And So, The Jobless Claims Games Continue

Yesterday morning, the news media was shocked and dismayed to see that first-time claims for unemployment insurance rose to a 4-month high at 380,000.

Just three weeks ago the claims number was reported to be 348,000 -- a four-year low -- and the left-wing news media was doing victory laps for Obama.  The always left-wing LA Times wrote: "New claims for unemployment benefits fell again last week to 348,000, a new four-year low as the economic recovery continues to accelerate."  But, what most people don't seem to realize is that the very next week that 348,000 number was corrected upwards to 368,500.  Not exactly a four-year low anymore. And, certainly not an economy that the Times claimed was accelerating.

While it is obvious that we are much better off than last year when claims consistently remained above the 400,000 mark, this economy is not roaring back.  But, in an election year, expect the news media to nuance everything to help Obama out.  In fact, this morning's terrible claims number is being tamped down by opinion writers and reporters finding every possible excuse for it.  Some idiots even blamed the number on  the Easter holiday.  The silliness of that argument is that any holiday usually results in an abnormally lower claims number because the unemployment offices are typically closed for at least one day and people are out of town and unable to file. If anything, the 380,000 might be understated and subject to an upward revision next week.  Something that the Obama Labor Department has consistently done for the last three years.  That's why, almost every week, the news headlines will read something like: "Jobless Claims Fall Again."   But, in fact, the "Fall" is always due to a revision upwards of the prior week's number; a game that continually results in better headlines for the President.  In reality, the claims number is merely running in place.

A Summer Of Recovery? Really?

At a time when Obama and Biden are sliding in front of every camera imaginable hyping their fairy-tale pre-election campaign slogan of a "Summer of Recovery", the economic situation only appears to be worsening.

In one report after another, we find a worsening situation. The last consumer confidence, and spending reports have clearly shown that people are worried and less willing to spend. The foreclosure rate is even higher than it had been during the last year. Housing prices are falling on a more widespread basis with 75% of major cities now reporting valuation losses. And, as in the case of last Friday morning's report, the production growth in the country is slowing once again. Now, with this morning's unemployment insurance claims, we see another jump in a number that should be falling if we were truly in a recovery.

But, in speech after speech, this President and the Vice President would have you believe everything is rosy. This disconnect is why Obama and Congress' approval ratings are diving to new lows. The people just aren't buying it. If the deterioration continues to be as rapid as it has appeared to be in the last two months, the Democrats are in for even bigger loses than are expected right now. Therefore, I have to agree with Biden that the Democrats will "shock" us in the Fall; except the shock will be greater than expected and the opposite of what our silly VP seems to think.

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Only 20,000 Real Jobs Added To The Economy In May

The May Unemployment Report is out and the numbers are astoundingly dismal. Like I predicted in yesterday's blog, the bulk of the jobs created in May were for temporary Census worker positions. In fact, of the 431,000 jobs created, 411,000 were Census workers; leaving the net increase to be about 20,000. Further, previously reported numbers for March and April, were lowered with a loss of an extra 22,000 jobs. Therefore, in reality, the 20,000 jobs created in May were more than offset by the 22,000 additionally lost in the prior two months (Click here to See Story: Jobs Growth Is Disappointing Due to Weak Private Sector).

Once again, the economists were shocked. They had predicted a growth of 500,000 to 575,000 jobs for the month. Economist and Presidential cheerleader at Moody's, Mark Zandi, had actually predicted 575,000 jobs in May (Click here to See Story: Census hiring to spike job figures in May). For reference, Zandi is one of the economic idiots who wholeheartedly backed the failed Obama/Democrat stimulus package. But, if Zandi and the rest of the economists would simply Google the word "layoff", they'd understand that the employment situation in real life is job losses and not job creation. That's why I've been so negative about the economy for months now.

From a political standpoint, this poor jobs' number will cause the Democrats -- literally in panic for their very own jobs in the Fall elections -- to push for another stimulus package. However, I think they've already proven they haven't a got a clue how to create or even save a single job in America.

Additionally, the Census jobs' number might be phony. The worker tally in the May report might just be a faked number through an intentional process of hiring and rehiring people a number of times to inflate the Census headcount. This charge was made yesterday by a whistle blower who has been rehired and trained by the Census Bureau a total of 5 times:



I read this morning that Obama touted the hiring of all those new Census workers (Click here to See Story: Obama: Economy 'getting stronger by the day'). What most liberals, like Obama, don't seem to understand is that you need to create at least 18 private sector jobs in order to have enough income tax revenue to cover the cost of hiring "one" new, Federal government worker. That's because 1/2 of those newly-created private sector jobs won't pay any taxes; leaving the total burden of paying for any new government position to the other half. The reason being that most government workers get paid more and get more health and retirement benefits than equivalent jobs in the private sector. And for our state governments, the government to private sector job ratio is even higher. This is why countries like Greece and states like California are in such deep trouble. Throughout this recession, Obama and Democrats have been creating more and more government jobs while protecting state government jobs like teachers, police, and fireman. At the same time the number of jobs in the private sector has kept shrinking. That, my friends, is a complete recipe for disaster and easily raises the potential for a double-dip recession in the coming year.

Disinflation to Deflation to an Eventual Deflationary Spiral?

When April's Consumer Price data was released yesterday, the prices of most consumer goods actually fell (Click to See Full Story: Deflation fears as US consumer prices dip).

