Initial Jobless Claims Rise… Unexpectedly… Again

Here we go again, another week and another, um, “unexpected” rise in initial jobless claims:

The number of new claims for unemployment benefits jumped unexpectedly last week as heavy snows caused layoffs to rise.

In addition, many state agencies in the mid-Atlantic and New England regions that process the claims were closed due to the storms and are now clearing out backlogs, a Labor Department analyst said.

The department said Thursday that first-time claims for unemployment insurance rose by 22,000 to a seasonally adjusted 496,000. Wall Street analysts polled by Thomson Reuters expected a drop to 455,000.

Bad weather can cause job losses in construction and other industries sensitive to weather.

I’m sorry but I have to ask… Unexpectedly by whom???

JWF sums things up nicely:

It’s comical how every story about job losses always calls it unexpected, with pointy-headed experts baffled by the news. Maybe someone can ask Professor Obama about this grim news today during his six-hour lecture to Republicans.

Um, yeah, I’d pay money to see that!

Anyway, it’s not the weather that’s driving these new jobless claims it’s the slumping consumer confidence and  home prices coupled with the Millions of Americans who are underwater on their mortgages… roughly 300,000 of them are facing foreclosure each month. Americans simply don’t have the discretionary capital to invest or consume they they used to. Bottom line we’re not going to see anything resembling a meaningful recovery until that changes.

Related

• US Jan mass layoffs edge up on weak manufacturing – Reuters
• Read His Lips: Obama Calls for Increasing Payroll Taxes on ‘Households’ Earning Less Than $250,000 Per Year – CNSNews.com
• Obama May Prohibit Home-Loan Foreclosures Without HAMP Review – Bloomberg.com

New Jobless Claims Rise… Unexpectedly… Again…

Here we go again… another week, another “unexpected” rise in new jobless claims:

The number of U.S. workers filing new applications for unemployment insurance unexpectedly surged last week, while producer prices increased sharply in January, raising potential hurdles for the economic recovery.

Initial claims for state unemployment benefits increased 31,000 to 473,000, the Labor Department said on Thursday. That compared to market expectations for 430,000.

Another report from the department showed prices paid at the farm and factory gate rose a faster than expected 1.4 percent from December after a 0.4 percent gain in December, as higher gasoline prices and unusually cold temperatures helped boost energy costs.

To be honest I’m more concerned the sharp rise in producer prices than I am about the increase in new unemployment claims. In short, inflation is starting to rear its ugly head; frankly I think we’re head for a dead cat bounce rather than a recovery. What say you?

Related

• Fed Raises Discount Rate Quarter Percentage Point – Wall Street Journal
• U.S. stock futures fall as economic data disappoints – MarketWatch.com
• Jobless Claims in U.S. Rose Last Week to 473,000 – Bloomberg.com
• Leading Economic Index in U.S. Increased 0.3% in January – Bloomberg.com
• Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases – Business Week
• Dear Mr. President: Why We Are Not Hiring – C. Edmund Wright, American Thinker

WSJ: Andrew Cuomo has more to answer for than does Bank of America

Politicians love to blame the financial crisis and by extension the recession on greedy bankers, but as the Wall Street Journal notes today many of them, like New York Attorney General and former Clinton Administration Secretary of Housing and Urban Development Andrew Cuomo have much to answer for:

With his fraud lawsuit last week against Bank of America, New York Attorney General Andrew Cuomo has joined the long queue of politicians blaming bankers as the chief culprits in creating the financial panic and recession. We dealt with the merits of those BofA charges on Saturday, but that isn’t the end of this story. There’s also the not so small matter of Mr. Cuomo’s own role in promoting policies that fed the housing mania and set the stage for the meltdown.

Before he pursued statewide office in New York, Andrew Cuomo was Secretary of Housing and Urban Development during Bill Clinton’s second term. And lest you think his tenure is forgotten, the HUD Web site has an instructive item in its Archives section.

Entitled, “Highlights of HUD Accomplishments 1997-1999,” the document chronicles the “accomplishments under the leadership of Secretary Andrew Cuomo, who took office in January 1997.”

HUD’s Web visitors learn that in 1999 “Secretary Cuomo established new Affordable Housing Goals requiring Fannie Mae and Freddie Mac—two government sponsored enterprises involved in housing finance—to buy $2.4 trillion in mortgages in the next 10 years. This will mean new affordable housing for about 28.1 million low- and moderate-income families. The historic action raised the required percentage of mortgage loans for low- and moderate-income families that the companies must buy from the current 42 percent of their total purchases to a new high of 50 percent—a 19 percent increase—in the year 2001.”

