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Tilting at Windmills

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July 3, 2008
By: Kevin Drum

MORE JOB LOSSES....Oil prices keep rising, automobile sales have cratered, the credit markets look perilously close to going into crisis again, the service sector shrunk in June, and today the Labor Department announced job losses for the sixth month in a row:

Nonfarm payrolls fell by 62,000, the Labor Department said Thursday. May payrolls also retreated by 62,000 jobs, representing an revision from the initial estimate of 49,000. April was revised to a decline of 67,000, versus the 28,000 previously reported.

...."Labor market weakness persisted in June," said Keith Hall, commissioner of the Bureau of Labor Statistics. "Non-farm payroll employment continued to trend down and has fallen by 438,000 in the first half of the year, an average of 73,000 per month."

The unemployment rate stayed the same, however. You only get counted as unemployed if you're actively looking for a job, and more and more people are just giving up. We may or may not technically be in a recession, but it sure feels an awful lot like one.

Kevin Drum 12:25 PM Permalink | Trackbacks | Comments (55)

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Not only are you only counted if you are actively looking for work, but you're only counted if you were an employee. The hundreds of thousands (if not millions) who were converted to "contract worker" or subcontractor status over the last 15 years or so are just as out of work, yet technically not unemployed. Wonderful economy we have here.

Posted by: Dave Brown on July 3, 2008 at 12:38 PM | PERMALINK

Heckuva job, Bushie.

Posted by: Hemlock for Gadflies on July 3, 2008 at 12:41 PM | PERMALINK

I'm part of the unemployed counted in the first group (actively looking) but I'm also on track to be eventually added to the second group as mentioned by Dave Brown, as I'm not literally unemployed but underemployed and working part time as a independent contractor/freelancer.

But here's a question I've often wondered about -- how does the government know whether or not people are "actively looking"? Surveys? Census data? As long as you're collecting unemployment, you have to swear you're looking, but once that's exhausted, how do they have any clue at all about what people are doing. It's been puzzling me for years.

Posted by: Bob on July 3, 2008 at 12:50 PM | PERMALINK

U-6 Unemployment is almost 10%. This number more accurately reflects current reality than the U-3 number that is widely reported. I don't know why the press insists on reporting U-3.

See the Mish and the Big Picture for more in depth discussion of these numbers.

Posted by: mickslam on July 3, 2008 at 12:53 PM | PERMALINK

Think of the unemployment rate as the difference between the labor force participation rate (LFP) and the employment-population (EP) ratio. As we noted over at Angrybear, both fell last month. EP has declined from 63.4% as of 12/2006 to 62.4% as of 6/2008.

Posted by: pgl on July 3, 2008 at 12:53 PM | PERMALINK

You only get counted as unemployed if you're actively looking for a job

You only get counted as hungry if you're actively looking for food. Once you're too weak to climb into the dumpster, you don't count anymore.

Posted by: thersites on July 3, 2008 at 12:56 PM | PERMALINK

But, but -- tax credits to the rich was supposed to fix all that. The money the rich didn't have to pay was supposed to be reinvested, and that would create new industries, jobs ... you mean that didn't pan out?

You mean that letting U.S. businesses move all manufacturing abroad, and borrowing trillions to lend to U.S. consumers who are working two minimum wage jobs in the services industry, while fighting a numbskull war over oil and ignoring the need for alternative sources of energy and locomotion -- can lead to disaster?

Who'd a thunk dat?

Posted by: SteinL on July 3, 2008 at 12:57 PM | PERMALINK

The Market works!

Cut millionaire's taxes! Borrow trillions more from China!

Posted by: John McCain: More of the Same on July 3, 2008 at 1:00 PM | PERMALINK

Russian President Medvedev said the US is in a depression.

Posted by: Brojo on July 3, 2008 at 1:03 PM | PERMALINK

Isn't the past tense of "shrink" "shrank"?

Posted by: Will Guthrie on July 3, 2008 at 1:11 PM | PERMALINK

Someone beat me to it, but - all those tax breaks for the wealthy have really kicked the American economy into overdrive, huh? Woo-hoo!

When are the Democrats going to point this out? Go back into the news archives and replay all of Bush's speeches after he rammed through the repeal of the estate tax and all of the tax cuts for the wealthy, where he promised spectacular economic growth and job creation, etc. They should play those over and over and over again, until the American people understand that:

"Trickle-down" economics is an utter and complete failure!!!

Posted by: The Conservative Deflator on July 3, 2008 at 1:15 PM | PERMALINK

Conservative Deflator wrote: "Trickle-down economics is an utter and complete failure!"

