Economists have discovered how bad the economy really is

Unemployment is almost back to normal, but the economy isn't.

That isn't because the unemployment rate is a conspiracy to make things look better than they really are. It's because even though the unemployment rate tells us the most about the labor market, it doesn't tell us the full story. All it does is show us how many people who are actively looking for work can't find it. But that leaves out the "shadow unemployed" who want full-time jobs but have either given up looking for them or can only find part-time ones. That usually doesn't make that big a difference, but it does now, because, even six years after the crisis has ended, there still isn't much that's usual about this economy.

Now if you add it all up, this shadow unemployment means our jobs hole is more than three times as big as it looks. That, at least, is what economists Danny Blanchflower and Andrew Levin found when they looked at how low the unemployment rate is versus how low we think it could go, how high the participation rate is versus how high we think it could go, and how many people can only find part-time jobs. That first part tells us how much further unemployment itself could fall, the second how many discouraged workers could come back, and the last how many people would work more if they could. In other words, it shows us the gap between how many full-time jobs we have and how many full-time jobs we need. The result, as you can see above, is that instead of being a million full-time jobs short, like the unemployment rate says we are, we're about 3.5 million short.

Via: Washington Post

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Uneasy Days for the Economy

Listening the other day to discouraging economic forecasts from Alan Greenspan and Larry Summers, I was reminded of the many polls showing that Americans worry their children won't have the same opportunities they did. To be clear, neither the former Fed chairman nor the former Treasury secretary was predicting recessions or even downturns. But there was little in their words to the National Association for Business Economics to suggest that brighter days are on the immediate horizon.

Their diagnoses and suggested treatments of the economy weren't exactly the same, but both nonetheless left the listener deeply unsettled. Summers argues that it's been a long time since the United States had "healthy, strong economic growth in a full-capacity economy." He argues against current government austerity measures, particularly at a time when the country—he asserts—desperately needs an increase in consumer demand. He also complains that regulatory and policy restraints have restrained economic growth, specifically pointing to the fact that no new oil refineries have been built in the United States in decades. Meanwhile, austerity has led us to a lack of public investment; Summers gives the example of the currently dilapidated Kennedy airport in New York, at a time when borrowing rates are under 3 percent, which would normally be the perfect situation for government to rebuild infrastructure.

Greenspan argued for the need for immigration reform, saying that deporting illegal immigrants would lead to our economy "falling apart." On the other end of the immigration spectrum, he said, the H-1B program for admission of highly skilled workers is important because "we can't staff the high-tech needs of our country with the kids coming out of our high schools." Yet, the prospects for immigration reform in the House, despite the backing of leading Republicans, are problematic at best, due to entrenched opposition within the GOP base.

At the same time, and more broadly, Americans are worried about where our country is—and seems to be—headed. A Wall Street Journal/NBC News poll in May 2012 asked, "Do you feel confident or not confident that life for our children's generation will be better than it has been for us?" Only 30 percent of respondents felt confident, while 63 percent indicated they were not. A New York Times/CBS News poll taken in January of this year asked, "Do you think the future of the next generation of Americans will be better, worse, or about the same as life today?" Only 20 percent said better, 53 percent indicated worse, and 25 percent said about the same. In late 2012, a USA Today/Gallup poll asked, "In America, each generation has tried to have a better life than their parents, with a better living standard, better homes, a better education, and so on. How likely do you think it is that today's youth will have a better life than their parents?" At the time of the poll, the public was evenly split, with 49 percent saying likely, and 50 percent indicating that improvement was unlikely. Results differed widely based on exactly how the question was framed, but at best, in what has historically been one of the most inherently optimistic nations, at least (roughly) half of the population is doubtful that things will be better for succeeding generations.

Via: National Journal

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Housing, jobs data weaken, but overall economic picture still upbeat

(Reuters) - U.S. home resales hit a near one-year low in November and new filings for unemployment benefits unexpectedly rose last week, putting a wrinkle in an otherwise brightening economic picture.

The reports on Thursday came a day after the Federal Reserve gave the economy a vote of confidence by announcing that it would reduce its monthly $85 billion bond buying program by $10 billion starting in January.

"Things have not changed. It's still a marginally rosier outlook in the short-term," said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

The National Association of Realtors said sales of previously owned homes fell 4.3 percent last month to an annual rate of 4.90 million units. That was the lowest since December last year and the third straight monthly drop.

A rise in interest rates since the spring and fast-rising home prices have shut some potential buyers out of the market, dampening home sales in recent months.

Economists polled by Reuters had expected home resales to fall only to a 5.03 million-unit pace in November.

Housing market fundamentals, however, remain solid. Household formation is rising steadily from multi-decade lows, which in turn is keeping demand for housing supported and encouraging builders to undertake new projects.

