• Scam Diego alerts

Wall Street seems to be happy that the nation lost 216,000 jobs in August when economists had expected a loss of 233,000. But be VERY skeptical of that number. Each month, the Bureau of Labor Statistics estimates jobs that have been gained or lost by new and small business. It's called the birth/death adjustment model; it is not seasonally-adjusted. For August, that number is plus 118,000 jobs. But on Wednesday, ADP (Automatic Data Processing) reported that small businesses (those with fewer than 50 workers) LOST 122,000 jobs in August. The ADP report is real-time data. The government's report is simply a computerized estimate. The fact that ADP reports a LOSS of 122,000 jobs in small business while the government reports a GAIN of 118,000 small business jobs strongly suggests some statistical manipulation by government. Giving the government the benefit of the doubt, a realistic job loss for August would be 334,000. That computation simply erases the claim of 118,000 small business. If you assume that small business jobs actually declined, then the August job loss would be more than 334,000. In May, the government reported initially that small business added 220,000 jobs through the birth/death adjustment model; in June it was 185,000. There should be a thorough investigation of these false numbers reported by the government. Prediction: there won't be.

Carlsbad money manager E. James Welsh, reflecting on the reported numbers and the birth/death adjustment model, says, "The consumer [accounting for 70% of the economy] continues to be missing in action." In the second half of this year, the statistics may suggest a sharp recovery of the overall economy because of inventory adjustments, but once they have run their course, the economy has to depend on the consumer. And no matter how the government twists numbers, the consumer remains skeptical.

  • Scam Diego alerts

Comments

shizzyfinn Sept. 4, 2009 @ 9:55 a.m.

I know anecdotes don't count for much in the face of real stats like the ADP data, but still wanted to mention the fact that, of the dozen or so people I know who have been laid off in the last year, not one of them has found a new job. Definitely supports the idea that headline unemployment stats are missing the real picture.

0

David Dodd Sept. 4, 2009 @ 11:46 a.m.

Employment figures are never going to be accurate, even if they actually make a real effort. For example, if 100,000 jobs are lost in the manufacturing sector, and 150,000 jobs are gained in the transportation sector, it is a silly notion to assume that steel workers suddenly became bus drivers.

0

SurfPuppy619 Sept. 4, 2009 @ 12:01 p.m.

Not only are the numbers TOTALLY cooked, but a far bigger problem is that there is no distinction between the types of jobs lost and the types of jobs being created.

When you lose manufacturing jobs that pay 4 times what a service job pays the employment figures are useless.

0

shizzyfinn Sept. 4, 2009 @ 12:45 p.m.

Here are some mind-boggling new statistics, hot off the press today, that show just how vigorously our economy really sucks. This is what our plutocracy gets us:

LOS ANGELES (MarketWatch) -- If you want to feel even more depressed about Friday's unemployment report, get a load of this: the private sector didn't just lose jobs over the last month or the last year -- it's lost jobs over the last decade.

Yes, the very segment of the economy that was supposed to thrive under the Bush administration ended up with a net loss of 223,000 jobs since August 1999, according to the latest figures from the Bureau of Labor Statistics. Meanwhile, the nation's population has grown by 33.5 million people.

That's the worst job-creating performance by the private sector since, you guessed it, the Great Depression.

On top of that, the government created 2.1 million jobs. Wait, you say -- isn't that a positive? Well, no, because it's the worst performance by the government over a 10-year period since the last major recession of the early 1990s...

0

SurfPuppy619 Sept. 4, 2009 @ 12:51 p.m.

Yes, the very segment of the economy that was supposed to thrive under the Bush administration ended up with a net loss of 223,000 jobs since August 1999, according to the latest figures from the Bureau of Labor Statistics. Meanwhile, the nation's population has grown by 33.5 million people.

That's the worst job-creating performance by the private sector since, you guessed it, the Great Depression.

Respect to shizzyfinn for this amazing find.

And that fool Bernanke claims we have hit bottom. Ha!

0

David Dodd Sept. 4, 2009 @ 1:28 p.m.

Here's the thing: It's entirely possible that the recession has hit bottom. Here's the problem: Employment, historically, never recovers evenly with economic recovery, it always lags. And, here's the rub: Shizzy's article points out another issue, that employment has indeed shifted away from the private sector.

The markets seem to be relatively happy and not so volatile. GDP has stopped declining at a rapid rate. Housing seems to have hit bottom. While this is far from proof that the recession has hit bottom, it's useable data. Don's going to be skeptical, that's his nature and frankly I don't blame him. I'm at least willing to consider that the worst is over.

