Friday Reads: A Sign of the Overlord Apocalypse

Good Morning!old store

It’s been since at least November since I’ve had some time to myself when I wasn’t completely in need of tons of sleep so I’m enjoying spending some time in bed with my feet up getting my reads on.  There’s not been a lot that’s intrigued me but it beats designing and updating an on line International Finance Class, believe me.  So, imagine my sheer joy when I found out that Walmart broke down and upped its wages.

There are several reasons the America’s #1 corporation and chain store made the leap.  It was probably a combination of fear of unionization and the incredible employee turnover rate.  It really costs to hire and train new workers so upping the salary is really the required move for that one.  There’s a lot of analysis on the deed so I’d thought I’d take a look at it.  First up, Joe Pinsker at The Atlantic discusses the move.

The CEO of Walmart announced earlier today that all of the company’s employees will, starting in April, be paid at least $9 an hour, nearly $2 more than the federal minimum wage. That’s still far short of the $15 per hour pushed for by OUR Walmart, a union-like group of Walmart workers. Still, it’s a change for a company that has stubbornly opposed such a raise for years.

Walmart’s CEO framed the raise as an act of corporate benevolence, but the reason his company will inch closer to paying all its employees fair wages has little to do with goodwill (few business decisions do). If Walmart has determined that it’ll need to start paying higher wages to stay competitive, then other retailers might arrive at the same conclusion. This isn’t an isolated act of corporate social responsibility—it’s a response to the current realities of labor economics that will likely inform the behavior of other American employers.

1922_Detroit_storeThis is a pretty good sign that the economy is doing well enough that workers are beginning to be able to trade up to better jobs.  It’s the best sign that I’ve seen yet that the economy has really started to recover from the financial crisis. 

Some companies have set even higher wage floors more in line with living wage expectations. Most recently, for example, Aetna set its floor for US workers at $16 an hour, twice the current federal minimum wage.

Higher wages are exactly what the financial doctors have ordered to cure America’s ailing economy. According to the Economic Policy Institute, it would take a wage growth of at least 3.5% to 4% for workers to feel the impact of the recovery. In 2014, the average hourly pay went up by just 1.7%.

“Raising wages among low-wage workers shifts income into the pockets of workers and families that are highly likely to quickly spend every additional dollar they earn,” says David Cooper, economic analyst at the Economic Policy Institute.

“So even though some businesses have to pay their workers more, they see more customers coming through the door because now there’s additional dollars rippling out through local economies in a way that doesn’t really happen if those dollars just go back into the bank accounts of corporate shareholders.”

It’s taken awhile for the plight of low income workers to attract any kind of attention from decision makers despite the huge amount of media attention focused on income inequality and the general lack of demand at stores that cater to the majority of Americans.  Sooner or later, something had to give.  It certainly wasn’t going to be any Republican-led legislature.

So what has changed? The simple answer is that the world for employers is very different with a 5.7 percent unemployment rate (the January level) than it was five years ago, at 9.8 percent. Finding qualified workers is harder for employers now than it was then, and their workers are at risk of jumping ship if they don’t receive pay increases or other improvements. Apart from pay, Walmart executives said in their conference call with reporters that they were revising their employee scheduling policies so that workers could have more predictability in their work schedules and more easily get time off when they needed it, such as for a doctor’s appointment.

The giant question now is not whether there will be some meaningful wage gains in 2015; beyond the anecdotal evidence from Walmart and Aetna, the collapse in oil prices means even modest pay increases will translate into quite large inflation-adjusted raises. The question is whether wage gains will be strong enough to create a virtuous cycle in which rising pay for the workers at the bottom three-quarters of the income scale, who are most likely to spend the money and get it circulating through the economy, will spur more investment and hiring.

To the degree their logic was, “We think we’re going to need to raise wages this much in the next couple of years anyway to retain good workers and maximize profitability, so we may as well get ahead of the curve and get a public relations bump out of it and announce the plans in a big splashy way,” that would be the best news for American workers. Because that would imply that it won’t just be Walmart workers getting a raise in 2015.

Other news this week is not as good.  We continue to see people justify their bigotry through religious beliefs. Judges around the country aren’t buying it but the justification is popping up in some really odd places including a pediatrician who wouldn’t accept a 6 day old as a patient because her parents are lesbians. 160376_large

Sitting in the pediatrician’s office with their 6-day-old daughter, the two moms couldn’t wait to meet the doctor they had picked out months before.

