money/economy/h ... 52512364/1

The firm cautioned that the decline does not necessarily indicate the housing market is getting better, as many foreclosures have been delayed due to confusion over documentation and legal issues involved in the process.
There have also been problems with the way some lenders were handling foreclosures. Specifically, they have been signing off on home foreclosures without first verifying documents — a practice referred to as "robo-signing." Many of the largest U.S. banks reacted by temporarily stopping all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

The basic gist is that banks put an artificial halt on foreclosures. Nothing has really gotten better.

Granted, the stock market alone does not the economy make. Neither does the unemployment numbers. Neither does the housing market, or the manufacturing sector, or the inflation rate, or consumer confidence, et cetera...

But I'm only looking at the macro and the trend lines. There is undeniable recovery, there has been growth more than 2.5 years, and it appears to be accelerating.

The only economic "shoe" I'm genuinely worried about is Europe.

Certainly not "undeniable." At best the parts of the economy you've cited as recovering are anemic and paltry.

Foreclosures are a possible shoe. Housing sales are the worst EVER, and the only hope is that 2012 will be an improvement. I HOPE we hit bottom in 2012 - in fact, I'm banking on it, because I'm buying again this year.

If you really want "big picture" check out this article: http://www.propublica.org/article/our-s ... he-numbers

Here's a brief overview of some key stats on where the economy stands.

Annual rate at which the GDP grew this year: 1.3 percent between April and June, 0.4 percent between January and March
Average annual GDP growth from 1998-2007: 3.02 percent
Total jobs lost since January 2008: 8.7 million
Total jobs recovered since January 2008: 1.8 million
Recession technically ended: over two years ago, in June 2009
Unemployment rate in July 2011: 9.1 percent
The "natural unemployment rate": 5 percent
Months that the unemployment rate has been around 9 percent or more: 28
Number of unemployed people in July 2011: 13.9 million
Number of long-term unemployed people in June 2011: 6.3 million, or 44.4 percent of the unemployed
Number of long-term unemployed people in July 2011: 6.2 million, still about 44.4 percent of the unemployed
Government jobs cut in July, federal, state, and local: 37,000
Pace at which jobs were added throughout the late 1990s: 350,000 per month
Jobs that the Bureau of Labor Statistics initially reported were added in June: 18,000
Jobs that were added in July: 117,000
Percentage of the population that’s employed as of July: 58.2%
Percentage of the population that was employed at the end of the recession in June 2009: 59.4%
Jobs the U.S. needs to create to 5 percent unemployment rate: 6.8 million, as of January 2011
Years it will take to get back to an unemployment rate of 5 percent: four years if we're adding jobs at 350,000 per month; 11 years if we're adding jobs at the 2005 rate of 210,000 per month
Unemployed workers per job opening: 4.64 as of May 2011, the most recent month for which data on job openings was collected (3.0 million job openings in May 2011; unemployed people in May 2011: 13,914,000)
Number of people who weren't in the labor force, but wanted work, as of June 2011: 2.7 million
The last time the labor force participation rate was lower than it is now: 1984
The amount of state budget spending that comes from the federal government: about 1/3, or $478 billion in 2010
Increase in before-tax corporate profits in the first quarter of 2011: $140.3 billion
Percentage of Americans' total personal income that comes from federal funds: almost 20 percent
Spending cuts in the proposed budget: at least $2.3 trillion over a decade from 2012-2021
How long you can currently receive unemployment benefits: up to 99 weeks
The number of those weeks funded to some extent by federal aid: up to 73
People currently relying on federal unemployment benefits: 3.8 million
How long you'll be able to receive unemployment benefits if you lose your job after July 1, 2011: 20 to 26 weeks, depending on your state
Recovery-funded jobs reported by recipients, according to recovery.gov: 550,621
Amount of stimulus money left to be spent: $122.8 billion of the original $787 billion
The economy by your numbers (suggested by our readers on Twitter):

85 percent of college graduates are going to return home to live with their parents after college, according to a May 2011 poll by Twentysomething Inc. Suggested by @SuzanneMcGeeNYC
The national debt is 95 percent of our GDP (Total debt = $14 trillion. GDP = $14.66 trillion as of 2010) Suggested by @David_McClurkin
Just over 80 percent of "prime age" American men (between 25 and 54) are employed today, compared to 95 percent in the late 1960s. According to OECD data, the U.S. has the lowest labor force participation rate for prime age men of any G7 country. Suggested by @JoshRBruce

[Coito ergo sum]

Add to that --

16 trillion dollar national debt
1.5 trillion dollar deficit

No end in sight.

