Thursday, July 19, 2012

Jobs & Econ 101 - Going Stag (as in Stagflation)...

In May, it was reported that factory orders declined to their lowest level in three years:

New orders for U.S. factory goods in March recorded their biggest decline in three years as demand for transportation equipment and a range of other goods slumped, government data showed on Wednesday. The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February.

In June, the jobs report looked ugly:

Job openings fell to a five-month low in April and showed their sharpest percentage decline in about seven and a half years, according to a government report Tuesday that helped confirm a slowdown in the labor market. The Job Openings and Labor Turnover Survey, or JOLTS, indicated 3.4 million job openings at the end of April, an 8 percent decline from the previous month. The pace of total hiring also slowed, with 160,000 fewer jobs filled during the month. Moreover, the drop showed weakness across the employment spectrum, with manufacturing seeing 62,000 fewer job openings and construction dropping by 2,000...
The numbers come just two weeks after the government reported a paltry 69,000 new jobs created in May and sharp downward revisions to the previous two months, while the unemployment rate rose to 8.2 percent. Leisure and hospitality, which had been leading job growth, saw 3,000 fewer openings, while government job openings fell 42,000 amid belt-tightening particularly at the state and local levels. 

CNBC then had this to say:

Uncertainty about U.S. fiscal policy, Europe’s sovereign crisis and slower global growth have turned the U.S. economy into what feels like a slow-moving zombie, leaving businesses and consumers hesitant and reluctant to act... 

“The U.S. economy has been unable to achieve escape velocity but the amount of monetary and fiscal stimulus in the system has proven adequate enough to keep it going at a 1-2 percent GDP pace. That is slow by historic recovery standards…it feels like a 'zomb'-economy,” said Ian Lyngen.
“People are increasingly worried about a double dip,” he said.
“It feels like it’s sleepwalking,” Moody’s chief economist Mark Zandi said of the economy. "We’re walking but not going anywhere fast. I don’t think we’re dead like a zombie. There is some life underneath, but we are sleepwalking. The reality is people are so nervous and shell shocked, it doesn’t take much to get them to stop what they’re doing.”

By early July, the jobs reports got worse:

The jobs report for June shows another gloomy month in the US economy.  Job growth amounted to a disappointing 80,000, below analyst expectations of 90-100K, while the jobless rate remained the same at 8.2%:
This is only a bare improvement over last month’s report, with its addition of 77,000, an upward revision from the report a month ago, which had May at 69,000. The average monthly job growth has been 75,000 over the last three months — when we need 125K-150K to keep up with population growth. It’s a measure that shows us going backwards … again.The bad news gets even worse when looking at combined unemployment and underemployment, as measured by U-6.  That measure had dropped to a years-long low in March and April of 14.5%, but now has ticked upward two months in a row, and is back to 14.9%.  Joblessness among African-Americans jumped by 184,000 and the rate shot up from 13.6% to 14.4%, the highest it has been since December 2011.

Ed at HotAir added these updates to his post:

Update II: This is a good time to remind people of the implications of Barack Obama’s immigration policy change this month.  The pledge to issue work permits means that we may potentially add 1.2 million workers to the workforce over the next two years.  That means we will have to add jobs at a rate closer to 200,000 per month just to keep up with population growth and the policy change.Update III: The AP article also reports that one-third of the job gain came from temp hires.  That may or may not be a bad thing; temp hires usually presage some expansion, but that’s something you want to see more toward the beginning of a recovery than three years into it.  At this stage, and with these low overall numbers, it looks a lot more like bet-hedging.

Unemployment of the younger citizens shoots up to 16.8%:

...if all the young people who’ve already given up looking for jobs are included — the 1.7 million people aged 18-29 who’ve been out of work for more than a year — the latest 8.2% unemployment figure would be closer to 16.8% for that age group, Conway says. That’s the highest unemployment rate for that age group since World War II. “Their story is one of few opportunities, delayed dreams, and stalled careers,” he says.

Three reasons why jobs are hard to come by:

Opportunities. There are too many uncertainties hanging over businesses for them to make any significant moves in the next five months. Most reports indicate companies are flush with cash, but the lack of clarity with health care reform and the presidential election is making them too scared to spend and increase their payroll.
Incentives. Although people did start re-entering the workforce in May, the labor participation rate is sitting near a 30-year low. Some argue continued unemployment benefits are becoming a crutch for job seekers, but soon the aid will disappear as both federal and state benefits expire for some individuals.
Mindset. I frequently receive e-mails from job seekers complaining about the lack of job opportunities. They get frustrated because they don’t hear back from companies after submitting resumes, and they feel jobs aren’t being fairly advertised or posted.
We have entered an era where careers can no longer be pursued, they must be created. In order to get out of this labor market downturn, we have to rekindle the spirit of American entrepreneurialism. We have created a bailout mentality where people now expect the government to step in and fix any problems.
Since 2009, more people have been put on disability than have found jobs:

Barack Obama put 3.1 million Americans on disability since June 2009. Obama only created 2.6 million jobs in the same period.