It’s a sign of Washington’s continuing failure to examine its own failures that HUD still views such a policy as an “accomplishment.” It’s as if the Pentagon described Pearl Harbor as a victory.

The Village Voice has much more on Mr. Cuomo’s actions at HUD here.

Bottom line the Federal Government and Federal Reserve are every bit as culpable as bankers are in creating this mess… Andrew Cuomo is just one of several prominent political figures who has to answer for his role his roll in creating the financial crisis. Unfortunately, I doubt Washington’s policy makers will ever admit to their culpability, it’s much easier to demonize and scapegoat Wall Street’s greedy bankers.

Peter Schweizer does a good of laying the anatomy of the crisis in Architects of Ruin: How big government liberals wrecked the global economy—and how they will do it again if no one stops them. If you haven’t read it, I suggest picking up a copy.

Unemployment Rate Drops to 9.7%

I was going to post this yesterday, but there was something about the numbers that just didn’t make sense to me so I decided to hold off until I could dig through the report.

Anyway, the Associated Press got to use it’s favorite adverb, “unexpectedly“, again today:

The job market is lurching toward improvement. It just has a long way to go.

The outlook for jobs became a bit less bleak Friday when the government released January’s unemployment rate showing an unexpected decline from 10 percent to 9.7 percent. It was the first drop in seven months.

Still, the government now estimates 8.4 million jobs vanished in the Great Recession. And economists say the nation will be lucky to get back 1.5 million of them this year. They also warn it will take until the middle of the decade for the job market to return to normal.

The economy is growing, and normally job creation would be strengthening. But the job market is weighed down by employers who remain slow to hire because consumers are not spending enough. Companies worry about their prospects once government stimulus aid fades. They also fret about possibly higher costs related to taxes or health care measures from Congress and statehouses.

Heh, I hate to break this to you folks at the AP, but this wasn’t unexpected if you’ve been watching the trends over the last couple of months it was foregone conclusion that the unemployment rate hold steady or decline.

Why? For starters lets take a look at Table A-12 in the Household Survey, the number of long term unemployed, that is those who have been unemployed for 27 weeks or longer, has been rising steadily for the last several months. For statistical reasons those people are no longer considered part of the workforce.

Second take a look at Table B-1 in the Establishment Survey, the total number of jobs in the marketplace has dropped sharply from roughly 133 million in January 2009 to an estimated 129 million in January 2010… In fact if we look at the historical data the drop is even sharper… From 137 million in January 2008.

Bottom line the decline in unemployment is the result of statistical manipulation not real job growth. In short if fewer jobs in the marketplace means you’re naturally going to have a lower percentage of those unemployed.

First-time Jobless Claims Rise Unexpectedly… Again

This is getting ridiculous, and as predictable as sunrise… Just how many times can new jobless claims rise “unexpectedly” before the Associated Press realizes there’s nothing unexpected about it:

The number of newly laid-off workers filing initial claims for jobless benefits rose unexpectedly last week, evidence that layoffs are continuing and jobs remain scarce.

The rise is the fourth in the past five weeks. Most economists hoped that claims would resume a downward trend that was evident in the fall and early winter.

The Labor Department said Thursday that new claims for unemployment insurance rose by 8,000 to a seasonally adjusted 480,000. Wall Street economists had expected a drop to 460,000, according to Thomson Reuters.

The four-week average, which smooths fluctuations, rose for the third straight week to 468,750.

The figure is the highest in the past two months. Initial claims dropped sharply in late December, raising hopes among economists that layoffs were nearing an end and the economy would soon start generating net gains in jobs.

When you couple this report with yesterday’s news that planned layoffs have begun increasing again things don’t bode well for this so called recovery… Of course if tomorrow’s announcement from the Bureau of Labor Statistics about unemployment and job creation for January turns out to be bad news, the media will undoubtedly call it “unexpected”.

Related

• Stocks, Commodities Plunge, Dollar Gains on Debt, Jobs Concerns – Bloomberg.com
• House approves $1.9 trillion more debt – The Washington Times
• Companies boost productivity and put off hiring – Investors.com

Train Wreck: Retail Sales Fall, Jobless Claims Rise, Foreclosures set Record and the Dollar Crisis

Whew, I can’t believe I got all that in headline!