[drl2]

Say what you will about statistics and which way to twist them, and how this is a totally anecdotal example, but:

In 2008 the funding was pulled for a project I was working on through a consulting firm and I ended up unemployed for four months. In that time, despite having 18 years of experience in my field and hearty recommendations from all my past employers, I scored only about seven interviews in that time period - with each interviewer telling me, when I asked, that they'd never seen so many applications for any one job posting. I had to settle for what, when its higher priced health insurance and city wage tax was figured in, amounted to a little over a 20% pay cut.

Last Tuesday I showed up for work only to find there was no job waiting there for me. They'd fired a consultant the week before, and they fired their other senior developer (the only guy who'd been there longer than me) on the same day. All three of us were criticized for their performance, though none of us received any feedback that there were problems and, in fact, if we hadn't been cut off from the company e-mail system could print out pages of praise ranging from "Great! That's just what I needed!" to "<Product> went into production today and I have to say this is the proudest I've ever been of any development team". I'm not sure what's really going on over there - they've left themselves with three junior developers and one consultant who's actively interviewing to get out of there. That's a separate gripe, though - what I'm getting at is that I can't even give my recent employer's name as a referral because I can't be sure what they'll say and I have to kind of skirt around the circumstances of my departure from there... but the afternoon after I was fired I updated my resume on a couple of job sites and by that evening I had two phone interviews lined up; I've had seven phone screenings and three interviews already, in under two weeks. I just got an offer that's at a decent place with a small raise, and I'm actually contemplating not taking it because I've been told I'm at the top of the list so far for a more local place (the offer would be a 1-1.5 hour commute and the hassle of dealing with taxes across state lines), and yet another place has expressed serious interest in me because I have some experience with some older systems they're working to replace with the latest. (There's also a recruiter trying to place me at a client that does work in military/intelligence/law-enforcement - I'd have to get secret clearance to work there and I'd probably have Ian-y people riding my ass all day to get their software working! )

Anyway, the general point I'm trying without much success to get to is this: The difference in the IT job market in the greater Philly area between 2008 and 2012? Night and day.

[Coito ergo sum]

Here is a potential shoe: http://www.mcall.com/business/mc-gas-pr ... ?track=rss $5 gasoline in the US? That would not be good.

DLR2 - sounds like tough 4 years. Glad to see you're still standing.

[PsychoSerenity]

Here is a potential shoe: http://www.mcall.com/business/mc-gas-pr ... ?track=rss $5 gasoline in the US? That would not be good.

The US having to pay almost as much as most other places in the world? Howsoever will you cope?

[Coito ergo sum]

Here is a potential shoe: http://www.mcall.com/business/mc-gas-pr ... ?track=rss $5 gasoline in the US? That would not be good.

The US having to pay almost as much as most other places in the world? Howsoever will you cope?

It never fails. The same old canard.

One, who gives a fuck what you folks pay? Most of the reason you folks pay more is your own fault due to confiscatory tax rates on gasoline.

Two, the sudden rise in the price is the real problem, as the equilibrium in our economy is based on the current range of fuel prices, and if you raise the price by 33% or even 50% suddenly, within months, that has a reverberating effect throughout any economy. It will have to be incorporated in the cost of goods sold, which will especially impact the poor and the middle class due to the effect that increased fuel prices have on the the price of consumer goods, groceries, and the cost of holding a job (since the vast majority of working Americans commute to work in automobiles).