The Roseville pediatrician — one of many they had interviewed — seemed the perfect fit: She took a holistic approach to treating children. She used natural oils and probiotics. And she knew they were lesbians.

But as Jami and Krista Contreras sat in the exam room, waiting to be seen for their newborn’s first checkup, another pediatrician entered the room and delivered a major blow: The doctor they were hoping for had a change of heart. After “much prayer,” she decided that she couldn’t treat their baby because they are lesbians.

Doctor’s letter: Why she wouldn’t care for baby with 2 moms

“I was completely dumbfounded,” recalled Krista Contreras, the baby’s biological mother. “We just looked at each other and said, ‘Did we hear that correctly?’ …. When we tell people about it, they don’t believe us. They say, ‘(Doctors) can’t do that. That’s not legal.’ And we say, ‘Yes it is.'”

The Contrerases of Oak Park are going public with their story to raise awareness about the discrimination that the lesbian, gay, bisexual and transgender (LGBT) community continues to face. There is no federal or Michigan law that explicitly prohibits discrimination against LGBT individuals.

For months, the couple kept quiet about what happened to them and their baby — Bay Windsor Contreras — at Eastlake Pediatrics last October.

But the pain and frustration wouldn’t go away. So they broke their silence.

“We want people to know that this is happening to families. This is really happening,” said Jami Contreras, 30, who was blindsided that fall day in the doctor’s office. “It was embarrassing. It was humiliating … It’s just wrong.”

Old shops and stores in N.J (10)A judge in Washington state has made a meaningful decision on a Florist that refused service to a gay couple seeking flowers for their wedding.  The bottom line is that religion is not an excuse to refuse public accommodation under the law.

Benton County Superior Court Judge Alex Ekstrom rejected arguments from the owner of Arlene’s Flowers in Richland that her actions were protected by her freedoms of speech and religion. While religious beliefs are protected by the First Amendment, actions based on those beliefs aren’t necessarily protected, he said.

“For over 135 years, the Supreme Court has held that laws may prohibit religiously motivated action, as opposed to belief,” Ekstrom wrote. “The Courts have confirmed the power of the Legislative Branch to prohibit conduct it deems discriminatory, even where the motivation for that conduct is grounded in religious belief.”

Barronelle Stutzman, the owner of Arlene’s Flowers, sold flowers for years to customer Robert Ingersoll. She knew he was gay and that the flowers were for his partner, Curt Freed.

After Washington state legalized same-sex marriage in 2012, Ingersoll went to the shop the following spring to ask Stutzman to do the flowers for his wedding. At the time, floral arrangements for weddings made up about 3 percent of her business.

She placed her hands on his and told him she couldn’t, “because of my relationship with Jesus Christ,” she said in a deposition. As a Southern Baptist, she believed only in opposite-sex marriages.

046618-unley-supermarket-grocery-storePeople use just about anything to justify bigotry but religion seems to be a source of refuge for a huge part of the hate-based discrimination.  You may want to take a look at a new documentary called “Hate in America” if you’d like to hear more about all the issues every one has with bigots.

For more than 30 years, Emmy-winning journalist, documentary filmmaker, and Al Jazeera America anchor Tony Harris has reported on senseless and vicious acts of violence, many fueled by intolerance, fear and hate. In the new Investigation Discovery one-hour special HATE IN AMERICA, Harris partners with The Southern Poverty Law Center (SPLC), a non-profit that has been tracking hate groups across the country since 1971, and NBC News’ award-winning production arm Peacock Productions, to examine the current realities of intolerance in America.

According to the SPLC, more than 900 active hate groups currently exist across the United States, from neo-Nazis to anti-government militias, targeting entire classes of people for their race, religion, and sexuality, among other immutable characteristics. Largely propagated by anger and fear over the nation’s ailing economy and the diminishing white majority, that number has been on the rise for over a decade.

Traveling to communities torn apart by violence, Harris pulls back the curtain on what drives modern-day hate, and comes face to face with its victims to examine HATE IN AMERICA.

HATE IN AMERICA premieres on Investigation Discovery on Monday, February 23, at 8/7c.

I’ve often wondered why my attitude towards shopping has changed over time.  I used to love going to the big stores downtown and the clerks all seemed so cheery and glamorous.  The buildings were vast and had huge tall ceilings supported by ornate columns.  The window decorations were incredible during the holidays and they were up such a short period that you had to rush down there just to catch them. It was fun to walk from store to store and each store had its on personality and personalities.  This is so different from today’s megastore where every one is rude and seems to only care about low priced junk. The aisles are tight and packed with crap and the crap is hard to find.  There is very little help and only cashiers in far off places.