Not really. The purpose of a fraud is to enrich the person who perpetrates the fraud. So, trickle-down economics has been a tremendous success at achieving what it was actually, always intended to achieve: to vastly enrich the already rich, at the expense of everyone else.

Posted by: SecularAnimist on July 3, 2008 at 1:41 PM | PERMALINK

John McCain: More of the Same: Cut millionaire's taxes! Borrow trillions more from China!


bush already did that...

haven't the benefits kicked in yet?

Posted by: mr. irony on July 3, 2008 at 1:42 PM | PERMALINK

I don't get it when people say that people have "stopped looking for work." If you give up work, where do you go? What do you do? How do you eat? How do you feed your kids?

Posted by: Chad on July 3, 2008 at 1:46 PM | PERMALINK

HAPPY DAYS ARE HERE AGAIN !!

Posted by: Herbert Hoover on July 3, 2008 at 1:46 PM | PERMALINK

I'm with SecAn on this one. Success vs. failure is matter of goals and perspective.

Posted by: thersites on July 3, 2008 at 1:46 PM | PERMALINK

Things have really been going well since the Dems took over Congress. Heckuva job, guys. Way to go.

Posted by: Brian on July 3, 2008 at 1:53 PM | PERMALINK

how does the government know whether or not people are "actively looking"? Surveys? Census data? As long as you're collecting unemployment, you have to swear you're looking, but once that's exhausted, how do they have any clue at all about what people are doing.

They don't. That's why they stop counting you then.

Posted by: Vicente Fox on July 3, 2008 at 2:07 PM | PERMALINK

anyone have a handy graph showing job creation under this and previous administrations?

Posted by: ed on July 3, 2008 at 2:07 PM | PERMALINK

Brian is an idiot.

Posted by: on July 3, 2008 at 2:09 PM | PERMALINK

As I recall, the economy needs to add 150,000 jobs a month to keep up with normal population growth, so the average net loss would be more like 225,000 jobs a month.

Posted by: anandine on July 3, 2008 at 2:12 PM | PERMALINK

You only get counted as unemployed if you're actively looking for a job, and more and more people are just giving up. We may or may not technically be in a recession, but it sure feels an awful lot like one. —Kevin Drum

The unemployment rate has always been under-reported by anywhere from 1/2% to 2% for that very reason. Any economist will tell you this.

Of course we're in a recession and we haven't hit bottom yet. In fact, we're likely to be in a recession as long as oil continues to climb in price and as long as we remain mired in Iraq and Afghanistan.

The American automobile industry as we know it now is on it's last legs. I believe that one of the Big Three will go out of business in the next 18-months. Amongst the three, they will shed anywhere from 40-60,000 more employees in the next 18-months to two years, which of course will affect suppliers in the same or greater numbers. Economic conditions in the Midwest from Detroit south will be as bleak as they were in the mid-70s. Toyota, Honda, and Nissan will, of course, weather this storm.

Add to this the fact that the majority of American banks are in horrendous shape, and we are looking at a recession worse than the economic down turn from the mid-1970s through early 1980s.

The only bright spot in all this is that a more responsible ownership will emerge for Anheuser-Busch, and they will begin to make real beer.

Posted by: Jeff II on July 3, 2008 at 2:14 PM | PERMALINK

This country will not admit to a recession until it is over by three months. Anyone who does will be fired or will lose client business. If you don't believe me, just listen to the financial talking heads.

Posted by: Jeem on July 3, 2008 at 2:25 PM | PERMALINK

As I recall, the economy needs to add 150,000 jobs a month to keep up with normal population growth, so the average net loss would be more like 225,000 jobs a month.

You are right. During most months in the last few years, the monthly jobs added to the economy was below this 150 K "minimum required number." But the MSM continues to ignore this number and breathlessly report a 80K job growth as an achievement when in fact, that 80 K job growth fell 70 K short of what is required to keep up with inflation (as in net new additions to the job market resulting from population growth). Sometimes I wonder why we even bother with these statistics and the "reporters" who report them.

Posted by: rational on July 3, 2008 at 2:29 PM | PERMALINK

Your negative reporting on the economy only serves to embolden our enemies and demoralize the hedge fund managers who are working tirelessly for our benefit.

Posted by: CT on July 3, 2008 at 2:38 PM | PERMALINK

Anandine and rational,
Accounting for population growth needs to be done, but you also need to account for number of retirements, since this frees up jobs.

Posted by: optical weenie on July 3, 2008 at 2:57 PM | PERMALINK

And yet, all of those statistics pale in the face of what is yet to come (over the next, oh, 30 years) from the Supreme Court.

