A compelling combination of facts and reportage about multiple/pending state shutdowns, our economy and unemployment have surfaced over the past 24 hours, and this will continue over the next two days, culminating in the government's (US Department of Labor's Bureau of Labor Statistics') June Employment Situation Report on Thursday, July 2nd. It all points to one basic reality: an urgent need exists for a second economic stimulus for Main Street, right now.
Here's the scoop, summarized as "three reasons:"
REASON #1: June 30th, today, is the last day of the fiscal year in 46 of our 50 states. A collapse is now occurring within many states' fiscal budgeting processes as I write this. Five states--Arizona, California, Indiana, Mississippi and Pennsylvania--face virtual total shutdowns this week due to budget-related problems right now. (See this story from today's LA Times, "States brace for shutdowns.")
States brace for shutdowns
Time is running out for the legislatures in Arizona, California, Indiana, Mississippi and Pennsylvania to solve budget gaps.
By P.J. Huffstutter and Nicholas Riccardi
June 30, 2009
Reporting from Indianapolis and Denver --
...Indiana is one of five states -- along with Arizona, California, Mississippi and Pennsylvania -- bracing for possible shutdowns this week as time runs out for lawmakers to close billion-dollar gaps in their fiscal 2010 budgets.
Of the 46 states whose fiscal year ends today, 32 did not have budgets passed and approved by their governors as of Monday afternoon, according to the National Conference of State Legislatures.
--SNIP--
"It's a lot of states that are coming down to the wire," Haggerty said. "It's far more than we've seen in the past, and it's because of the state of the economy."
--SNIP--
"What's different now is that the recession has eroded tax revenues across the country," Haggerty said. Collectively, he said, states are wrestling with budget deficits totaling $121 billion.
The article does tell us that majority of these 46 states will pass 11th-hour budgets; but, many will not. And, even in those states where budgets are passed, draconian cuts in services are scheduled to occur.
REASON #2: Unemployment is escalating at a rate that's exceeding the government's own, "revised," numbers. It's all but a certainty that unemployment will be at or above 10% by Labor Day, well ahead of even the government's own acknowledged misstatements about those numbers in their revised commentary (regarding same). In other words, despite all of the jawboning about the government acknowledging that even their worst-case scenarios were off the mark, with regard to rising unemployment rates, and even with their revised predictions of unemployment hitting 10% by the end of the year, the reality is it will most likely be at 10% in just over 60 days, on or around Labor Day.
REASON #3: There's an ongoing, albeit unorganized, effort being made by many to obfuscate/downplay the severity of the current economic problems we're now facing. The "happy talk" we've been hearing, which is really little more than propaganda (blatant misinformation), about unemployment being a lagging indicator of our "recovery," is now being openly dispelled by a few outspoken souls in the MSM. Additionally, what's little more than bottom-bouncing is occurring (numbers fluctuate up and down, but within a relatively small range, without major improvements over extended periods of time) with many of the so-called economic indicators which are put forth to us as being "hopeful indicators" of a recovery on the horizon. Two examples of this occurred just today, with regard to the consumer sentiment and delinquency data on prime mortgage defaults (See: "U.S. Stocks Fall on Consumer Confidence Slump, Delinquency Data.")
Please do not misunderstand me on this; it's not about "doom and gloom." It's about inaction versus a call to action. (Eventually, I truly believe there will be a recovery, but a significant recovery isn't going to happen for at least 12, 18 or 24 months; and even then, it'll be weak. Many tell us it will take much longer than that.)
So, I ask, shouldn't we be preparing Main Street for the worst, as opposed to "hoping" for the best? (Indeed, this question is at the heart of why I post these diaries. It's not out of some perverse thrill at seeing all this suffering. It's about preparing for it and preventing it when it occurs to limit that suffering!)
The reality is that as long as unemployment is rising, the economy is not recovering. Period. Aside from the basic fact that it offends the sensibilities of any intelligent-minded individual on Main Street to have it put forth for their consumption that we're supposedly doing better while more and more people are out of work each month, the truth is finally coming to the fore on this matter, as is self-evident in an excellent piece in this past Friday's New Republic, by Senior Editor John Judis, entitled,"Why We Need a Second Stimulus." There are folks here that play semantics with this reality, attempting to confuse the situation and tell this community otherwise; they claim to know what they're talking about, but, that's all propaganda, even according to our own Federal Reserve Board's stated criteria on the matter with regard to THEIR definitions of economic indicators.
Again, as long as unemployment is rising, the economy is NOT in recovery. Period.
Don't take my word for it; and don't let the self-styled pundits confuse you when it comes to calling out their semantics about a percentage rate versus increasing numbers of unemployed either; read about it in this past Friday's New Republic (see link in previous paragraph).
Why We Need a Second Stimulus
by John B. Judis
The New Republic
Don't be fooled by dropping unemployment rates.
Post Date Friday, June 26, 2009
Our country's unemployment rate, which has risen every month this year, now stands well above the worst case scenario of the Treasury Department's stress tests. Yet we are inundated each month with reports that, in spite of a rising rate of unemployment, the slump has "bottomed out" or is even over...
--SNIP--
...These reports dismiss unemployment as a "lagging indicator"--a figure that is not keeping pace with the economy a whole, and thus doesn't necessarily have any bearing on whether a recovery is occurring. This is a mistake, and it contributes to complacency about the depth of the slump and about the kind of measures necessary to get ourselves out of it. Unemployment isn't a lagging indicator, but rather at the heart of the current recession...
--SNIP--
...But while the rate of unemployment may be a lagging indicator, the number of employed has actually served to be quite a good predictor of economic recovery over the past century. For example, as the 1990-91 recession was starting to reverse, the percentage of unemployed people rose--but so did the number of employed, which grew by about one million workers from March 1991 to June 1992 as a result of more people entering the workforce. In that case, the number of employed was not a lagging indicator, but rather a fairly good indicator that recovery was afoot. In the case of the present slump, the number of employed have continued to fall since December 2007...
--SNIP--
...If you apply this gauge to the current situation, there is little reason for optimism...
--SNIP--
...So employment numbers aren't just a good sign of whether we are headed upwards or downwards; increasing employment through government spending is the most important way that the White House and Congress can get us out of this slump. That's worth remembering as Republicans and renegade Democrats call for budget cuts. This is not a time for cuts--it's time to begin thinking about whether a second stimulus program will be necessary...
Whether it's collapsing state budgets, the rising number of unemployed, a lack of a national healtcare initiative, or a myriad of bottom-bouncing statistical data that we hear now and over coming days, it's simply to the point where it should become self-evident to many that what's currently being done and what's on the boards are insufficient to stem the amount of despair that's occurring on Main Street now and, inevitably, for the foreseeable future, too.
Happy news, semantics and optimistic platitudes that belie the extent of Main Street's pain do not put food on the table or a roof over one's head.
While the folks on Wall Street don't miss a beat, let alone a meal, isn't it time we effectively focused upon stopping Main Street's suffering and hardship right now?