Four reasons why the economy has stalled:

1. Good News Isn't Good EnoughThe American economy is not without its bright spots. Housing is improving, energy prices are dropping and factory orders are surging. But those trends have been offset by weakening consumer confidence and manufacturing, as well as the realization that one of the reasons energy prices are falling is because the world economy is weakening and sapping demand from big industrial consumers like China.
In all, the housing market, considered by some to be the final lynchpin to economic recovery, is far from escape velocity and its improvements are not enough to lift the broader economy...
2. Too Many Unknown UnknownsWhile hugely controversial, the recent Supreme Court ruling upholding President Obama's health insurance reform — Obamacare — helped clear one area of uncertainty, with businesses and individuals now knowing that a new tax is coming. And while the markets have had plenty of time to price in the known unknowns of the debt crisis in Europe, there still remain a plethora of unknown unknowns about tax and regulatory structure, China's growth slowdown and central bank activity...
3. Central BanksThough it seems that every weak economic sign or stock market downturn brings calls for more central bank easing across the world, people have begun wondering how effective these measures really are. After all, with interest rates in the U.S. near zero and other global central banks getting there as well, how much lower can you go, and how much more can it help?… Fed critic Michael Pento at Pento Portfolio Strategies said the U.S. central bank ought to get out of the way and let rates normalize, though he doubts it will happen. "There is nothing that can be benefited economically from lowering rates from here on," he said. "The only thing you will do is levitate asset prices and send commodity prices soaring. That is not the prescription for what ails this economy."...
4. Wall Street May Be Self-Destructing AgainA trader for JPMorgan Chase loses billions with a risky bet. Regulators are engaged in an ever-expanding probe regarding interest rate manipulations by banks. A steady stream of investment scams is getting exposed.  Investors have seen this movie before, and it doesn't end happily.

Captain Ed at HotAir just posted this bit of info after the newest weekly jobs report came out today:

This week’s report puts the measure back on the same track it has held most of the year, rising 34,000 to jump back up to 386,000 — which includes the now-indispensable upward revision of 2,000… 
July has unique issues for this metric, with automaker furloughs more the norm than the exception, as well as the reporting difficulties over one of the truly national holidays in the year.  Skip last week’s result and we end up with a remarkably stable series: 386K, 374K, 388K, 392K, 389K  for the last five weeks apart from the holiday week report.  That would average out to 386K — which is exactly what we have today, at least until next week shows an upward revision in this number.


Saturday, July 07, 2012

Eight Years Ago Today...

I can't believe it was eight years ago today that I started this blog.

I may not be as active here as I was in the past, but it's still going...
over 960 posts later.

Thursday, July 05, 2012

Follow-ups to the ObamaCare Fallout...

Apparently, inside sources suggest that Roberts was compromised.

Some think that it was for political reasons.

It appears that the first 3/4 of the dissent opinion was also written by Roberts. (???)

Liberals fear a Roberts backlash in future conservative rulings.

Moe at RedState, Captain Ed at HotAir, and Stephen Hayes at the Weekly Standard all point to the fact that it is indeed a TAX (despite what Romney's crank spokesman tries to say).

Which lead to Joel Pollak at Breitbart to say this:

The Obama campaign has seized on remarks made by Romney adviser Eric "Etch-A-Sketch" Fehrnstrom this morning on MSNBC, to the effect that the individual mandate in Obamacare (and Romneycare) is not a tax. Fehrnstrom allowed Chuck Todd to push him off message--and re-ignited the fears that conservatives have long had about Romney's will and ability to fight. In response, conservatives--who had just coalesced around opposition to what many now call "Obamatax"--exhort: Mitt, start fighting, or give up and let someone else do it.
Fehrnstrom's point--in defense of Romneycare--was that the Supreme Court was wrong to uphold Obamacare under the taxing power. The individual mandate was never intended to be a tax, Congress never called it a tax, and it wasn't a tax in Massachusetts, either. Fine--but now that Obama's lawyers went to court and called it a tax, and Chief Justice John Roberts called it a tax (and spare us the non-distinction between "tax" and the "taxing power") Obamacare is, undeniably, a massive tax on the middle class. Obama lied. It's that simple.
The GOP primary is over, and this is not a mistake that Fehrnstrom can merely shake away. It's going to be used--and already is being used--by the Obama campaign to save itself from the tax argument, and to label Romney as a liar (when that label belongs squarely on Obama, who campaigned against Hillary Clinton's individual mandate in 2008). Perhaps this is why Rupert Murdoch has been calling openly for Romney to "drop...old friends from [his] team and hire...some real pros," as he did on Twitter yesterday.
The Tea Party has been ready to rally to Romney's side over the Obamacare decision, overlooking his past in order to use him as the vehicle for repealing Obamacare and toppling Obama. But if Romney won't fight for conservative principles, the Tea Party is going to start looking elsewhere--fast. No one wants to live through the frustration of October 2008 all over again. No one wants to watch another conservative capitulate to Obama. 
This ain't Etch-A-Sketch, Mitt. Go hard or go home.

Romney was quick to respond, saying that:

"Well, the Supreme Court has the final word and their final word is that Obamacare is a tax. So it's a tax. They decided it was constitutional. So it is a tax and it's constitutional.... the chief justice in his opinion made it very clear that at the state level, states have the power to put in place mandates. They don't need to require them to be called taxes in order for them to be constitutional. And as a result, Massachusetts' mandate was a mandate, was a penalty, was described that way by the legislature and by me, and so it stays as it was...The chief justice said that states have what's known as police power, and states can implement penalties and mandates and so forth under their constitutions, which is what Massachusetts did. But the federal government does not have those powers, and therefore for the Supreme Court to reach the conclusion it did - that the law was constitutional - they had to find it was a tax, and they did. And therefore Obamacare's a tax. Like it or not, it's a tax."

75% of this tax falls on those households making under $120,000.

Here is a list of 20 of these new taxes on NewsMax.  Some of these new taxes:

Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113.
Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399.
“Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105.
HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959.
Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986
Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389
Employer Mandate Tax (Jan 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).Bill: PPACA; Page: 345-346
Lawyers have already written 13,000 pages of new regulations... and they're not finished yet!
As Daniel Horowitz at RedState says, we need to defund ObamaCare NOW.

And we should be able to do it via reconciliation.

So now you know why likely voters in a Newsweek/Daily Beast poll find Obama even WORSE than Carter.