But I have some doubts, as well. First, the banks are recycling the "toxic assets" again, this time bundling them with better-looking debt. They're saying, "Sure, there's some bad debt in this package, but there's some GOOD debt, too!" And people are sometimes stupid and they'll be sold. Second, and weird if you don't follow it, one marker I use to gage this economic situation is how the peso and dollar interact (Mexico is the #1 trading partner of the U.S.). In the U.S., investors hedge against inflation by purchasing gold. In Mexico, they purchase dollars.

When this crisis began, the dollar was just under ten pesos. In a year, it reached over fifteen. Then, slowly, it backed down to where a couple of weeks ago it was back to about 12.8 pesos to the dollar. Now, it is rising again, it hit 13.2 yesterday. I haven't been out today, so I have no idea where it is, but if it continues to rise then I'll suspect that this isn't over.

And one last thing: There should be some indications of inflation right now. The government is busy throwing billiions of dollars into the money supply. All economic principles dictate that inflation should follow. Why isn't it? There hasn't been an increase in lending rates, which is the main control used to stave off inflation.

Scary.

0

SurfPuppy619 Sept. 4, 2009 @ 1:28 p.m.

Carlsbad money manager E. James Welsh, reflecting on the reported numbers and the birth/death adjustment model, says, "The consumer [accounting for 70% of the economy] continues to be missing in action." In the second half of this year, the statistics may suggest a sharp recovery of the overall economy because of inventory adjustments, but once they have run their course, the economy has to depend on the consumer. And no matter how the government twists numbers, the consumer remains skeptical.

This was a telling comment. If we continue to allow our economy to run on consumer spending, without increasing our exports, we are doomed.

We need more of our economy coming from the net sales of exports.

We need to increase the savings rate and DECREASE consumer spending, at least when the consumer spending is not supported by wages from jobs.

0

SurfPuppy619 Sept. 4, 2009 @ 4:51 p.m.

The markets seem to be relatively happy and not so volatile. GDP has stopped declining at a rapid rate. Housing seems to have hit bottom. While this is far from proof that the recession has hit bottom, it's useable data.

gringo-the stock market is no longer ANY indicator of the economy. It hasn't been an indicator for at least 20 years.

The housing market is so far from the bottom it's not funny. As private sector jobs continue to disappear we will see more and more home foreclosures-and the increase in gov employment is a "double whammy" because ALL gov employment is funded through the private sector. The gov-if they had the brain power of at least a trained circus chimp (which they do not)- would be DECREASING their employmees, their pay and their benefits-like the private sector has.

This is a ponzi scheme, plain and simple, and it is crashing right now as CA has seen when they tried to raise taxes and failed miserably. The budget gap gets wider and wider in CA with every passing month. Very soon there will be either NO services or we will cut gov employee pay and benefits. It is one or the other.

The average federal employee now makes TWICE what the average private sector employee makes-all on a credit card.

0

David Dodd Sept. 4, 2009 @ 5:32 p.m.

"The housing market is so far from the bottom it's not funny."

Surfpup, provide links. While the housing market sucks, it seems to have reached an equalibrium. If you have evidence I haven't read, I'd love to read it.

"The gov-if they had the brain power of at least a trained circus chimp (which they do not)- would be DECREASING their employmees, their pay and their benefits-like the private sector has."

That's not going to happen. Never has, never will.

"This is a ponzi scheme, plain and simple, and it is crashing right now as CA has seen when they tried to raise taxes and failed miserably. The budget gap gets wider and wider in CA with every passing month. Very soon there will be either NO services or we will cut gov employee pay and benefits. It is one or the other."

The Fed will simply print more money. Inflation is the enemy at the moment. It should be here, and it isn't. That's more scary to me than anything else. You can't dramatically increase the money supply and not have inflation unless you concurrently increase interest rates.

0

SurfPuppy619 Sept. 4, 2009 @ 8:27 p.m.

Surfpup, provide links. While the housing market sucks, it seems to have reached an equalibrium. If you have evidence I haven't read, I'd love to read it.

I cannot provide links to the future, but I have been in the real estate field for over 25 years and I can tell you right now I am close to the mark on where the market is headed.

Time will tell which of us will be correct, but my position is we are far from bottom, we will continue to go down, and it will be at least 18-24 months before we hit bottom, if not longer.

0

Don Bauder Sept. 4, 2009 @ 9:20 p.m.