Posted by: Noam Sane on July 3, 2008 at 3:07 PM | PERMALINK

The markets are doing to America what the rest of the world should have done to it after March 2003. Fortunately, the ecomomic downturn is the result of W. Clinton's deregulation, W. Bush's wars and the Fed's economic policies, so Americans should not be able to blame their situation on the worldwide economic boycott and sanctions that should have been imposed in 2003. Unfortunately, Americans will still blame others, like Chinese manufacturers and Hispanic immigrants, rather than themselves for the economic hard times we allowed our leaders to create.

Posted by: Brojo on July 3, 2008 at 3:10 PM | PERMALINK

Anandine and rational, Accounting for population growth needs to be done, but you also need to account for number of retirements, since this frees up jobs. Posted by: optical weenie

Already accounted for. The 150,000/month number refers to new jobs needed to accommodate new entrants into the work force who, in few cases, would be taking over the jobs of retirees. In fact, given the staffing priorities of most companies today, a mid level retiree won't necessarily be replaced. It's just as likely that their responsibilities will be spread out amongst remaining staff. That's why if we've shed another 61,000 jobs, we're actually 211,000 jobs in the hole going into the next month.

In spite of the fact that Baby Boomers are now beginning to reach SS age, our population is growing thanks to out of control legal and illegal immigration and a significantly higher birthrate amongst "new" Americans than that for Americans whose families have been here for three or more generations. Japan's birthrate is 1.3 the U.S. is at 2.03. While that's slightly below the 2.1 replacement rate, we have a demographic bulge right now of women of child bearing age. We're looking more and more like the developing world every day! Kumbaya.

http://www.susps.org/overview/birthrates.html

http://www.susps.org/overview/immigration.html

Posted by: Jeff II on July 3, 2008 at 3:32 PM | PERMALINK

"Private sector job gains in the Bush years may fall below 3 million by November."

Dean Baker via Brad Delong.

So 3,000,000 jobs created divided by 96 months of Juniors rein = 31,250 jobs created per month. Unless I've calculated wrong (which is quite possible ) all equals

a. Catastrophic Success
b. Heckuv a job shrub.

Posted by: bill on July 3, 2008 at 3:38 PM | PERMALINK

Oil is closing over $145/barrel and the unemployment numbers show a sixth straight month of job losses, but the job losses were only slightly worse than expected, so the Dow and the S&P 500 both go up on that "good" news.

Is this the bizarro world or something?

Even with the upside down performance of the market today and some other days, it looks to be sure bet that the major stock indexes will be lower on January 20, 2009 than they were on January 20, 2001. On the job front, Bush should finish out his 8 years with a net increase in jobs, but not by much. Certainly not enough to account for the increase in population during that period. Unemployment numbers should be much higher than they are, but Bush is being shielded from the really bad news by sheer hopelessness of it all. People give up hope of finding a job so they are no longer unemployed for statistical purposes...they still don't have a job -- but they aren't unemployed. Isn't that special?

Posted by: majun on July 3, 2008 at 3:51 PM | PERMALINK

Just once I wish the media would include our prison population as a portion of the unenployed.

Posted by: racersave on July 3, 2008 at 4:06 PM | PERMALINK

Oil is closing over $145/barrel and the unemployment numbers show a sixth straight month of job losses, but the job losses were only slightly worse than expected, so the Dow and the S&P 500 both go up on that "good" news.

Is this the bizarro world or something? Posted by: majun

Just another example of how divorced Wall Street is from Main Street. We'll know that traders, brokers, hedge fund managers and investment bankers are really "feeling our pain" when we see them jumping off ledges. Ah, for the good 'ol days.

Posted by: Jeff II on July 3, 2008 at 4:08 PM | PERMALINK

As along time contractor, I don't figure in to these statistics. And the volume of my business never factors in either (except in GDP numbers). But I do notice this statistic: I used to get called about once week about contract offers. Now it's less than once a month. People like me are really the canary in the coal mine, except that nobody cares how we're doing. The best of us will always do fine, but the mediocre among us are probably looking for work these days.

Posted by: fostert on July 3, 2008 at 4:18 PM | PERMALINK

"letting U.S. businesses move all manufacturing abroad"
_________________

I wish we could keep them, but exactly how can we force companies to stay in the US?

Posted by: trashhauler on July 3, 2008 at 4:31 PM | PERMALINK

People are giving up on the economy and utilizing the black market in order to pay bills and eat. Bank robberies are also up.

Posted by: Brojo on July 3, 2008 at 4:50 PM | PERMALINK

According to some clowns at WSJ, everything is great and Americans are just swayed by all that negative "progaganda" from the SCLM, like you are doing, Kevin!

