While folks around here are rightfully preoccupied with Iran, Healthcare and the Prosecution of War Crimes of late, another hot topic--IMHO the hottest topic--has been attaining critical mass in the MSM and on Main Street over the past couple of days: the overall economy with regard to the plight of Main Street.
ARE THEY RUNNING OUT OF ASTROTURF?
Somewhere along the way to landing that jumbo jet-load of astroturf-fail many are referring to as the supposed green shoots of a nonexistent "recovery," that meme now appears to have run out of runway, at least for our government's current "approach."
Nowhere was this more self-evident than on the front pages of yesterday's New York Times, Bloomberg Media and the Wall Street Journal. (Surprisingly, there's been very little coverage of this here over the past 48 hours, too.) I'm talking about the NY Times' story, "
States Turning to Last Resorts In Budget Crisis," Bloomberg's "
Housing Eludes Recovery as Job Losses, Foreclosures Climb," and the Wall Street Journal piece, "
Numbers On Welfare See Sharp Increase."
Even those zaney, pseudo-libertarian wingers over at ZeroHedge made a comment about this yesterday to the effect of, "The Propaganda Machine Needs Oiling."
PARTYING LIKE IT'S 1933...
Just last week, the "green shooters" were having a party because of a couple of spin-laden pieces of drivel like this, "Jobless benefit rolls drop sharply to nearly 6.7M." If you didn't read the fine print it was party time--and many who were 'excited,' apparently, did not bother to read further, even though the truth reared its reality-based head in just the next couple of paragraphs:
Jobless benefit rolls drop sharply to nearly 6.7M
By CHRISTOPHER S. RUGABER (AP Economics Writer)
From Associated Press
June 18, 2009 12:34 PM EDT
WASHINGTON - The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said Thursday, while new claims for benefits rose slightly.
The report shows that job losses are easing after companies made deep cuts earlier this year. But nearly half of recipients at the end of last month had exhausted the 26 weeks of benefits provided under the regular state program without finding work, according to Labor Department data. That's a record and compared with about 36 percent in December 2007, when the recession began.
"It is unlikely that new hiring has picked up in any meaningful fashion," Joshua Shapiro, chief economist with MFR Inc., a consulting firm, wrote in a note to clients.
The department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years.
The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher. Initial claims rose by 3,000 to a seasonally adjusted 608,000 in the week ending June 13, above analysts' expectations. The four-week average, which smooths fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.
Hell, even our Commander-in-Chief was sounding more optimistic than normal last week (while simultaneously hitting us up with bad news that everyone pretty much knew months ago): "Obama Says U.S. Jobless Rate to Reach 10% This Year."
Obama Says U.S. Jobless Rate to Reach 10% This Year
By Matthew Benjamin
June 16 (Bloomberg) -- President Barack Obama said the U.S. unemployment rate will reach 10 percent this year, even as the economy begins to emerge from the recession.
"You're starting to see the engines of the economy turn," Obama said today in an interview with Bloomberg Television at the White House. "It's going to take a long time -- we had a huge de-leveraging that took place."
Obama acknowledged that unemployment lines may keep growing despite government efforts to boost economic growth, saying he's confident an expansion will begin "shortly." His outlook mirrors the forecasts of private economists who predict a jobless rate of 10 percent -- a level unseen since 1983 -- by the final three months of the year.
"What you've seen is that the pace of job loss has slowed," the president said. "The economy is going to turn around, but as you know, jobs are a lagging indicator and we've got to produce 150,000 jobs every month just to keep pace, just to flatten this out."
Our President told us, in the past tense no less, that the "de-leveraging" was behind us. Unfortunately, someone forgot to tell the Federal Reserve and Main Street, where it's now (See: "U.S. Home Prices May Fall for Years, Shiller Says") widely believed by the pundits that home prices will continue to drop through 2010, and perhaps even into 2011 and 2012.
xx
Then again, even the President is parrotting the false meme that unemployment is a "lagging indicator" of our economy. Hopefully, next time he'll check with the Federal Reserve on that one, as well.