Response to post #1: By trying to manipulate the unemployment stats, the government thinks it will fool the public. But it might not be able to do so. Such moves may simply breed more cynicism -- justified cynicism. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 9:21 p.m.

Response to poste #2: It is true that employment stats will always be based on a small sample. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 9:23 p.m.

Response to post #3: Yes, the unemployment numbers really don't capture the quality of jobs. However, the decline should be captured in income numbers. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:15 p.m.

Response to post #4: Yes, private sector jobs have not grown for a whole decade. That is very significant. We shipped our manufacturing jobs offshore to prop up short term profits for corporations, permitting top executives to garner outrageous salaries, and now we are paying the price. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:18 p.m.

Response to post #5: Don't you see those green shoots popping out of the ground everywhere? The Fed and Treasury threw $12 trillion at this thing. They should have produced a few green shoots. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:23 p.m.

Response to post #6: Again, this $12 trillion was bound to create some activity. Keep short term interest rates at nearly zero for many months and there will be all kinds of arbitrage opportunities. Keep mortgage rates artificially low by having the central bank purchase long paper and there will be SOME activity, much of it speculative. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:26 p.m.

Response to post #7: Jim Welsh is a very savvy commentator. You are correct. Relying on consumer spending is like relying on cocaine. We have to kick the habit. The savings rate has to go back to double-digit rates as consumers spend less and pay off debts. But getting from here to there will involve pain. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:31 p.m.

Response to post #8: The stock market used to be a reliable indicator of the future course of the economy. I agree that it is much less so today. Wall Street is made up of a bunch of day traders -- buy one minute, sell the next -- and computerized trading. What we call Wall Street is incapable of collectively thinking long term. The rally now is basically a reaction to all the liquidity that has been pumped into the economy. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:34 p.m.

Response to post #9: Bernanke keeps saying that when the time is right, the Fed will be able to raise rates and keep the ocean of liquidity from becoming inflationary. Don't count on it. Best, Don Bauder

0

Don Bauder Sept. 4, 2009 @ 10:36 p.m.

Response to postg #10: On the one hand, interest rates are extremely low and residential real estate prices are low. On the other hand, foreclosures may well pick up again. Best, Don Bauder

0

shizzyfinn Sept. 5, 2009 @ 12:41 p.m.

Inflation isn't showing up because of the extent of the Depression we are in, and the relatively meager amount of government stimulating going on.

Most of the "trillions" tossed out by the Fed went to shore up balance sheets of too-big-to-fail institutions, keeping the institutions from going bust, but not otherwise stimulating the economy. In other words, all that bailout money went toward keeping things from getting worse, not helping things get better. This is a subtle but very important distinction.

As for the $800 billion or so of actual federal stimulus money, hardly any of it has been spent yet - only about 15% - so of course there has been no real positive impact yet. But will there ever be? Even the whole 100% is a tiny amount of money compared to the size of our economy. For example, there was tons more stimulating going on when people were able to stimulate themselves by taking on huge loans against the value of their homes. That type of stimulating is gone and ain't coming back, which is one key contributor to the deflation we're mired in now. People just can't get cash like they used to.

Keep in mind that it is not an ironclad rule that big boosts in money supply must lead to inflation. For example, over the last 15 to 20 years, Japan has responded to economic crisis by dramatically boosting money supply and government spending, much like we are doing now. Japan's moves have not resulted in any sizable inflation; in fact, Japan is suffering from deflation now, just like we are.

As for the real estate market bottoming out, if you believe that, I've got a condo downtown I'd like to talk to you about...seriously though, prices may have come up a bit, but the key number of inventory of homes for sale is still bloated, something like 1/3 above normal nationwide, according to recent comment I read from S&P's David Blitzer. And he also mentioned that there is likely more "shadow inventory" waiting in the wings...that is, homes that owners want to put on the market but haven't because of how bad it is right now; if/when prices seem to be recovering, these homes will come on the market, keeping prices down.

All in all, folks, it's going to get worse before it gets better. We are living through a massive step-down in standard of living for Americans unlike any seen since the first Depression; nobody knows how far it's going to go or how long it will last. Don't kid yourself by thinking there are definitive answers out there.

0

Don Bauder Sept. 5, 2009 @ 1:31 p.m.

Response to post #21: Real estate is a local phenomenon. Some markets are doing surprisingly well, others continue to be extremely weak. (See Las Vegas, Phoenix.) Best, Don Bauder

0

SurfPuppy619 Sept. 5, 2009 @ 4:37 p.m.

