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Lagging Behind

February 5th, 2011

Good news, bad news–unemployment dropped rather sharply to 9.0%, following an identical 0.4% drop from 9.8% from November to December. Unfortunately, it’s not such great news. Only 36,000 jobs–an anemic number–were added in January, and while that’s still significantly better than the -740,000-job hole Bush left us with in January 2009, it’s not nearly enough.

Last month, Republicans laughably tried to take credit for the drop in unemployment after taking the reins of the House for only 19 days. Being consistently inconsistent, they are now claiming that a second similar drop is not enough. Make up your minds already.

Something is interesting about the news articles on this, and maybe one reason why people can’t see the Republican claims as being ridiculous lies. From the AP:

The unemployment rate dropped sharply last month to 9 percent, based on a government survey that found that more than a half-million people found work.

The Washington Post:

The jobless rate fell to 9 percent in January from 9.4 percent in December and 9.8 percent in November. In a promising sign, the improvement in January reflected the success of nearly 600,000 more people in finding work. By contrast, the rate fell in December in part because people had dropped out of the labor force, too discouraged perhaps to even look for work.

Funny how none of these articles mentions that the unemployment rate is a lagging indicator, which allowed me to predict the current changes in the unemployment rate last October. What we’re seeing now reflects the pop we saw about nine months ago when jobs went in the black for the first time in a few years. A few months later, the number of new jobs dipped, and though we haven’t gone negative on average, we’re more or less trading water–meaning that, in all likelihood, the unemployment rate fall will slow or stop soon (maybe the reason why Republicans stopped trying to take credit for it).

And while Obama has been trying to get us back on track with new stimulus spending, Republicans have countered with demands for cuts (except their massive increase in the form of the tax deal, mostly for wealthy people who don’t need them). A lot of those cuts–aside from the usual stabs at “liberal” spending like for PBS–are for infrastructure, job creation, education, scientific research–some of the best values in both short- and long-term investment. A great deal of what the Republicans are trying to cut represent lots of jobs–in short, they say we can create jobs by cutting jobs. Some of their proposals are painful–like the one-time sale of federal properties which are unused, with not a whisper of charging for public resources the government currently gives away to big business.

Even if they were actually serious and could really cut spending–doubtful–we would still be sinking further into this deep pit, and it probably would not have a positive effect on jobs–just like continuing the Bush tax cuts won’t have a positive effect.

The good news is, at least now they’re coming out with proposals, actual ideas–a significant change from before. The bad news is, they’re mostly the wrong ideas, ones that will likely hurt more than help, many of them simply having no effect at all.

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  1. Tim Kane
    February 6th, 2011 at 00:37 | #1
  2. Troy
    February 6th, 2011 at 04:12 | #2

    reflected the success of nearly 600,000 more people in finding work



    Shows the true story.

    We also had half a million people mysteriously disappear in population adjustment.

    Initial unemployment claims, per week:

    2011-01-01 578904
    2011-01-08 773499
    2011-01-15 549890
    2011-01-22 486316
    2011-01-29 459683

    vs: eg a ‘good’ year:

    2005-12-31 475889
    2006-01-07 555114
    2006-01-14 439873
    2006-01-21 317926
    2006-01-28 318805

    Shows the job-loss rate is 100,000/week worse than five years ago.

    Part of the core challenge that’s hitting the economy is that people are beginning to run out of their 99 weeks now, since peak unemployment was ~99 weeks ago:

    More initial claims from two years ago:

    2009-01-03 731958
    2009-01-10 956791
    2009-01-17 763987
    2009-01-24 620143
    2009-01-31 682176

    The economy is still utterly f—ed and it’s not going to get any better. The only thing holding it together is the $1.5T/yr in deficit spending, that’s enough for THIRTY MILLION jobs at $50,000/k per, 25% of TOTAL employment.


    They actually lowered taxes this year — 2% — on top of the Bush tax cuts.

    Plus the Fed is also buying $100B in treasury debt each month with printed money. This essentially gives the private economy an extra $3B/day to play with in the stock market etc. Which is why it’s up so much:


    The funny thing is I’ve already lived through this once, in Japan in the 90s, but was like a babe in the woods in that I did not follow politics or economics or business news AT ALL back then. Blogs on these topics only got going in the 2003-2005 timeframe.

    Only in retrospect did I learn how utterly screwed the Japanese economy was in the 90s. I guess the Nikkei average should have been telling me something, but I was still in my 20s and so much of the world was just something the ‘grown-ups’ had to deal with, not me.

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