I used to think I started disliking stores and shopping just because I’d worked so much retail in high school and college. But, I still love to hit little antique stores in quaint places and will take hours staring down some bargain. I figured I’d just burned out on the entire store experience from those years. But, I still love hopping around the big stores in NYC and I used to love hitting the Maison Blanche in downtown New Orleans when I first moved here.  So much of the things I enjoyed about shopping as a customer are gone.  Also, when I was small, even retail store owners and employees had civilized work hours.  Now, all I can think about it how grumpy every one looks and how junky the merchandise has become since they work night and day on every day imaginable. I’ve taken to ordering a lot of stuff on line just to avoid the overall experience of the ugly buildings, merchandise and people.  The thought of going to a Walmart stresses me out. It’s something I avoid if I can.  So, I don’t know.  What happened?

Whatever happened to a fun day at a store?  Oh, well.  Everything changes and now it’s just all about returning profits to a few at the inconvenience and dismay of the many.

So, those are the two interrelated topics that I’ve been investigating this week.  What’s on your reading and blogging list today?

 


Behind the Unemployment Rate

We’ve discussed this before. The unemployment rate that is used as the benchmark of the state of the job market by the mainstream media does not contain the full story. It’s missing the faces of people that have given up on the job market and are considered ‘outside’ the labor force. It considers any one employed that one works one paid hour per week even though those people want 40 hour a week jobs and maybe working multiple part time or temporary jobs to make ends meet because unemployment insurance only goes so far. It doesn’t give you information on how persistent that unemployment is and there’s no inference of where the unemployment is the worst. It’s just an average of every one who is actively looking for work and is not currently employed at least one hour a week as a percentage of the total labor force.

It is the flows in out and out of employment and unemployment and the labor force itself that gives you more information. It is the stratification of that unemployment by race, by industry sector, by region, by sex, by age and by education that gives you an idea of the faces behind the unemployment rate. It is also the source of unemployment and the duration or length of time out of a job that provides the detail that you must have to develop a successful unemployment policy.

I’ve mentioned that the duration of unemployment in this recession and its root in structural unemployment is what is so worrisome about the unemployment we have today. It appears that many of the jobs lost over the last decade are gone permanently. The financial crisis put a large number of these folks on the unemployment roles. Their benefits are running out and there are basically no jobs for them any more. Worse yet, states are cutting their budgets which mean job training and education are less available and will continue to become more personally expensive and less available. They will be unreasonable choices for older, unemployed Americans with only high school degrees and job skills that only China requires.

The article in the NY Times today called “The New Poor- Millions of Unemployed Face Years Without Jobs” is a good overview of what we’ll look forward to as we creep out of the recession. I was struck by the stories of the people profiled in the piece as well as the candid discussion that most of these folks will never know what it is to be middle class again.

Large companies are increasingly owned by institutional investors who crave swift profits, a feat often achieved by cutting payroll. The declining influence of unions has made it easier for employers to shift work to part-time and temporary employees. Factory work and even white-collar jobs have moved in recent years to low-cost countries in Asia and Latin America. Automation has helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that once provided lower-skilled workers with middle-class paychecks.

“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”

This is a radical change from a country that prior to this century was a job creation machine for every one. Bostonboomer discussed the dark side of this change in her morning news thread on Saturday morning. We can look at the unemployment number and realize that it serves its role as barometer of bad numbers. It has some Cassandras–like Yves Smith of Naked Capitalism–wondering how these people will take their status as permanent underclass. Will it be with quiet resignation or more teaparties with more pitchforks and rifles?

Every downturn pushes some people out of the middle class before the economy resumes expanding. Most recover. Many prosper. But some economists worry that this time could be different. An unusual constellation of forces — some embedded in the modern-day economy, others unique to this wrenching recession — might make it especially difficult for those out of work to find their way back to their middle-class lives.

What does it mean when so many Americans are so visibly losing the American promise? What will it mean if–in order to continue replenishing necessary campaign coffers–American politicians continually sell out the American labor class for the American capital class? Obviously, in a democracy, those of us that rely on paychecks instead of dividend checks and capital gains can out vote them the bonus class. But can we achieve any real change when the two major parties continually move towards the same policies with only the only difference being which industry sponsors which version of the rhetorical spin?