Thus, it is not merely a function of worthless and emotion-driven comparisons between what people in Europe pay on average and what people in the US pay on average. It has to do with the reality of our economy and the negative effect dramatic fuel cost increases have not only on the economy at large, but on the day-to-day livelihood of the common man and woman.

[eXcommunicate]

Coito, look at your first post in this thread (stock market is doomed!, unemployment near 10%!, inflation soon to be out of control!), then look at today. That's all I ever need to know about your economic acumen. I would bet you any amount of money that we will not hit $5.00/gal this Summer (barring some unforeseen disaster). Why do I say that? Because it's something you're harping on, so it's a good bet it won't come to pass.

[PsychoSerenity]

Here is a potential shoe: http://www.mcall.com/business/mc-gas-pr ... ?track=rss $5 gasoline in the US? That would not be good.

The US having to pay almost as much as most other places in the world? Howsoever will you cope?

It never fails. The same old canard.

One, who gives a fuck what you folks pay? Most of the reason you folks pay more is your own fault due to confiscatory tax rates on gasoline.

Which means if we have a problem with sudden rises the in market value our governments can balance out the effects with tax reduction thus avoiding economic catastrophe.









You do know I'm only teasing you, don't you?

[Coito ergo sum]

Coito, look at your first post in this thread (stock market is doomed!,

I never promised Svengali-like powers of prediction. This is a discussion thread.

The stock market has been very volatile, though, and was way down for a period of time.

unemployment near 10%!,

Unemployment still sucks. The main reason it has gone down at all is that the total number of workers has gone down. People left the job market. Real unemployment and underemployment is still at disaster levels.

inflation soon to be out of control!),

Inflation is very high, and in the US it is especially a problem for things like groceries and necessaries.

then look at today.

I'm looking.

That's all I ever need to know about your economic acumen.

Mine? You mean the authors of the articles?

Do we only discuss articles that later come true now? Or, we can't have a thread discussing the negative aspects of the economy? That is more like it with you, I think. You want to steer the discussion to how great everything is, because there isn't a point in criticizing the current administration. That's all I need to know about YOUR economic acumen.

I would bet you any amount of money that we will not hit $5.00/gal this Summer (barring some unforeseen disaster). Why do I say that? Because it's something you're harping on, so it's a good bet it won't come to pass.

It's not me harping on it. If you clicked on the link, you'll see it was by Ronald D. White of the Los Angeles Times and Sam Kennedy of the Morning Call (a Lehigh Valley Pennsylvania newspaper).

so, your point is that you'll bet any amount of money that we will not hit $5 a gallon, because I read their article and thought to post it here, a discussion of "economic shoes" dropping. My, how thoughtful and thought provoking of you, eXcommunicate!

Let me rephrase then -- "All is well! The economy is fine! There is no risk of anything untoward happening! Obama rules and Republicans drool!"

There! Happy now? Now we can all jerk off over how great everything is, and we need bother following the news and discussing different points of view and different prognostications. No need for that - we know it's all going to be fine, because Obama is president. When he's President, we are living in the Best of All possible Worlds.

[Coito ergo sum]

Here is a potential shoe: http://www.mcall.com/business/mc-gas-pr ... ?track=rss $5 gasoline in the US? That would not be good.

The US having to pay almost as much as most other places in the world? Howsoever will you cope?

It never fails. The same old canard.

One, who gives a fuck what you folks pay? Most of the reason you folks pay more is your own fault due to confiscatory tax rates on gasoline.

Which means if we have a problem with sudden rises the in market value our governments can balance out the effects with tax reduction thus avoiding economic catastrophe.









You do know I'm only teasing you, don't you?

Poe's Law applies to comments by Europeans about Americans and the United States.

[gt2211]

Coito, look at your first post in this thread (stock market is doomed!,

I never promised Svengali-like powers of prediction. This is a discussion thread.