A BASIC REALITY: AS UNEMPLOYMENT RISES, THE HOUSING MARKET CONTINUES TO FALL
Because as long as unemployment is increasing then the economy is still tanking, for all intents and purposes--and as far as history was concerned up until the Clinton administration changed the rules to accommodate economic bubbles--even now, the Federal Reserve tells us that unemployment is a coincidental indicator of the current state of the economy.
In fact, the folks down in D.C. think things are coming along so swimmingly that, also today, our President's told us he's not even sure Main Street's going to need additional stimulus..."yet" in: "Obama Says Second Fiscal Stimulus Not Yet Needed."
Obama Says Second Fiscal Stimulus Not Yet Needed
By Hans Nichols and Julianna Goldman
June 23 (Bloomberg) -- President Barack Obama said he expects the U.S. unemployment rate will exceed 10 percent this year, though a second stimulus package isn't needed yet.
"I think its important to see how the economy evolves and how effective the first stimulus is," Obama said at a White House news conference.
He said it is "pretty clear" that unemployment will continue rising before the recovery takes hold and said it isn't surprising that initial forecasts from his administration missed the mark...
The article goes on to reiterate that approximately six million jobs have been lost since the recession began in December 2007, and that the jobless rate is at 9.4% as of May. Not many are saying it, so I will: We're looking at 10%+ unemployment, not at the end of the year, not in 2010, but in less than 90 days (by the end of Summer). That's the Bureau of Labor Statistics' U.3 Index, with the U.6 not far from double that amount. Some segments of society, and many states, are already dealing with numbers much higher than this. For instance, more than one in three African-American teenagers (16-19) cannot find work. More than one-third of that segment of our society, alone.
"I don't feel satisfied with the progress that we've made," Obama said. He cited the need to speed up distribution of stimulus funds and do more work with a program to modify existing mortgages, which hasn't "been keeping pace with all the foreclosures that are taking place."
Also, as noted in the article, foreclosure filings in the U.S. surpassed 300,000 for the third month in a row in May, and they may reach. 1.8 million for the first six months of 2009. We're further reminded that the median price of an existing home has fallen 26% from the peak of the market, reached in July 2006.
Yesterday, Harvard University's Joint Center for Housing Studies told us that unemployment and consumer debt are putting the price of a home out of reach for the average consumer, even with house prices resetting to levels not seen since 2003, in: "Housing Eludes Recovery as Job Losses, Foreclosures Climb."
Housing Eludes Recovery as Job Losses, Foreclosures Climb
By Brian Louis
June 22 (Bloomberg) --
"...Clear signs of a recovery have yet to emerge, and job losses and the steady stream of foreclosures are keeping many markets under pressure," researchers for the Cambridge, Massachusetts-based center wrote. "Sales of both new and existing homes continued to struggle to find a bottom."
...the number of U.S. households paying more than half their incomes for housing jumped from 13.8 million in 2001 to 17.9 million in 2007, the researchers said.
--SNIP--
Even as falling prices have made homes more affordable, roadblocks to buying remain, including the difficulty of getting a mortgage as lenders require bigger down payments and higher incomes to qualify for a mortgage, the report said.
"The home buying market will continue to struggle until the foreclosure crisis comes to an end," the report said. "Although new federal efforts may prevent millions of families from losing their homes, mounting job losses will likely keep foreclosures at elevated levels."
THE PAIN IS GETTING WORSE, ALMOST EVERYWHERE...
The article noted that the unemployment rate for African-Americans was 15%, compared with 8% for whites. It also noted that low-income minority neighborhoods are experiencing a significantly higher foreclosure rate (8.4%) than low-income white neighborhoods (6.3%), based upon statistical measurements from January 2007 through June 2008.
Just today, the Philadelphia Federal Reserve Branch came out with a report that tells us that, on a one-month basis, 47 states showed a continuing decline of economic activity in May, and on a quarterly basis, 49 states' economic conditions continue to decline (North Dakota being the sole exception), in: "Philly Fed State Coincident Indicators: Widespread Recession." And, here's the actual report: "Coincident Indexes, May 2009."
Forget about California for a second, and realize that the majority of our United States are reeling, as is self-evident in: "States Turning to Last Resorts In Budget Crisis."