Traditionally, three sectors have led the way out of recession: automobiles, home building and banking. But auto companies have been shrinking because strapped households have less buying power. Home building is limited by fears about a glut of foreclosed properties. Banking is expanding, but this seems largely a function of government support that is being withdrawn.

At the same time, the continued bite of the financial crisis has crimped the flow of money to small businesses and new ventures, which tend to be major sources of new jobs.

I think I mentioned before that my laugh line from the State of the Union Address was the one where POTUS said he wanted to double exports and make us an export driven economy. Most of us had the same reaction WTF are we going to export? Disneyland? Yellowstone Natinoal Park? Old Arnold Schwarzenegger movies? Where are the jobs coming from? What do we produce any more? Much of our economy seems based on manipulation of information to disenfranchise many and benefit a few or feeding, massaging, and entertaining the bonus class or giving sophisticated medical procedures to people with Cadillac insurance plans. Many of these folks worked with their hands. They made cars or houses or sewed clothing. We now have too many houses and we prefer cars from elsewhere. All of our clothes are made by the indentured servants in third world countries now.

What are these people to do? Our safety net programs have been gutted and the states are now in the position of gutting education and training. That link is from CNN.

States face combined remaining budget gaps of $134 billion over the next three years, the report said.

It said there has been no leveling of state revenues and most states are seeing monthly totals that are lower than recent forecasts.

Citing the Rockefeller Institute of Government, the report said that state tax collections have declined for four consecutive quarters, beginning in 2009’s third quarter.

Meanwhile, Medicaid costs have grown, the report said. And states continue to lose jobs. In January alone, states eliminated 18,000 jobs, and will continue to shed jobs, the report said.

Because states are required to balance their budgets, they will “continue to cut spending and increase taxes, which will also weaken the economy and, thus, its ability to generate private sector jobs,” it said

This is back from the NY TImes:

Some poverty experts say the broader social safety net is not up to cushioning the impact of the worst downturn since the Great Depression. Social services are less extensive than during the last period of double-digit unemployment, in the early 1980s.

On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.

“You have very large sets of people who have no social protections,” said Randy Albelda, an economist at the University of Massachusetts in Boston. “They are landing in this netherworld.”

“We have a work-based safety net without any work,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. “People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor.”

The majority of people in this country rely on their jobs for everything. The majority of business in this country (in terms of numbers) rely on customers who pay for their products and services with their pay checks. When the money is sucked out of this process to a few people, the house of card falls. Income inequality is not good for the country at all, but that’s been the increasing story since the 1980s. Here’s another disturbing headline from FT Alphaville: “The US is not a viable concern anymore”. The thread is based on an interview with Richard Duncan, partner at Blackhorse Asset Management and author of The Dollar Crisis. He’s written a new book called The Corruption of Capitalism.

The point being: the world’s largest economy and engine of global economic growth — the United States — is simply not a viable concern any more. As Duncan explained it:

The country is de-industrializing because wages in the US are up to 40 times higher than those in developing countries like China. Therefore, the United States makes very little that the rest of the world cannot buy somewhere else much more cheaply.

And so, like any troubled company, the US too must restructure itself if it is to remain operational, says Duncan. How it goes about it, though, will be crucial to its success. The best policy according to the author would be heavy government investment in so-called ‘future’ industries — everything from solar, biotech, nano-technology and so on. Trouble is, a move like that would take more government spending not less.

What kind of future does this leave us with? That is why BB’s self-titled “incoherent ramblings” were not the least bit incoherent. It’s just very hard to grasp losing the promise. Suicides will go up as well as murder-suicides. More and more people will have to find other ways to get what they need outside of the traditional job structure. Read into that what you will.

Is the American Dream over?


Barack Hoover Obama and the Curse of the Long Term Unemployment Rate

When I wrote the morning thread at The Confluence last night, I couldn’t imagine any justification for an economic policy proscription of spending freezes coming from any one except maybe the American Enterprise Institute. Basic macroeconomic theory states that during a recession with high unemployment, the government’s fiscal policy should either consist of tax cuts or spending increases. Theory also shows that during these horrible times, budget deficits grow naturally through automatic stabilizers. Tax receipts go down because folks lose their jobs and businesses lose customers. Government spending goes up because unemployed people rely heavily on social safety net programs like unemployment insurance.

