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October 25, 2010 – Comments (15)

Double dip, slow recovery or still in the first recession.  These are the arguments being discussed over the last few months by economists.

The phrase "Jobless Recovery" is really quite interesting.  Is it an oxymoron?  Can you have a recovery without substantial job creation.  Let's start with an insane hypothetical, one man has all the money and there are no other jobs.  It would be obvious that this one man probably will spend it, otherwise why earn it.  Spending it will create jobs, aka: 'A recovery WITH jobs'.

Let's say ½ the population has all the money and the other ½ don't work.  Let's say the ½ with money are concerned about their own jobs and won't spend anything they don't need.  Will ½ the population simply lie down and die, or would they start their own markets, gathering food and selling it using some new currency?  I'd bet the latter.

But today we have 75% of the people working and 15% collecting unemployment, 5% getting welfare and 5% living w/friends or family.  Can this economy grow (aka: recovery) without generating jobs?  Lets say every business finds 20% efficiency's and hire no one and give out no raises.  They are all storing wealth.  If they give out raises, the money will likely be spent - after all your company is more profitable and you feel safe in your job - and jobs are created.  

The lack of jobs in this recovery can only mean one thing, this economy is not in recovery.  

15 Comments – Post Your Own

#1) On October 25, 2010 at 3:52 PM, Jbay76 (< 20) wrote:

I concur.  In fact, this "recovery" will be the base for the empending disaster lurking around the corner precisely becuase the "recovery" is a jobless one.  The one way to achieve this is to spend money generated by increasing the debt load. 

 

Just another example of the smoke and mirrors game everyone is playing to avoid the reality.....game on 

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#2) On October 25, 2010 at 4:21 PM, Dow3000 (< 20) wrote:

You are overcomplicating it...it is classic empire in decline...very very similar to the way Britain fell (except it seems the Fed is even more willing to destroy its country than any other central bank)

Maybe, just maybe the problem is that we allow the government to ruin everything we ever worked for...yet still people defend it...do you really think we need a government at all?  Do you think the world would perpetually be at war if it wasn't for central banking?  Limited government is impossible...a pipe dream...similar to limited slavery (like you don't force them to work more than 10 hrs a day or something stupid)...it is still slavery!!!  It is completely immoral

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#3) On October 25, 2010 at 4:33 PM, BillyTG (32.21) wrote:

Jobless Receovery : Depression  ::  Enhanced Interrogation : Torture

 

People keep drinking the Kool-Aid.  We are in a bonifide depression, no matter what you call it, no matter how much money is printed to sustain the unemployed, to pump the markets, to whitewash the situation in the mainstream news.

What is your source that 75% of people are working and 5% on welfare?  That doesn't sound accurate.  You post your source, and I'll show you some other sources with stats that are far different.

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#4) On October 25, 2010 at 4:39 PM, TDRH (99.84) wrote:

      What % of the population is actually employed, earning more that $25,000 per year?   I threw out that number because median household income if $48-$50k per year, with two people working it would combine to $50K.

 

  

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#5) On October 25, 2010 at 5:29 PM, ETFsRule (99.90) wrote:

Employment is a lagging indicator, so you would not expect to see increased employment in the early stages of a recovery. Companies will start hiring when they have more cash and when they feel more confident about the economy.

Personally, I think we are in the early stages of a slow recovery. Most leading indicators have been improving, corporate earnings have been pretty good, and industrial production has been steadily increasing.

If you look at an indicator like manufacturing, it certainly looks like we are recovering - although we obviously still have a long way to go.

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#6) On October 25, 2010 at 8:35 PM, BillyTG (32.21) wrote:

ETFsRule, you look at different indicators than I do.

Sure, the corporations have great earnings, but the people, the labororers are being trashed right now, with continuing declines and no indication of improvement.

You say companies will hire when they get cash? All they have is CASH! Have you not been reading the news?   Corporations are stockpiling dollars like there's no tomorrow.  You did say when they have cash AND feel confident about the economy.  Well they definitely have cash and it's because they do NOT feel confident about the economy. There is way too much uncertainty.  So them not hiring exacerbates the problem.

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#7) On October 25, 2010 at 10:30 PM, ETFsRule (99.90) wrote:

So we are in agreement then? Or do you disagree with something that I said?

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#8) On October 25, 2010 at 10:40 PM, MoneyWorksforMe (< 20) wrote:

ETFsRule,

"Employment is a lagging indicator, so you would not expect to see increased employment in the early stages of a recovery."

A year and a half later, unemployment continues to rise...Is this still considered "early"?

Mind you the recession began almost three years ago. 

Foreign economies are recovering, the U.S. economy is not. 

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#9) On October 25, 2010 at 11:05 PM, ETFsRule (99.90) wrote:

MoneyWorksforMe:

Sometimes it takes a while. See for yourself.

Here are the facts:

1. The recession started about 3 years ago.

2. Unemployment started to rise roughly 6 months after the start of the recession.

3. The recession ended when GDP growth turned positive, in early 2009.

4. Unemployment began to drop (albeit very slowly) in late 2009. Again, we see the same six-month lag time that we saw at the beginning of the recession.

As you can see, unemployment has acted very consistantly as a lagging indicator. Just as it always does.

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#10) On October 25, 2010 at 11:21 PM, BillyTG (32.21) wrote:

I disagree with you that comapnies will start hiring "when they have more cash."  They do have more cash and have had more cash for some time.  See earlier post.

 

That's cool you look at official GDP numbers to draw conclusions about the end of a recession, but you might want to take into account how manipulated the currency has become, and how artificial any temporary employment (and non-productive employment like expanding government) and earnings were in the era of TARP/stimulus/QE/FOMC/Cash4Clunkers/Housebuyingcredit, etc.  A "recovery" never happened except in pretend throw-money-at-the-problem-and-make-it-look-like-it-disappeared world.  