Median home prices increased 9.4 percent from a year-ago and the share of distressed properties - foreclosed and short sales - declined over the same period.

The inventory of previously owned homes on the market slipped 0.9 percent to 2.09 million units, representing a 5.1 months' supply at November's sales pace. That compared to 4.9 months' worth in October.

Via: Reuters

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62% FEAR JOB LOSS DUE TO ECONOMY

A new Washington Post-Miller Center poll finds that a record 62% of Americans worry they will lose their jobs due to the dour U.S. economy. Roughly one in three people (32%) said they worry "a lot" about job loss, another record high. 

Strikingly, the survey found that America's growing economic anxiety no longer tracks with political ideology or partisanship; economic fears span the political spectrum. 

"Americans' economic perceptions often divide along political lines," reported the Post. "But that's not the case with this new anxiety. Once you control for economic and demographic factors, there is no partisan divide." 

The Post added, "There's no racial divide, either, and no gender gap. It also doesn't matter where you live." 

The poll also found that 70% of Americans believe reducing the federal budget deficit is a "very important" or the "most important" factor in making America economically competitive.  

Via Breitbart

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Economy Still Growing Too Slowly

The Bureau of Economic Analysis’s (BEA) first estimate of economic growth for the third quarter of this year shows an economy that continues to grow at a plodding pace.

According to BEA, the economy grew at 2.8 percent from July 1 through September 30. This was slightly faster than the 2.5 percent the economy grew in in the second quarter of the year.

The main driver of growth in the third quarter was increased investment, the strongest component of which was a sharp climb in business inventories. Inventory accumulation could mean either that businesses didn’t sell as much as they anticipated during the third quarter or that they ramped up production in anticipation of a busy fourth quarter. Time will tell which.

Personal consumption was also a large contributor to growth. Purchases of durable goods—such as cars and home furnishings—drove the growth in consumption.

This is BEA’s first estimate of growth in the third quarter, and subsequent estimates will change.

Updated estimates won’t change the fact that growth continues to be too slow. Compared to previous recoveries from steep recessions, it is clear growth should be much more robust at this point. For instance, after a comparable period following the steep 1981–1982 recession, growth averaged 3.5 percent annually. And that was after periods of growth that were three times stronger than what we’ve seen since the last recession ended.

Via: The Foundry

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A Tale of Two States, CA and NV: Part III

Nevada’s aggressive pro-business policies, and the agencies charged with selling the state, have produced decidedly mixed results. While the state has made some gains in reducing unemployment, challenges lie ahead.

Nevada’s aggressive pro-business policies, and the agencies charged with selling the state, have produced decidedly mixed results. While the state has made some gains in reducing unemployment, challenges lie ahead.

As described in Part II, several businesses — such as Starbucks and Apple — have expanded operations in Nevada as a result of direct lobbying from different business development agencies.

Smaller firms have moved to Nevada, as well. Orange County-based Kareo, an online back office service provider for health care offices, recently announced plans to expand 112 jobs to Southern Nevada. Altogether, thousands of jobs have left California for Nevada.  In fact, California lost 5.2 percent of its businesses in 2012 (though some were closed and did not move).

Bureau of Labor Statistics data shows an improving Nevada. Down from a high of 14 percent two years ago, unemployment stands at 9.5 percent. There are more jobs in 10 out of 11 sectors of the economy than there were 12 months ago, or even two years ago. Government, manufacturing, business services, education and mining are all doing well, for example.

But there is more than just businesses and jobs coming to Nevada from California — people are too.

Population growth

While California’s population is flat-lining, Nevada’s is projected to grow. At least part of that reason is the new taxes enacted last year in California.

From a Fox News report describing the effects of Proposition 30:

Nevada tax accountant George Ashley said he’s received more than 100 inquiries from higher-earning Californians about the possible tax advantages and feasibility of relocating to a state with lower taxes.

“We have had a 10-fold increase from various parts of California, particularly Los Angeles and the Bay Area where many people are seeking a way to leave the state,” said Ashley, who lives just over the California state line in Lake Tahoe, Nev. “They are fed up with the situation and they feel like they are being unfairly treated.”

This trend has real impacts: Between 1999 and 2009, California lost $27 billion in tax revenue because residents moved to other states. In that same time period, Nevada’s added $12.4 billion to its coffers from residents of other states that moved to the Silver State.

Via: California Political Review

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Charlie Daniels: Where did it all go wrong?

I am seriously concerned with the place our nation is right now and even more seriously concerned about where it is headed.

It seems that part of the people care about what’s happening, part don’t care and a large part doesn’t know and don’t want to know.