There really are no philosophical differences between conservative or liberal economists on these theories. What you usually see are arguments from both sides on which policy prescription to apply. Republicans favor tax cuts. Democrats usually go for increased spending that targets job creation. That’s been the way it’s been for a long time until THIS President who appears to believe he can rewrite economic theory the way a fundamentalist preacher rewrites geology, anthropology, cosmology, biology, and reality.

I woke up to a chorus of Barack Hoover Obama this morning coming from Economic Blogs all over the web.  It is here from Paul Krugman.

A spending freeze? That’s the brilliant response of the Obama team to their first serious political setback?

It’s appalling on every level.

It’s bad economics, depressing demand when the economy is still suffering from mass unemployment. Jonathan Zasloff writes that Obama seems to have decided to fire Tim Geithner and replace him with “the rotting corpse of Andrew Mellon” (Mellon was Herbert Hoover’s Treasury Secretary, who according to Hoover told him to “liquidate the workers, liquidate the farmers, purge the rottenness”.)

It’s bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead.

It is here from Brad Delong who mentions that even deficit hawk economics find this a laughable policy.

There are two ways to look at this. The first is that this is simply another game of Dingbat Kabuki. Non-security discretionary spending is some $500 billion a year. It ought to be growing at 5% per year in nominal terms (more because we are in a deep recession and should be pulling discretionary spending forward from the future as fast as we can)–that’s only $25 billion a year in a $3 trillion budget and a $15 trillion economy.

But in a country as big as this one even this is large stakes. What we are talking about is $25 billion of fiscal drag in 2011, $50 billion in 2012, and $75 billion in 2013. By 2013 things will hopefully be better enough that the Federal Reserve will be raising interest rates and will be able to offset the damage to employment and output. But in 2011 GDP will be lower by $35 billion–employment lower by 350,000 or so–and in 2012 GDP will be lower by $70 billion–employment lower by 700,000 or so–than it would have been had non-defense discretionary grown at its normal rate. (And if you think, as I do, that the federal government really ought to be filling state budget deficit gaps over the next two years to the tune of $200 billion per year…)

And what do we get for these larger output gaps and higher unemployment rates in 2011 and 2012? Obama “signal[s] his seriousness about cutting the budget deficit,” Jackie Calmes reports.

As one deficit-hawk journalist of my acquaintance says this evening, this is a perfect example of fundamental unseriousness: rather than make proposals that will actually tackle the long-term deficit–either through future tax increases triggered by excessive deficits or through future entitlement spending caps triggered by excessive deficits–come up with a proposal that does short-term harm to the economy without tackling the deficit in any serious and significant way.

Here’s more from Mark Thoma and one from Naked Capitalism. That’s just some of the more high profile economist blogs. I didn’t even go for the dozens of links from business bloggers or the political sites. I want to put this all in perspective and I’ll use a Jan. 16 article from The Economist to do so. It’s one of the latest articles I intend to use in my classes and it’s called The Trap.

When teaching about unemployment statistics, economics professors like Krugman, Thoma, DeLong, and little ol’ me all emphasize that it’s not the big rate so much as the underlying trends and details within the rate that drive a policy. Cyclical unemployment–the type of unemployment that comes from a recession–eventually clears up on its own when the economy improves. Usually, the folks impacted by cyclical employment will not have problems finding jobs in a good economy.

There are some pervasive types of unemployment that are much more deeply rooted and take more targeted, specific job policies to eliminate. Structural unemployment is one of those phenomena that take job retraining programs or helping the labor force move where the jobs are being created (either location or industry change). You can usually spot this type of unemployment in the Long Term Unemployment Rate. These folks have been in industries or jobs that are no longer valid in the modern economy and without some refitting, they stay unemployed. If you look at the graph I posted above from The Economist, you’ll see exactly how disturbed the labor market really is right now. This unemployment is not going away and it requires some serious policy to deal with it. Until then, we will see lower tax receipts and higher need for safety net programs. Obama’s policy totally ignores the reality on the ground and goes for a quick political message. We’re not seeing solutions for the real problem at all.

The Economist article calls this the ‘curse’ of long term unemployment. This is the real problem left to this administration from the Bush years. Other than shove the young unemployed into the military, there has been no program aimed at the lackluster job creation coming from the U.S. economy since Bill Clinton left office.

THE 2000s—the Noughts, some call them—turned out to be jobless. Only about 400,000 more Americans were employed in December 2009 than in December 1999, while the population grew by nearly 30m. This dismal rate of job creation raises the distinct possibility that America’s recovery from the latest recession may also be jobless. The economy almost certainly expanded during the second half of 2009, but 800,000 additional jobs were lost all the same.