And he also mentioned that there is likely more "shadow inventory" waiting in the wings...that is, homes that owners want to put on the market but haven't because of how bad it is right now; if/when prices seem to be recovering, these homes will come on the market, keeping prices down.

There is actually a second tsunami foreclosure wave on the way, from the people who are just hanging on by their findgertips and hoping for a recovery or hoping to get a better job because they can't make the payments on the home which is now upside down on value.

If one or both do not appear these people, millions of them, will also see their homes go into foreclosure. That is judt around the corner.

0

Don Bauder Sept. 5, 2009 @ 10:38 p.m.

Response to post #23: A lot has been written about more foreclosure tsunamis. The arguments make sense. Commercial real estate is in trouble, too. Best, Don Bauder

0

JustWondering Sept. 7, 2009 @ 8:28 p.m.

If the sky is falling why is Sanders championing a new City Hall, a new library and a major expansion of the Convention Center? If we're near the cliff of another double dip why is he willing to mortgage the farm? And please don't tell me he wants a legacy other than the biggest mismanagement in San Diego's history....

0

shizzyfinn Sept. 7, 2009 @ 9 p.m.

Personally I'm in favor of spending some taxpayer cash on public projects...now's the time - demand is down, and local tradespeople need the work.

Would be nice to see the federal stimulus dollars (only 15% spent thus far) start hitting in the form of assistance with the City Hall, the Library, and some other investments.

Would also be nice if the federal stimulus dollars could be used to hire temps at state agencies. I've got an acquaintance who waited for almost two hours on hold with Unemployment, and another who acted early but still could not get a DMV appointment on time to meet renewal deadlines. Why can't we get some federal money to hire local folks to shore up staffs at offices like these?

0

Burwell Sept. 7, 2009 @ 9:43 p.m.

If the sky is falling why is Sanders championing a new City Hall, a new library and a major expansion of the Convention Center? If we're near the cliff of another double dip why is he willing to mortgage the farm?

Mayor Sanders likely has major tax increases in the works to pay for all this. There's no other way to pay for his grandiose schemes. Either that or he's a lunatic, similar to Hitler who spent his final days during WWII in his underground bunker issuing orders to army divisions that existed only in his mind.

0

Don Bauder Sept. 7, 2009 @ 10:32 p.m.

Response to post #25: It's a matter of political timing. These projects are years in the future. This permits corporate welfare advocates to say that today's weak economy is irrelevant. Also, Sanders will be out of office -- perhaps in a different office at a different level -- by the time these projects begin to stumble financially. Best, Don Bauder

0

Don Bauder Sept. 7, 2009 @ 10:35 p.m.

Response to post #26: How about spending federal stimulus money on infrastructure? That's what's needed -- desperately. Forget about the city hall complex, library, convention center expansion. Fix the streets for starters. Best, Don Bauder

0

Don Bauder Sept. 7, 2009 @ 10:38 p.m.

Response to post #27: The convention center expansion will require tax and fee increases. So will the other projects. Get used to it. Best, Don Bauder

0

SurfPuppy619 Sept. 7, 2009 @ 11:29 p.m.

Burwell is funny as hell!

How about we give the "stimulas" money back to Treasury, and stop mortgaging our grandchildrens future.

How about we stop spending more than we are taking in and reduce our budget deficit?

How about we start working on building our manufacturing base back up and work on building up our exports, and reducing our trade deficit.

How about we shrink government pay, benefits and pensions so they are not bankrupting us, and make gov employees woirk to the same age as everyone else does.

How about we stop printing money with nothing to back it up except high interest payments to China?

How about we start getting tough with Japan and China on trade issues-so we have FAIR trade.

How about we stop letting Big Business and public unions ruin our country through their buying of undue influence through elected politicians?

There are so many things this country could do to right the ship........I mean if a stupid internet blogger like me can come up with this many solutions in slightly under 60 seconds why can't our elected leaders just ATTEMPT a few of these fixes???

0

David Dodd Sept. 7, 2009 @ 11:46 p.m.

SurfPuppy: It's because all elected leaders are corrupt. They have no plans on fixing anything other than their own bank accounts. Re-election = power = money = more power = and so on.

0

Don Bauder Sept. 8, 2009 @ 12:04 p.m.

Response to post #31: The reason these ideas don't take root with politicians is that pols live for the next election. The reforms you suggest are long term ones. Politicians don't give a hoot about the long term. Neither does the private sector, particularly Wall Street. Best, Don Bauder

0

Don Bauder Sept. 8, 2009 @ 12:05 p.m.

Responsse to post #32: Good analysis. Best, Don Bauder

0

Sign in to comment