States Turning to Last Resorts in Budget Crisis
By ABBY GOODNOUGH
Published: June 21, 2009
In Hawaii, state employees are bracing for furloughs of three days a month over the next two years, the equivalent of a 14 percent pay cut. In Idaho, lawmakers reduced aid to public schools for the first time in recent memory, forcing pay cuts for teachers.
And in California, where a $24 billion deficit for the coming fiscal year is the nation's worst, Gov. Arnold Schwarzenegger has proposed releasing thousands of prisoners early and closing more than 200 state parks.
--SNIP--
With state revenues in a free fall and the economy choked by the worst recession in 60 years, governors and legislatures are approving program cuts, layoffs and, to a smaller degree, tax increases that were previously unthinkable.
Needless to say, but I will, increased taxation (of all but the uppermost class) during a deep recession/depression is the exact opposite of what should occur to ameliorate the pain on Main Street, as even the President's Council on Economic Advisors Chair Kristina Romer just reminded us: "The lessons of 1937." But, the states have no choice but to create new sources of revenue if they're going to make ends meet (or, in California's case, due to ass-backward legislation during the Reagan era, they simply have no choice at all without repealing the outright draconian results of thoughtless legislation from previous decades).
"These are some of the worst numbers we have ever seen," said Scott D. Pattison, executive director of the National Association of State Budget Officers, adding that the federal stimulus money that began flowing this spring was the only thing preventing widespread paralysis, particularly in the areas of education and health care. "If we didn't have those funds, I think we'd have an incredible number of states just really unsure of how they were going to get a new budget out."
But, even with stimulus funds, 19 states are still floundering to make ends meet.
"Legislators have never dealt with a recession as precipitous and rapid as this one," said Susan K. Urahn, managing director of the Pew Center on the States. "They're faced with some of the toughest decisions legislators ever have to make, for both political and economic reasons, so it's not surprising that the environment has become very tense."
In all, states will face a $121 billion budget gap in the coming fiscal year, according to a recent report by the National Conference of State Legislatures, compared with $102.4 billion for this fiscal year.
Exacerbating matters, people are out of work and corporations aren't making the profits they were projected to make, so tax collections are way off; the article tells us personal income tax revenues are off 6.6%; sales tax income is down 3.2%; and corporate income tax revenues are off 15.2%.
Of course, California, our biggest state, is feeling the worst of it. But, contrary to popular belief, California doesn't have a monopoly in the pain department. The article tells us that Minnesota's being forced to unilaterally cut $2.7 billion from all government agencies and programs; and, many of our states' governments' most compassionate and beneficial services are being placed on the chopping block in places like Illinois, where the state notified the public that it will cease spending $15 million per year for funerals for the poor; Washington is laying off teachers by the thousands; and New Hampshire's trying to sell-off 27 of its state parks.
These problems pale in comparison to the stress that increased unemployment will have on our states' budgets going forward, however, with many predicting unemployment rising throughout 2010, and well into 2011. And, it is here where matters dovetail most with healthcare.
"Stress on the Medicaid system tends to come later in a recession, and we have yet to see the depth of that," Ms. Urahn said. "So you will see, for the next couple years at least, states really struggling with this."
SO, WHERE DID ALL THE UNEMPLOYED GO?
Again, I'm talking about every state, from Michigan to South Carolina, from Rhode Island to Hawaii. It's not just about California. It's practically every state. And, it's not just about healthcare, it's about matters as basic as finding one's next meal and having a roof over your head. And, if you doubt this then consider this twisted excuse for a green shoot: All that talk about unemployment getting "less severe" than it has been over the past six months? Those people didn't just miraculously find jobs! They just fell off the damn charts, and they're now either off the charts, on welfare, or a part of that burgeoning Bureau of Labor Statistics' U.6 Index you hear some ranting about (which is almost twice as big as the U.3 Index), while most buy into the government's overhyped and grossly undercounted U.3 Index, spun especially "for the masses."