It took four solid years for employment to regain its peak after the 2001 recession. With jobs so scarce, wages stagnated even as the cost of living rose, forcing households to borrow to maintain their standard of living. According to Raghuram Rajan, an economist at the University of Chicago, this set the stage for the most recent crisis and recession—a crisis, ultimately, caused by household indebtedness. If the current recovery is indeed jobless, wages will continue to lag. Since they are now virtually unable to borrow, households will have to make do with less, and reduced spending is likely to make the economic recovery more uncertain still.

So which is it to be: jobless or job-full? Of paramount concern is the growth in long-term unemployment. Around four in every ten of the unemployed—some 6m Americans—have been out of work for 27 weeks or more. That is the highest rate since this particular record began, in 1948. These workers may forget their skills; and many began with few skills anyway. Just as troubling is a drop of 1.5m in the civilian labour force (which excludes unemployed workers who have stopped looking for work). That is unprecedented in the post-war period. If those who have stopped looking were counted, the unemployment rate would be much higher.

The only sectors that have been growing recently are the health care industry (like demand for nurses) and the education sector. I can tell you as a participant in the education sector, state-level balanced budget requirements are about to change those statistics. Both the Health and Education sectors require government funding, if that dries up, the jobs dry up even though the demand remains high.

The Obama administration has been verbal about green sector jobs, but frankly, jobs are not going to come from ethanol subsidies, that’s only going to create food shortages. The basic question, then, is where do the jobs come from, and what policies do we use to encourage job creation? It is obvious that our infrastructure needs a huge amount of rework to me and like FDR, this is one area where we could start programs to rebuild interstates, networks, and buildings. Just refitting buildings to meet earthquake or hurricane standards could be one potential area. We also don’t have enough refineries and power plants. It is possible we could subsidize the private sector in major infrastructure projects if there’s no will for a public work project. All of the highways, dams, and electrical grids are aging and in need of repair. We’ve seen realization of these problems but no policy prescriptions.

Where are the jobs of the future and how can government create an environment for their creation if we defund job training and education and fail to fully fund repairs to the infrastructure that supports job creation in the future?  Do we really need a spending freeze in this jobless century? Where are the real economists in this administration?


Don’t Quit Your Job if you can Help It!

April’s employment data was released today.  We now stand at an 8.9% unemployment rate which represents a 26 year high.  Every one appears to be spinning away the bright side of over 539,000 lost  jobs with the refrain that at least it’s not as bad as it was in January.  joblosses But, just because it’s marginally better, doesn’t mean the worst is over. All time series have variation and this may or may not signal the end of the worst of the worst monthly losses.

I’m still trying to figure out how people are finding glimmers of hope in this news given the historical perspective  shown in this graph  from the NY Times as presented by its blog Economix.  This compares the current recession to previous recessions.  As you can see, we’re still straight off the cliff at this point.  Equally impressive is this graph from Market Watch which shows the monthly change in nonfarm payroll growth.  It seems that the monthly changes may have bottomed, but it’s way too early to tell if there’s going to be any improvement.  That’s when you have to examine some of the underlying factors in the market.  Remember, variation in any series is to be expected so you’ll get ups and downs just from random variation.  Those movements don’t necessarily indicate a trend.  What do economists say about these numbers?

From Economix:

“The employment data do not yet corroborate the extent of the diminishment of the intensity of the recession suggested by other economic indicators (ISMs, consumer confidence, etc,). However, if we continue to see declines in the four-week average of jobless claims (which has fallen for four straight weeks), this may suggest smaller declines in employment later in the second quarter. Nonetheless, relating this report to the bank stress tests, the unemployment rate in April is already at the “alternative more adverse” average level assumed for the 2009…” — John Ryding, Conrad DeQuadros, RDQ Economics

“In April, more than one in four unemployed workers, 27.2 percent, had been without jobs for six months or longer, the highest rate on record since the government started calculating this statistic in 1948.” — National Employment Law Project

nonfarm payroll growth

“The unemployment rate rose to 8.9 percent, but this is entirely due to a surge in the size of the labor force, as household employment is reported to have risen…
“[W]ith the smaller headline job loss number, many are interpreting the April employment report
as yet another sign that the economy is “stabilizing,” but the more accurate assessment is that the economy’s pace of contraction is slowing, which is not quite the same as stability and is still a long way from the economy actually improving.” – Richard F. Moody, chief economist, Forward Capital, LLC

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