That you do not have 'Svengali-like powers of prediction' is not that important. What is important is when you are wrong you make an attempt to understand why and adjust your world views accordingly. If you predict hyperinflation and someone else says we will have extremely low inflation.... and you are wrong, it is probably best to make an effort to understand why and reconsider their arguments.

unemployment near 10%!,

Unemployment still sucks. The main reason it has gone down at all is that the total number of workers has gone down. People left the job market. Real unemployment and underemployment is still at disaster levels.

The U-6 (including discouraged/part-time for economic reasons/marginally attached[would like work, but not presently searching] has fallen more than the U-3 rate.

inflation soon to be out of control!),

Inflation is very high, and in the US it is especially a problem for things like groceries and necessaries.

No it is not. Inflation has been too low.

[Coito ergo sum]

Coito, look at your first post in this thread (stock market is doomed!,

I never promised Svengali-like powers of prediction. This is a discussion thread.

That you do not have 'Svengali-like powers of prediction' is not that important. What is important is when you are wrong you make an attempt to understand why and adjust your world views accordingly. If you predict hyperinflation and someone else says we will have extremely low inflation.... and you are wrong, it is probably best to make an effort to understand why and reconsider their arguments.

Look - I've just been posting news reports, essentially. I didn't prognosticate that they would all come true.

I didn't predict hyperinflation. I posted news articles to discuss. My posting of them is not a prediction, nor am I wrong because someone else writes something and it doesn't "come true."

We don't have extremely low inflation. We have very high inflation in sectors of the economy that are important to the common person.

Those who say that we have extremely low inflation are wrong, and perhaps if your advice is correct, they would be well-served to take your advice, I guess, and reconsider their arguments.

unemployment near 10%!,

Unemployment still sucks. The main reason it has gone down at all is that the total number of workers has gone down. People left the job market. Real unemployment and underemployment is still at disaster levels.

The U-6 (including discouraged/part-time for economic reasons/marginally attached[would like work, but not presently searching] has fallen more than the U-3 rate.

Nevertheless, the main factor in falling national unemployment rate is the shrinking of the job market. Between December 2011 and January 2012, the number of Americans "not in the labor force" increased by 1.2 million. That was the largest increase ever in that category for a single month.

inflation soon to be out of control!),

Inflation is very high, and in the US it is especially a problem for things like groceries and necessaries.

No it is not. Inflation has been too low.[/quote]

That depends what is taken into consideration in creating the statistic.

Any U.S. consumer that goes to the grocery store or the gas station on a regular basis knows that prices are rising.

Unfortunately, those rising prices are set to soar even higher - and their effects on consumers will continue to be ignored by the U.S. Federal Reserve.

The United States has had a break from inflation the past couple years, while it exported higher prices to emerging market economies. The Fed's easy money policies created excess money that flowed overseas, and now those countries are seeing prices rise to threatening levels.

More than 12% of after-tax income in U.S. households is now being spent on fuel and food, according to a CNBC report.

http://moneymorning.com/2011/03/07/hidd ... ill-admit/

Prices are going up. There's just no way around that. Just about everything is more expensive, from gas to fuel to clothes; almost everything you buy on a normal day has gotten more expensive. Yet the official word from the Obama administration is that prices are rising only slightly, under 3% which is not unusual for normal economic conditions.

What's going on? Why don't they see what we feel in our wallets every day? Newsweek, of all places, reports on how this works and why the Consumer Price Index (CPI) is broken:

Back in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: ?Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.? Quick as a flash came a voice from the audience: ?I can?t eat an iPad.?
One of the tricks used is to index prices by including items which are not going up and tend to get lower in price. Technology, for example, tends to go down in price over the years, but it is factored in with food. The problem is, you buy an I-Pod once every few years and food as much as every day.

Other expenses such as furnishings have not gone up much in recent months, but you only buy dinette set once every few decades, and you buy gas once a week or more.

With gas prices increasing, that pushes the price of nearly everything up because of costs of packaging and shipping. The biggest problem, however, is the Federal Reserve's "Quantitative Easing" (QE2) plan to flood money into the market, money which has no actual value and is causing the dollar to lose value as well. That means everything goes up in price relative to your static wages.