Posted by: Neil B on July 3, 2008 at 5:00 PM | PERMALINK

Is "give up" the same as no longer eligible for unemployment?

Posted by: Ron Byers on July 3, 2008 at 5:05 PM | PERMALINK

I wish we could keep them, but exactly how can we force companies to stay in the US? Posted by: trashhauler

As I've posted here, just wait. When oil hits $200/barrel before the end of the year, it will make no sense to import mostly poorly made plastic crap from China. The rebirth of low-end American manufacturing!

At the very least, we'll start driving it up the Trans-America highway from Latin America. There is nearly as large a poorly educated and desperately poor labor pool down there, and Spanish is so much easier to speak than Chinese.

Viva maquiladora!

Posted by: Jeff II on July 3, 2008 at 5:10 PM | PERMALINK

One thing we could do, trashhauler, is not let companies take tax deductions for the expenses involved in moving overseas. Another thing we could do is insist that companies selling into the US market certify (under severe penalty) that they aren't using slave labor and have complied with at least the same environmental rules as American factories. Those are little things trashhauler, but things that might help everybody.

It won't matter in the long run because cheap Asian imports are the direct result of cheap ocean transport. As fuel costs continue to soar it is going to become increasingly expensive to ship cheap trinkets from Asia to the US.

My brother who lives in Seattle showed me a local magazine last month featuring a spinnaker on a container ship. The days of sail just might be returning.

Posted by: Ron Byers on July 3, 2008 at 5:15 PM | PERMALINK

Meanwhile, Rush Limbaugh just signed an eight-year, $400 million deal with Clear Channel.

The fat get fatter.

Posted by: Chet on July 3, 2008 at 5:25 PM | PERMALINK

At this point the fastest way to reduce the unemployment rate as measured by the government is to convince job seekers there is no point to looking for more work.

Call it the Audacity of Hopelessness -- cutting edge GOP economic policy.

Posted by: pj in jesusland on July 3, 2008 at 5:39 PM | PERMALINK

We are so-o-o fucked...

Posted by: The Conservative Deflator on July 3, 2008 at 6:01 PM | PERMALINK

Depression, Kev. It's called a Depression.

Posted by: getaclue on July 3, 2008 at 6:14 PM | PERMALINK

"not let companies take tax deductions for the expenses involved in moving overseas. Another thing we could do is insist that companies selling into the US market certify (under severe penalty) that they aren't using slave labor and have complied with at least the same environmental rules as American factories."
_________________

Sounds fair to me, but I'm not certain it will be enough.

My brother is a QC specialist (worked his way up from the loading dock) for a privately owned plastics firm with several factories in China. He hates going there, as his method of management includes walking the floor talking to workers. Trouble is, in China you can't get close to a worker without a keeper and you can only deal with their bosses. He tells me the workers might not be slaves because they are paid better than most but they have no say at all in how things are done.

Posted by: trashhauler on July 3, 2008 at 6:43 PM | PERMALINK

Make sure your college bound children are working to become fluent in Chinese and/or Arabic. THEY'll have a future, at least.

Posted by: slanted tom on July 3, 2008 at 8:49 PM | PERMALINK

Stock criterion for a recession is a quarterly decline in GNP. However, we've lost a trillion dollars in real estate equity and a trillion in the stock market. 6 months of jobs losses. And increased inflation. That sounds like a recession to me.

Posted by: Jeffrey Davis on July 3, 2008 at 9:16 PM | PERMALINK

How to keep US companies from moving out? Don't let them deduct any expenses spent outside the US, to the extent we can define that.

Posted by: Neil B on July 3, 2008 at 10:07 PM | PERMALINK

The elephant in the room is impeachment. It alays matters when someone is so incompetent and downright stupid. The only question about Bush and Cheney was whether their natural evil temperament was greater than their ignorance and intolerance. I vote for evil.

In any event, what about the economy can turn positive? With Bush stubbornly defending big oil, the weak dollar, and a disaster in Iraq, enabled by Pelosi and company, the truth is we are in a depression. The market is down 20-percent already; recession was here in 2001--we used credit cards to spend up the statistics. And there is a food crisis already; what happens if Bertha hits NYC?

Pelosi needs to get comfortable with putting things on the table.


Posted by: Sparko on July 4, 2008 at 12:24 AM | PERMALINK

'how does the government know whether or not people are "actively looking"?'

Well, when you get unemployment, you have to look for a job to keep getting it. Once your unemployment runs out, the government no longer asks if you've looked for work, so as far as they're concerned, you aren't and so you're no longer "unemployed."

