Since the Great Recession began three years ago, Americans have been receiving a daily dose of the most miserable news imaginable. Our prevalent nightmare concerns the possibility that gasoline prices could find their way up to $10 per gallon as Muammar Gawdawful takes Libya into a full-scale civil war.
Some people tried to find a thread of hope in the latest non-farm payrolls report from the Bureau of Labor Statistics. The report was spun in several opposing directions by various commentators. The single statement from the BLS report which seemed most important to me was the remark in the first sentence that “. . . the unemployment rate was little changed at 8.9 percent . . .”. Nevertheless, David Leonhardt of The New York Times noted his suspicion that “the government is understating actual job growth” while providing his own upbeat read of the report. On the other hand, at the Zero Hedge website, Tyler Durden made this observation:
Wonder why the unemployment rate is at an artificially low 8.9%? Three simple words: Labor Force Participation. At 64.2%, it was unchanged from last month, and continues to be at a 25 year low. Should the LFP return to its 25 trendline average of 66.1%, the unemployment rate would be 11.6%.
Indeed, the ugly truth is that as you spend more time pondering the current unemployment situation, you find an increasingly dismal picture. Economist Mark Thoma came up with a “back of the envelope calculation” of the benchmarks he foresees as the unemployment situation abates:
7% unemployment in July of 2012
6% unemployment in March of 2013
5% unemployment in December of 2013
4% unemployment in September of 2014
If anything, relative to the last two recoveries, this forecast is optimistic. Even so, it will still take two years to get to 6% unemployment (and if the natural rate is closer to 5.5% at that time, as I expect it will be, it will take another five months to fully close the gap). Things may be looking up, but we have a long way to go and it’s too soon to turn our backs on the unemployed.
Only three more years until we return to pre-crisis levels! Whoopie!
For those in search of genuinely good news, I went on a quest to come up with some for this piece. Here’s what I found:
For the truly desperate, the Salon website has introduced a new weekly feature entitled, “The Week In Uppers”. It is a collection of stories, often including video clips, which will (hopefully) make you smile. The items are heavy on good deeds – sometimes by celebrities.
I was quite surprised by this next “good news” item: A report by Rex Nutting of MarketWatch, revealing this welcome fact:
. . . the United States remains the biggest manufacturing economy in the world, producing about 20% of the value of global output in 2010 . . . (Although fast-growing China will pass the United States soon enough.)
Even though we may soon drop to second place, at least our unemployment rate should be in decline by that point. Here are some more encouraging factoids from Rex Nutting’s essay:
In 2010, U.S. factories shipped $5.03 trillion worth of goods out the door, up 9% from 2009’s horribly depressed output, according to the Census Bureau.
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In 2010 alone, productivity in the manufacturing sector surged 6.7%. Fortunately for workers, it looks as if companies have squeezed as much extra output out of labor as they can right now. For the first time since 1997, factories actually added jobs during the calendar year in 2010, as they hired 112,000 additional workers.
There will be further job gains as factories ramp up their production to meet rising demand, economists say.
According to the Institute for Supply Management’s monthly survey of corporate purchasing managers, business is booming. The ISM index rose for a seventh straight month in February to 61.4%, matching the highest reading since 1983.
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What is the ISM telling us? “The manufacturing sector is on fire,” says Stephen Stanley, chief economist for Pierpont Securities. The new orders index rose to 68%, the highest since 2004, and the employment index rose to 64.5%, the highest since 1973.
Factories are hiring because orders are stacking up faster than they can produce goods.
What’s behind the boom? In part, it’s domestic demand for capital goods and consumer goods. Businesses are finally beginning to believe in the recovery, so they’re starting to expand, which means new equipment must be purchased.
Be sure to read the full report if you want to re-ignite those long, lost feelings of optimism.
It’s nice to know that if you look hard enough you can still find some good news (at least for now).
Crazy Like Fox
Donald Trump has enjoyed a good deal of publicity during the past few weeks, since he jumped on the “birther” bandwagon, voicing skepticism as to whether Barack Obama was really born in the United States. Many of Trump’s critics insist that The Donald is not a serious Presidential candidate and that his newfound “birther” agenda demonstrates that his Presidential campaign is nothing more than a flimflam publicity stunt.
I have a different theory. I believe that Trump is running a “decoy” campaign. Keep in mind that Trump is currently the #2 contender for the Republican nomination. Remember also that the Republican Presidential primaries for 11 states (and the District of Columbia) are conducted on a “winner-take-all” basis – meaning that when a candidate wins a state primary, that candidate wins all of the delegates who will represent that state at the Republican National Convention. If Trump can win a few of those states, he could amass an impressive amount of “pledged” delegates. I suspect that Trump’s goal is to win the support from the extreme right wing of the Republican Party and “hijack” those delegates who would have been otherwise pledged to candidates acceptable to the Tea Party. Bill O’Reilly’s intervention to defuse the “birther” controversy (at which point he insisted that Trump has not been seriously seeking the nomination) was apparently motivated by the fact that the candidates most likely to be eliminated from contention because of Trump’s presence – Michele Bachmann and Sarah Palin – are both darlings of Fox News. In fact, Palin is a Fox News contributor.
At the 2012 Republican Convention in Tampa, Trump could step aside and support Willard Romney, who is despised my many Tea Party activists for having created what is now known as “Obamacare”. Trump’s elimination of the Tea Party favorites before the convention would solve Romney’s problem with that voting bloc. Romney can be expected to have an equally difficult time winning the support of dog lovers, as a result of his decision to strap the family dog, Seamus, to the car roof for a 12-hour family vacation drive to Ontario. Despite his “Presidential” appearance, this Homer Simpson-esque episode from Romney’s life has already impaired efforts to portray him as a potentially effective Commander-In-Chief.
Meanwhile, President Obama is busy trumpeting his newly-minted, false campaign promises. Gallup reported that on April 15, Obama’s approval rating had tied its all-time low of 41%. More interestingly, his approval rating among African-American and Hispanic voters is beginning to slip from its enormously-high levels:
Despite the efforts of Republican commentators, such as Peggy Noonan, to create a narrative to the effect that Obama’s waning popularity – as well as the losses sustained by the Democrats in the 2010 elections – resulted from voter concern about government spending and the deficit, I suspect that Americans have simply become alienated by the failure of Obama and his party to deliver on their 2008 promises. Worse yet, the capitulation to the interests of Wall Street by Democrats who promised “reform” has reinforced voter apathy – the real factor in the 2010 Democratic setbacks.
Cord Jefferson of Good provided this graphic of what Congress would look like if it truly represented America. The failure of Democrats to win the support of Independent and centrist voters is readily apparent. You can blame gerrymandering all you want, but as long as the Democrats fail to provide alternatives to Republican policies, they will continue to lose. I believe it was William Black who said:
I was pleased to see my own sentiments shared and articulated quite well by Mike Kimel of the Presimetrics Blog, in his recent posting entitled, “Why I Will Not be Voting for Obama in 2012”. Although Mr. Kimel doesn’t have an alternative candidate in mind, the very reason for his disillusionment with Obama is that – with respect to the nation’s most significant problems – our current President has proposed no alternative policies to those of his predecessor:
Obama will never re-ignite the enthusiasm of 2008 by presenting himself to the voters as “the devil you know” or “the lesser of two evils”. What America’s middle class really needs is an honest, Independent candidate to make a run for The White House in 2012.