And, of course, the ill-advised biofuels push has been causing inflation in food prices for half a decade now by encouraging farmers to grow for ethanol production instead of food production. Shortages, increases in price, and lower quality all result from this as supermarkets scramble for sources to offer produce to their customers.

It is no secret that the Consumer Price Index has been "improved" 24 times since its inception in 1978, each time to help calculate things to smooth out inflation. Using the original method, inflation right now would be at a 10% rate, which is more plausible when you buy groceries or a pair of pants.

http://washingtonexaminer.com/opinion/o ... cpi/144850

"My research suggests inflation is really running between 9% and 12%, which is more commensurate with what we all feel in our wallets every day," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

The producer price index (PPI), which tracks the price of goods before they reach consumers, also rose last month. U.S. wholesale prices were up 1.6% in February, doubling their increase in January and soaring past economists' estimates of 0.7%.

Higher wholesale prices are not always passed on to consumers. Retailers sometimes try to absorb the costs to keep shoppers buying their products. But with wholesale prices up 5.6% in the past year, and consumer prices only up 2.1%, businesses are running out of ways to avoid further price hikes. That means consumers have more price pain ahead.

"Price increases take some time to come through," John Ryding, chief economist with RDQ Economics, told CNNMoney.com. "But the idea that we'll dodge the prices this time around doesn't make any sense."

Wholesale food prices last month rose by 3.9%, the most since November 1974, and are up 7.3% in the past 12 months. Food prices are at their highest levels since the United Nations began tracking them in 1990.

http://moneymorning.com/2011/03/25/hidd ... ng-prices/

[gt2211]

unemployment near 10%!,

Unemployment still sucks. The main reason it has gone down at all is that the total number of workers has gone down. People left the job market. Real unemployment and underemployment is still at disaster levels.

The U-6 (including discouraged/part-time for economic reasons/marginally attached[would like work, but not presently searching] has fallen more than the U-3 rate.

Nevertheless, the main factor in falling national unemployment rate is the shrinking of the job market. Between December 2011 and January 2012, the number of Americans "not in the labor force" increased by 1.2 million. That was the largest increase ever in that category for a single month.

Oh lord...do you have any idea how the BLS works? The population controls are updated once a year at the beginning...

http://www.calculatedriskblog.com/2012/ ... ually.html

http://www.calculatedriskblog.com/searc ... -results=5

inflation soon to be out of control!),

Inflation is very high, and in the US it is especially a problem for things like groceries and necessaries.

No it is not. Inflation has been too low.

That depends what is taken into consideration in creating the statistic.

By pretty much in all measures of inflation that economists find important, it has been too low.

[Coito ergo sum]

unemployment near 10%!,

Unemployment still sucks. The main reason it has gone down at all is that the total number of workers has gone down. People left the job market. Real unemployment and underemployment is still at disaster levels.

The U-6 (including discouraged/part-time for economic reasons/marginally attached[would like work, but not presently searching] has fallen more than the U-3 rate.

Nevertheless, the main factor in falling national unemployment rate is the shrinking of the job market. Between December 2011 and January 2012, the number of Americans "not in the labor force" increased by 1.2 million. That was the largest increase ever in that category for a single month.

Oh lord...do you have any idea how the BLS works? The population controls are updated once a year at the beginning...

http://www.calculatedriskblog.com/2012/ ... ually.html

http://www.calculatedriskblog.com/searc ... -results=5

Quite in depth, yes. I know precisely how the BLS works.

inflation soon to be out of control!),

Inflation is very high, and in the US it is especially a problem for things like groceries and necessaries.

No it is not. Inflation has been too low.

That depends what is taken into consideration in creating the statistic.

By pretty much in all measures of inflation that economists find important, it has been too low.

False. See above. If the CPI was calculated in the same way as it was in 1980, inflation would be 10%. It's a jury-rigged number.

Those tame core inflation numbers? Well, they really aren’t so tame after all.

Tuesday brought another round of misleading government statistics relative to price increases brought on by Federal Reserve monetary policies and global growth.