Any thinking person who loves their children and grandchildren has to stop and consider the disaster this generation is passing on to them. I say this generation, knowing that preceding generations had a lot to do with our plight, but we as the generation in charge when the tipping point came, are the last generation that had a chance to do anything about it before the international train wreck happens and it seems that we, at least a majority of us, have chosen to keep our heads under the cover hoping the monsters will be gone when we come up for air.

Of course that’s not going to happen and as much as it goes against the eternal optimist in me to say it, I fear… no, I’m convinced that the United States of America will shortly find our collective testicles in a pair of vise grips and our feet bogged down in knee deep mud.

Our current economic policies are just impossible to sustain and as the debt explodes, the dollar decreases in value, the entitlement rolls grow and America is encouraged to become more and more dependent on a monolithic central government, we will never pull out of our self induced nose dive before our fiscal plane crashes to the ground.

Having said that – and by the way, for the benefit of you cherry pickers, I fervently hope I’m wrong – I got to wondering what thing, or combination of things, brought us to this sorry state of affairs.

Via: The Right Scoop

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Alan Greenspan: What Went Wrong

Alan Greenspan Melissa Golden for The Wall Street Journal, Grooming by Melissa Schwartz Jones

Alan Greenspan, the former chairman of the Federal Reserve, goes to a lot of parties. He and his wife, the TV journalist Andrea Mitchell, "sort of get invited everywhere," he says, sitting in front of the long bay window in his office on Connecticut Avenue in Washington, D.C. Lately, though, cocktails and dinners seem to have guest lists drawn almost exclusively from one political party or the other. "It used to be a ritualistic 50-50 at parties—the doyennes of culture and partying were very strict about bipartisanship," he adds. "That doesn't exist anymore."

In his new book "The Map and the Territory," to be released on Tuesday, Mr. Greenspan, 87, goes on a hunt for what has gone wrong in American politics and in the U.S. economy. He doesn't blame the current administration for today's partisan divide. The culprit? "It's the benefits," he says, pointing to the disagreements between Republicans and Democrats over how to deal with the growth of entitlements.

In the book, he also ponders why the Fed failed to predict the financial crisis, where he himself went wrong and how that discovery has completely changed his worldview.

Mr. Greenspan's biggest revelation came one day about a year ago when he was playing with gross domestic savings numbers. What he found, to his surprise and initial skepticism, was that an increase in entitlements has closely corresponded to a decline in the country's savings. "We had this extraordinary increase in benefits, with each party trying to outbid the other," he says. "That practice has been eroding the country's flow of savings that's so critical in financing our capital investment." The decline in savings has been partly offset by borrowing from abroad, which brings us to our current foreign debt: "$5 trillion and counting," he says.

Via: WSJ

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Tale of California’s Two Economies

California is an economy of regions—from the north to the south—from the inland to coastal communities—California’s regional economies are diverse.

When the recession hit in 2008, no region was exempt. Five years later, the state’s economy is improved, but not every region has bounced back in the same way. In fact, getting back to the “good old days” has been uneven.

Unemployment rates for coastal communities have dipped, many below the state’s unemployment rate of 8.9 percent. Jobs are being added and housing prices are soaring.

Yet, in many circumstances, the story is much different when you travel inland where unemployment remains in the double digits.

Fresno, in the San Joaquin Valley, is a prime example.

“The San Joaquin Valley is historically one of the most economically distressed regions in the nation.  On top of that, we experienced the double-whammy of the recession.  We were among the hardest hit by the recession and suffered significantly,” said Ashley Swearengin, Mayor and California Economic Summit Co-Chair.

“It will take us longer to come back than the coastal areas because we must overcome both the effects of the most recent recession, as well as our long-term, over-dependence on the housing industry. The San Joaquin Valley’s opportunity is to diversify its economy by building a skilled, innovative workforce that fuels business growth and generates higher income levels and lasting economic stability.”

Need more proof?  A recent study by The Stanford Center on Poverty and Inequality and the Public Policy Institute of California show, in 2011, 22 percent of Californians were living in poverty. The federal poverty rate, that same year, was 16 percent.

Latinos, the state’s largest ethnic group, is much higher at 32.2 percent. Los Angeles County had a poverty rate of 26.9 percent and Orange County was at 24.3 percent.

Both studies only emphasize California’s reality of two economies. Education levels, and cost of living, especially housing, are big factors in economic well-being.

Via: California Political Review

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[VIDEO]DAVID GREGORY CALLS ON GOP SEN. TO EXPLAIN BEN CARSON’S SLAVERY/OBAMACARE COMPARISON: HERE’S HOW THE SENATOR HANDLED IT

Senator Rob Portman (R-Ohio) was challenged Sunday by ABC News’ David Gregory to defend (or at least explain) Dr. Benjamin Carson’s recent claim that “Obamacare is the worst thing that has happened in this nation since slavery.”