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#11) On October 25, 2010 at 11:33 PM, ETFsRule (99.90) wrote:

Yeah, yeah, I know the drill. We should all just ignore the facts because everything is a government conspiracy. You're always right, Billy, and everyone else is always wrong.

Let me just point out that the new jobs are NOT government jobs. All of the new jobs from the graph I posted earlier were private-sector jobs, because gov't employment has continued to decline.

Do you EVER look at the facts before forming your opinion?

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#12) On October 26, 2010 at 2:25 AM, BillyTG (32.21) wrote:

Let me just point out that the Bureau of Labor Statistics does not accurately state unemployment.

"statistics on insured unemployment cannot be used as a count of total unemployment in the United States. Indeed, during 2008, only 36 percent of the total unemployed received UI benefits."

Additonally, the BLS does not count jobless people who have stopped looking for work after 4 weeks.

I'm sure you're aware of shadowstats' unemployment charts.  Everyone who has any natural skepticism of official numbers knows that if the statistics don't tell the story desired, the organization can change the criteria to fit their desired statistics.  That's exactly what the US gov has done with unemployment. Not to mention, they revise their figures every week (to worse numbers), after giving the rosier false numbers to the news agencies. Table A-15 has unemployment numbers using different criteria, but we don't see the really ugly stuff on TV.

Here are some more fun facts for you:

1. The recession never ended.  The uptick in GDP/employment were artificial and temporary, and would have continued decline if not for stimulus money.  The stimulus was a farce. The"recovery" was artificial, or a "jobless recovery" as the original poster said.  Hey, I guess we can fake plenty of unemployment if we continue to spend taxpayer money on jobs making signs that say "this sign was made with stimulus money---creating jobs for America!" Net productivity: Zero.

Many new jobs have been temporary government jobs such as the 77,000 census pollsters hired and then let go.  Also, many of the new jobs have been short-term and questionable private jobs "created" under stimulus program, jobs that did nothing productive for the economy other than to have people work.

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#13) On October 26, 2010 at 5:33 PM, ETFsRule (99.90) wrote:

"statistics on insured unemployment cannot be used as a count of total unemployment in the United States. Indeed, during 2008, only 36 percent of the total unemployed received UI benefits."

I understand that, but I don't see how it matters. Even if they only counted for 1% of the total unemployed, it would still be more than enough to see which way the number was trending (up or down).

I mean, we are literally talking about a sample size of millions of people here. I don't have time to go through confidence interval calculations and all that stuff, but I can guarantee that the gov't unemployment charts do indeed show the correct trend.

"The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers"

Great, so now we are supposed to rely on an estimate of "discouraged workers" made by some guys on the internet. It's sort of like the U-4 unemployment figure, except it uses made-up numbers from people who hate the gov't.

It shouldn't be hard to see that the Shadowstats figures are much less scientific, and have much less supporting evidence than the gov't numbers.

Frankly, I don't think you possess nearly as much natural skepticism as you would have me believe.

"The recession never ended.  The uptick in GDP/employment were artificial and temporary, and would have continued decline if not for stimulus money.  The stimulus was a farce."

Now you're just posting your opinion on the stimulus. I'm not going to enter into that debate, because that's not what this blog is about. Please stick to facts, not your biased opinions.

"Hey, I guess we can fake plenty of unemployment if we continue to spend taxpayer money on jobs making signs that say "this sign was made with stimulus money---creating jobs for America!" Net productivity: Zero.

Many new jobs have been temporary government jobs such as the 77,000 census pollsters hired and then let go."

Well, obviously you didn't even bother to look at my charts. If you had, you would have seen that there was a very clear, temporary spike in gov't employment from the census pollsters, which has since gone back down. The point that you are trying to make here has already been accounted for.

To reiterate: The total number of people employed by the government has dropped significantly over the past 12 months. Yet, the unemployment rate has decreased during  that same period. I'm sorry that you don't consider private-sector job growth to be productive. I find it to be very encouraging.

Once again, I have never claimed that we are experiencing record-setting job gains. We're certainly not. But as I explained earlier, unemployment is always a lagging indicator. And as the other fundamentals of the economy continue to improve, we will see more improvement in the employment numbers. It's an inevitable consequence when you have such enormous gains in areas such as manufacturing, exports, e-commerce, retail sales, etc. Practically every economic indicator has shown tremendous gains over the past year.

And Billy, I don't really care about your political stance or how you feel about the stimulus. I just want to help you understand what is going on in the world. As much as you may hate to admit it, our economy is recovering.

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#14) On October 30, 2010 at 12:30 PM, MoneyWorksforMe (< 20) wrote:

ETFsRule,

The economy is growing but it is not strengthening/recovering--there is a difference. There remains serious structural problems that continue to fester. And the little growth (1-2%GDP) we are seeing right now includes all of the stimulative measures the fed continues to implement. What would GDP be without stimulus and QE? This is something you need to ask yourself, because undoubtedly the current path is unsustainable and at some point in the near future the stimulus will be either depleted or withdrawn by force and/or necessity.

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#15) On October 30, 2010 at 12:57 PM, BillyTG (32.21) wrote:

Whoops, just saw that ETFsRule replied to me.

Thanks for the stats. They do matter, and I hope you're right that their is a real upward trend in the economy.  I see a lot of really bad stuff happening (Fed open market action, BLS statistics manipulation, insiders selling, PM manipulation, foreclosuregate, etc.) that don't bode well and that overshadow any marginal positive gains in employment numbers. 

I think we'll look back in a year or two and see government stimulus as being very temporary in nature and delaying the inevitable inflationary depression by several months.

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