This time, it was the Producer Price Index, a measure of wholesale prices that at its “core,” which reportedly strips out the volatile food and energy costs, showed a benign growth of 0.2 percent.

Headline numbers, which include the things we eat and drink and power our car with, showed an ugly 1.6 percent increase. But, of course, we’re not supposed to look at “headline” inflation, just the core numbers because they represent more constant cost patterns.

So let’s do that.

After all, the criticism against those who focus on the headline is that we dismiss areas that show decreases and only focus on those numbers that build our case for inflation.

The trouble is, in the latest report, which measures February prices, there are almost no negative numbers to be found.


RELATED LINKS
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Japan Roils Global Markets: What's an Investor to Do?
One index after another shows stunning surges, none more so than the gain in finished consumer foods. Those prices jumped 3.9 percent in February, the biggest gain in 37 years, going all the way back to the Nixon administration. Fresh and dry vegetables soared 48.7 percent in just one month!

Energy prices posted shocking gains as well: Crude energy materials rose 0.9 percent in February and were up 17.8 percent over the past three months. The natural gas index jumped 7.6 percent in the month and intermediate energy goods rose 4.3 percent, the largest one-month gain since January 2010.

Here’s the worst part when it comes to energy: The PPI measures prices at a fixed date just before the mid-point of the month, which in the case of February would have been before the huge run in oil that sent crude prices over $100 a barrel and gas at the pump to $3.50 a gallon. Thursday’s consumer price numbers, which measure the entire month, should be a real hoot.

These are the costs, though, that the Fed calls “transitory” and not worthy of as much attention as, apparently, non-transitory things.

So it’s instructive to pore through the PPI numbers to find out just what kept the core PPI so “tame.”

Turns out, one has to go almost to the very end of the Bureau of Labor Statistics’ three-page report to find out what’s holding prices down.

That would be “prices received by the commercial banking industry.” Those fell 4.8 percent in February as part of a total 0.2 percent decline in traditional services industries, which is the cornerstone of the 2011 economy.

In trying to discern just why commercial banks are losing revenue, I spoke with Dick Bove, the venerable banking analyst at Rochdale Securities.

Bove said much of the reason stems from curbs on banking fees imposed through the Dodd-Frank reform bill and other measures.

“There went into effect in the middle of 2010 regulation that resulted in a significant decline in overdraft charges by banks and also by the beginning of this year the credit card rules went into effect,” he said. “Overdraft fees are probably the single largest charge that banks make on existing accounts.”

Here’s the problem: Banks generally don’t take revenue restrictions lying down, so those costs will be passed on to customers at some point. Yes, that means this particular curb on inflation likely won’t last long.

“Banks are now going to react to mandated price cuts with price increases on another range of banking products,” Bove said. “That of course is going to cause a consumer backlash. Who knows where that’s going to wind up?”

The only one standing between banks and higher fees is controversial consumer watchdog czar Elizabeth Warren. If her appointment survives a constitutionality question, that in turn will set up a big battle with banks.

If the banks win, this momentary restriction on core inflation won’t last.

That means headline inflation, with its high food and gas prices in tow, could start receiving the attention it deserves.

“We have been warning for some time that the 85% surge in agricultural commodity prices since last summer would eventually feed through into the PPI and CPI and here it is,” Paul Ashworth, chief US economist at Capital Economics in Toronto, wrote in a note to clients. “There is plenty more to come over the next few months.”

http://www.cnbc.com/id/42111948/Once_Ag ... ll_Picture

PORT WASHINGTON, N.Y. (MarketWatch) — It’s time to look at all prices — including food and energy.

One of the biggest canards ever to be foisted on the American people is the notion that removing food and energy from the price indexes provides a clearer picture of inflation.

In reality, it’s just the opposite.

http://www.marketwatch.com/story/inflat ... 2011-02-08

[gt2211]

Food and energy prices are excluded for good reasons, they are volatile and over time converge to the core.
http://www.frbsf.org/publications/econo ... 11-24.html

We have many ways of measuring and inflation expectations, they are showing inflation is coming in below target levels.