“Is that an overstatement that’s counterproductive?” Gregory asked.

“Well, he’s a doctor who feels passionately about this issue, obviously, he can speak for himself,” Portman replied.

Gregory wanted more out of Sen. Portman.

“Is that something that, as a senior Republican, is helpful to the debate about Obamacare?” he asked.

“I think what would be helpful is if we sat down and figured out how to make this less damaging to American families and the American economy, because it is a huge problem,” the Ohio senator responded.

The senator then turned his attention to the unmitigated disaster that has been the Obamacare rollout.

You can watch Sen. Portman’s Carson remarks at the 07:45 mark:

Via: The Blaze

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[CARTOON] A Drag On The Economy

Something is dragging down the U.S. economy, but don’t worry… raising the debt ceiling doesn’t mean more debt. Get some more info here.

Via Red State

Full transcript: President Obama’s Sept. 16 speech on the economy and the navy yard shooting

PRESIDENT OBAMA: Good Afternoon Everybody.

Please have a seat. Before I begin, let me say a few words about the tragedy that’s unfolding not far away from here, at the Washington Navy Yard. That’s part of why our event today was delayed.

I’ve been briefed by my team on the situation. We still don’t know all the facts. But we do know that several people have been shot, and some have been killed. So we are confronting yet another mass shooting. And today it happened on a military installation in our nation’s capital. It’s a shooting that targeted our military and civilian personnel.

These are men and women who were going to work, going their job protecting all of us. They’re patriots. And they know the dangers of serving abroad, but today they faced the unimaginable violence that they wouldn’t have expected here at home.

So we offer our gratitude to the Navy and local law enforcement, federal authorities and the doctors who’ve responded with skill and bravery. I’ve made it clear to my team that I want the investigation to be seamless so that federal and local authorities are working together. And as this investigation moves forward, we will do everything in our power to make sure whoever carried out this cowardly act is held responsible.

In the meantime, we send our thoughts and prayers to all at the Navy Yard who’ve been touched by this tragedy. We thank them for their service. We stand with the families of those who’ve been harmed. They’re gonna need our love and support.

And as we learn more about the courageous Americans who died today, their lives, their families, their patriotism, we will honor their service to the nation they helped to make great. And obviously, we’re gonna be investigating thoroughly what happened, as we do so many of these shootings, sadly, that have happened, and do everything that we can to try to prevent them.

Via Washington Post

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Will California Become Detroit on the Pacific?

Environmentalists have used the allusion of the canary in the mineshaft when describing the importance of protecting the endangered Desert Sand Fly, Stephens Kangaroo Rat or the infamous Delta Smelt. By placing these insignificant creatures on the Endangered Species List, they were able to stop construction of hospitals, schools, roads and homes. And in the case of the Delta Smelt, they turned off water to countless farms in the fertile Central Valley of California.

Long ago, the death of a canary in a mineshaft signaled the presence of poisonous gases that would imperil miners. Today, environmentalists argue that the loss of the slightest of creatures is a signal of man’s impending doom. Policies like the Endangered Species Act worked — not to save species, but to slow or stop development. Countless jobs were lost by the imposition of such noble logic. Initially created to protect the American Bald Eagle, according to the Scientific American, only 1 percent of species (20 out of 2,000) under the protection of ESA have recovered to qualify for being taken off the endangered list.

It is time to use this same allusion to analyze the aggressive policies of the Progressive Movement in America as they seek to create their vision of a Blue Utopia in America. One must study the impact of their policies, not on canaries, but to the plight of hard-working American families. Will the canary warn us of the poisonous economic gases of Progressive policies? Or has the canary already died? Look no further than Detroit as a city and California as a state before entering the economic future mine shaft of our nation.

Detroit: A Model City in Blue Utopia

In the 1950ss and 60s, Detroit was the fourth largest city in the United States, with arguably the highest median income, the highest percentage of home ownership and the highest standard of living in the country. The industrial capacity of Japan, Germany, France and England had been decimated by war. America, the “arsenal of democracy” protected by oceans, stood alone with an untouched industrial capacity able to supply the Baby Boom population with the new suburban homes, appliances and cars they wanted.

Detroit’s workers had plenty of good-paying jobs thanks to the dominance of the auto industry. Detroit had modern skyscrapers, mass-transit trolley cars and great public services — water, sewer, roads, public schools and libraries. It had museums, parks, a symphony orchestra and a world-class zoo. Its sports teams included Lions, Tigers, Pistons and Red Wings. Detroit worked. Its weather was not great, but no worse than Cleveland, Philadelphia, New York or Boston. This was Detroit’s Golden Era.

Via: California Political Review

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