Meanwhile, GM stock drops to Eisenhower era level of $10 a share, in 2008 dollars! What's that in Eisenhower dollars?

But we're not in a recession. No.

Posted by: Cal Gal on July 4, 2008 at 12:47 AM | PERMALINK


Remember how "The War To End All Wars" got turned into a three-character foot-note by World War Two? That's what will become of "The Great Depression" after the current collapse is finished.


Posted by: John Nash on July 4, 2008 at 1:51 AM | PERMALINK

'The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number.

Williams also calculates the CPI according to the same way it was officially calculated prior to the recent decades of spin. Williams estimates the current CPI at 12%, three times higher than the official 4% figure.' - The Fading American Economy By Paul Craig Roberts
http://www.counterpunch.org/

Posted by: MsNThrope on July 5, 2008 at 9:51 AM | PERMALINK

Our economy is a dead man walking. We are just starting to enter a depression far more severe than the 1930’s. It is as ineluctable as a flash of regret running through the mind of a person who has leaped off a high rise building. Short of nuclear war, it really doesn’t matter who is elected president. Neither candidate can do anything meaningful as the shit hits the fan in increasing volumes. The cause can be traced to the world’s Central Banks which are puppets of the investment banks and hedge funds. They have vastly increased the money supply leading to an orgy of previously unthinkable leveraging and debt. This has been exacerbated by a nominal quadrillion dollars in the derivatives market. The sub-prime fiasco became the trigger tipping point in this incredibly unstable fiscal edifice. Like a nuclear chain reaction, one bad debt disaster after another will kick in; alt-A, ARM resets, Credit Default Swaps, CDO defaults, bankruptcy of the monolines within the next few months. The talking heads don’t have a clue. The giant ibanks are all bankrupt and insolvent, and they can only hide the fact by keeping their huge amounts of toxic waste as tier III and off the books – Enron like games. The Fed is swapping T-Bills for toxic waste and is close to tapped out. Freddie and Fannie will collapse before the end of 2009. Too big to fail is becoming too big to bail. OPEC will switch from the USD to a basket currency before the start of 2010 resulting in the collapse of the USD. Commodities, including crude oil and grains, are the final bubble after the dot.com and real estate (American, UK, and Eurozone excluding Germany) as the world’s giant pool of leveraged dollars flees real estate, equities, and bonds. Ironically, our giant institutional investor criminals are now looking to invest in something tangible. The giant deleveraging deflationary grinding wheel, propelled by bad debt, will accelerate the collapse of the last, commodities bubble. We will be left with a fiscal shambles. Batten down your hatches. Invest in ammunition and genetically unmodified seeds.

Posted by: elpollo on July 6, 2008 at 4:08 AM | PERMALINK

You can't just ignore economic fundamentals as a country any more than you can as an individual, but the government is corrupt--acting only for the benefit of themselves and corporations--and the sheeple are stupid and selfish, so whadyagonna do? It's over, boy and girls.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. "

Posted by: Luther on July 7, 2008 at 2:27 AM | PERMALINK

Considering that approximately 12% of the total population of this country is either on foodstamps or should be, it's easy to see that the 5.5% unemployment rating is grossly understated.

What is even more concerning to me is not just the number of jobs loss - but the sectors where they are being lost from.

In the Great Depression - we had the ability to make our own products, to provide ourselves with what we needed - we have lost nearly all manufacturing, production, and other such jobs - our midwest has been devestated by the floods - meaning that the ability to grow our own produce/food is severely limited - we've become completely dependent on imports for the most part.

So, if this is what things are like now, what happens when the world finally calls our tab and we are unable to import the things we need? We have no internal independent means to produce or even grow what we need and will soon have no money to buy it either - so what then?????

It was SUCH a good idea for our companies to save some money and offshore the jobs that would have been able to sustain this country and our economy - lord knows that making their items cheaper is going to end up working out in the end - pretty soon the world will have nearly 300 million less customers - because none of us will have any damn money in this country - wonder how that's gonna work out in the end.

I've got a feeling that next tax season will be the clear indicator of the current state of this country's economy - it's going to be hard to hide the fact that the amount of money collected in taxes will be devestatingly less than expected due to the losses that companies are enduring, resulting in less to no profits to tax, the fact that so many americans are making less to nothing - meaning less income - less taxes - and the fact that the bush tax cuts are in place for everyone who actually will have made some serious money this year - meaning less money all around going to the treasury.

Given that they've already decided what and where to spend the money they think they'll have, I'm wondering what they're going to say to us then.

Posted by: tefta on July 9, 2008 at 6:48 PM | PERMALINK




 

 

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