So, where do all of those "unemployed" go when they're no longer classified as unemployed and they've been sitting around in the Bureau of Labor Statistics' U.6 Index-hell for another six or twelve months? Where do you think they end up? On welfare, if they're lucky, as we learned yesterday in (of all places) the Wall Street Journal: "Numbers On Welfare See Sharp Increase."
Numbers On Welfare See Sharp Increase
By SARA MURRAY
Wall Street Journal
June 22, 2009
Welfare rolls, which were slow to rise and actually fell in many states early in the recession, now are climbing across the country for the first time since President Bill Clinton signed legislation pledging "to end welfare as we know it" more than a decade ago.
--SNIP--
Twenty-three of the 30 largest states, which account for more than 88% of the nation's total population, see welfare caseloads above year-ago levels, according to a survey conducted by The Wall Street Journal and the National Conference of State Legislatures. As more people run out of unemployment compensation, many are turning to welfare as a stopgap.
The biggest increases are in states with some of the worst jobless rates. Oregon's count was up 27% in May from a year earlier; South Carolina's climbed 23% and California's 10% between March 2009 and March 2008. A few big states that had seen declining welfare caseloads just a few months ago now are seeing increases: New York is up 1.2%, Illinois 3% and Wisconsin 3.9%. Welfare rolls in a few big states, Michigan and New Jersey among them, still are declining.
The recent rise in welfare families across the country is a sign that the welfare system is expanding at a time of added need, assuaging fears of some critics of Mr. Clinton's welfare overhaul who said the truly needy would be turned away.
"To me it's good news," says Ron Haskins of the Brookings Institution, who helped draft the 1996 welfare-overhaul law as a Republican congressional staff member. "This is exactly what should happen."
Yes, it is exactly what should happen, providing the states have the funds and the proper protocols in place to handle the burden. But, as we also learn from this article, that's not the reality.
Unemployment is extended up to a period of 59 weeks in some states. In other states it's as little as 26 weeks. But, the recession has been ongoing for over 18 months.
But, as advocates for the poor are now noting, some states, such as Michigan and New Jersey, (where welfare caseloads are actually off or have only declined slightly, respectively), maintain regulatory environments that inherently obfuscate the suffering. In Michigan, with its 14% unemployment rate and where food stamp use was up 13% over the previous year (equating to 1.4 million people), the state actually requires people to look for nonexistent work, which really does little more than act as a deterrent to people seeking welfare. In New Jersey, if you're a family of three earning more than a paltry $636 per month, you're ineligible!
In short, folks throughout the country are falling through the cracks, bigtime. As a the article notes:
"These are the people who really will fall through the cracks because they're not eligible for any help," says Donna Gapas, who oversees the welfare program in Hunterdon County, N.J.
And, what was in the first--and only at least for the near future according to our Preisdent just today--stimulus package in support of our states' welfare programs, exactly? $5 measely billion dollars.
The federal government's fiscal stimulus includes $5 billion for states where more families receive welfare or spending increases on employment subsidies or short-term emergency assistance. That provision sparked concerns from the Heritage Foundation and other conservative groups that President Barack Obama was undoing the provisions of the 1996 law intended to encourage states to get people off welfare and onto payrolls.
So far, only California and Ohio have received stimulus grants, but 38 other states and territories said they plan to apply, said Jeffrey Kelley, spokesman for the Department of Health and Human Services' Administration for Children and Families.
THE STARK CONTRAST: WHEN TOO BIG TO FAIL MEETS TOO BIG TO ASTROTURF
Demonstrating the now-unacceptable stark contrast between our government's Wall Street mantra of "too big to fail," and Main Street's reality which is now at a point that's "too big to astroturf," in Sunday's NY Times,' Gretchen Morgenson reminded us where Washington D.C.'s priorities are, in: "Too Big to Fail, or Too Big to Handle?"
So, Wall Street, where the multi-trillion-dollar, taxpayer-funded safety net and $10 million bonuses are the rule of the day is "too big to fail," or maybe just "too big to handle." But, on Main Street, record-shattering unemployment and $5 billion will be just fine...for now.
Not a problem.
"They've got this."
Do you?
(Suggested additional reading: "'Green Shoots' of Recovery? Don't Fall for the Media's Economic Triumphalism.")