Now, one might think lower prices are a good thing. However, a lowering in the rate of inflation -- called disinflation -- is a sign of structural problems deep in our economy. For example, a high, long-term unemployment rate is one structural reason for such a loss in pricing. More worrisome than the current disinflation, is what is called "deflation" where prices of products don't just slow at the rate that they are being hiked. Instead, prices actually fall. Deflation is a common symptom of any severe recession; or, worse yet, a depression like the Great Depression.

The fact that prices fell last month might signal a possible double-dip recession. For people on fixed incomes, disinflation and deflation are good things because they then have more purchasing power for each dollar spent. But, for the average worker, it could spell higher unemployment rates as companies try to stabilize prices by cutting back on both jobs and product inventories. For sure, pay raises are almost non-existent during extended periods of disinflation and deflation. A more serious type of deflation is what is called a "deflationary spiral" where the unemployment rate keeps chasing deflated prices and the cycle never seems to stop. That's when unemployment becomes so high that the nation's economy completely collapses.

I think that the Obama Administration's economic advisers have let this recession get out of control by banking on that useless Stimulus Package. It was a pure waste of money that ultimately my have cost us a year and a half of true recovery.

Workers Puttering Around....AGAIN!

It seems as if we never learn from the past. During the Great Depression, FDR, his economic team, and the then-Congress thought that "road building" and "public works projects" would get the economy back on its feet. So, they implemented the WPA (Work Progress Administration) to employ the unemployed in things like building roads and bridges and other public works activities. But, after years of failing to provide tangible economic recovery, the term WPA, instead, became jokingly known as Workers (just) Puttering Around.

When Obama and his Democratic majority pushed through the Stimulus Package, they, too, advertised that "shovel-ready" road-building and other public works activities would bring America back to it's feet with jobs-a-plenty. Now, a year later, we have an unemployment rate in double digits at 25 percent higher than what Obama had promised; and, that rate could possibly increase further. Also, there is no significant indication that any"shovel-ready" public works activities have made a single dent in the continued loss of jobs (Click to See the Full AP/CNBC Story: "What Stimulus? Road Projects Aren't Boosting Jobs Much").

The stupidity of the so called "shovel-ready" stimulus plan was that it ignored all that had been written about how ineffective the WPA was during the Great Depression. Almost every job created by the WPA turned out to be short-lived, temporary employment. As a result, there was no ripple effect throughout the rest of the economy.

To revisit the WPA again, during this recession, shows how absolutely ignorant Obama and his economic team are of history. Even this lone blogger predicted failure when I wrote the entry "The Lessons of the WPA and the Great Depression" in October of 2008 -- three months before Obama got into office and four months before the Stimulus Plan was enacted. I will say it once again: The only purpose of the Stimulus Package was to pay back the labor unions (teachers, police, fire fighters, SEIU, AFL-CIO, etc) for supporting an Obama run for the White House and to gain a Democratic control of Congress in the last election. Getting the economy back to work was the last thing on Obama's mind when he signed the Stimulus Plan into law. And, every day that goes by just proves me right!

I Think Krugman Has It Right

Rarely would I agree with the New York Times columnist and Nobel winning economist Paul Krugman. But, I have to agree with what he expressed this weekend, which was his belief that there is a possibility of a double dip recession in 2010:



I, however, am more certain that this will happen than Krugman. I personally don't see any depth to this recovery. What little growth that does exist is due to some smatterings of an artificial stimulus which are not organic or widespread. That can only create a short-lived recovery. The original Stimulus Package is well off it's target in creating jobs. In fact, the first package was specifically targeted to help state governments to grow which will ultimately get those governments in trouble. Those state's will continue to lose revenues and the already bloated deficits will only get bigger because they didn't make the hard choices needed to reduce spending. In addition, the new stimulus package -- nicknamed Cash for Caulkers -- will be another fruitless program.

Expect bank failures to rise next year to a level that is well above this year's 150 banks. Foreclosures are expected to be double this year's rate. The new and more disastrous bomb to hit the economy will be the default on commercial mortgages as the number of small business go under.

The important thing to note is that Paul Krugman is as far left and Democratic as they come. For him to predict another dip in the economy is more than just small talk. It's a big thing!

Confirming My Projection of an 11% Unemployment Rate

On November 6th, I wrote this blog entry: An 11% Unemployment Rate by June?

Now, Nouriel Roubini, writing in an op-ed, is making the same 11% unemployment projection (Click to See Full Story).

If you don't know who Roubini is, he is the economist who accurately predicted the collapse of the housing market and the subsequent recession. He did that in 2005 -- a little more than two years before it actually happened.

Also, consistent with many of my blog entries, he makes the following predictions:

"As a result of these terribly weak labor markets, we can expect weak recovery of consumption and economic growth; larger budget deficits; greater delinquencies in residential and commercial real estate and greater fall in home and commercial real estate prices; greater losses for banks and financial institutions on residential and commercial real estate mortgages, and in credit cards, auto loans and student loans and thus a greater rate of failures of banks; and greater protectionist pressures."

If I were Obama, I would be listening closely to Roubini. Obama would have been wise to have hired this man as part of his economic team; rather than go with that bunch of ideologically-driven, economic hacks that he ultimately went with. And, that's just my opinion.