Anyone who has read this blog for any period of time knows I’m a pessimist on the economy, in short I don’t see any reason to be hopeful:

Retail sales unexpectedly fell in December, leaving 2009 with the biggest yearly drop on record and highlighting the formidable hurdles facing the economy as it struggles to recover from the deepest recession in seven decades.

In another disappointing economic report, the number of newly laid-off workers requesting unemployment benefits rose more than expected last week as jobs remain scarce.

Still, many economists, puzzled by the retail sales decline that follows reports from retailers of brighter holidays, cautioned that the December figures don’t necessarily signal a big consumer pullback and could be a blip.

Right, retail sales fell 0.3 percent in December, overall sales for 2009 fell 6.2 the sharpest decline on government records going back to 1992.

On the jobs front, the Labor Department reports that new claims for unemployment insurance rose by 11,000 to a seasonally adjusted 444,000, sharply higher than the 3,000 new claims forecast by economists.

Add to that a record number of foreclosures:

A record 2.8 million households were threatened with foreclosure last year, and that number is expected to rise this year as more unemployed and cash-strapped homeowners fall behind on their mortgages.

The number of households that received a foreclosure-related notice rose 21 percent from 2008, RealtyTrac Inc. reported Thursday. One in 45 homes were sent a filing, which includes default notices, scheduled foreclosure auctions and bank repossessions.

In December, more than 349,000 households, or one in 366 homes, were hit with a foreclosure-related notice. That represents a 14 percent spike from November and a 15 percent jump from December 2008.

Banks repossessed more than 92,000 homes, up 19 percent from November. That increase was likely due to lenders working to clear their books at the end of the year, RealtyTrac said.

And the looming dollar crisis:

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

“It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally,” said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama’s administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

And you can understand why I’m pessimistic about the chances for a meaningful economic recovery anytime soon. I’m sure there’s reasons for optimism, but I can’t find them. Everything I seen is pointing towards 1970s style stagnation.

December Unemployment Holds Steady at 10 Percent

I’m looking for good news in the December Jobs Report, but I can’t find any…

From Reuters:

U.S. employers cut 85,000 jobs in December, confounding expectations the labor market was finally stabilizing and piling pressure on President Barack Obama to spur job growth.

Unemployment, which held steady at 10 percent, remains the Achilles heel of the economy’s recovery from its worst recession in 70 years. Creating jobs is critical to sustaining the recovery when government stimulus fades.

November payrolls were revised to show the economy actually added 4,000 jobs rather than losing 11,000, as initially reported, breaking a streak of 22 consecutive monthly losses, the Labor Department’s report on Friday showed.

With revisions to October, however, the economy lost 1,000 more jobs than previously estimated over the October-November period and the stable unemployment rate in December reflected a surprisingly large number of discouraged jobseekers leaving the labor force.

December’s payrolls plunge was much worse than what economists had expected. Wall Street had forecast a flat reading and a tick up in the unemployment rate to 10.1 percent.

Payrolls fell in the manufacturing, construction and the service-providing sectors. Government employment also dipped.

Still, analysts said the data suggested a broad trend toward a labor market recovery was intact.

Intact??? Not hardly, if it hadn’t been for another 600,000 plus workers dropping out of workforce, unemployment rate would have been 10.4 percent. In other words the unemployment rate dropped because 600,000 plus people gave up looking for work and are no longer being counted as part of the workforce… it’s statistical hocus pocus not a labor market recovery. Take a look at the Bureau of Labor Statistics’ Alternative measures of labor underutilization table here… Two things standout first U-1 or Persons unemployed 15 weeks or longer, as a percent of the civilian labor force has increased in each of the last four months from a seasonally adjusted 5.5 percent in September to 5.9 percent in December. Second U-6 or the Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers climbed back up to 17.3 percent in December.

If there’s recovery, it’s a jobless one.

Related

• Payrolls fall by 85,000 after small gain in November – MarketWatch
• Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising – Bloomberg
• Economy loses 85K jobs as employers remain wary – Associated Press
• 9 reasons why the Dec. jobs report is bad news for Dems – James Pethokoukis, Reuters
• State tax revenues continue to tank – Ed Morrissey, Hot Air

Commerce Department Revises 3rd Quater GDP Downward… Again

Two months the media and Obama Administration were trumpeting the announcement that third quarter GDP had grown at an annualized rate of 3.5%. Unfortunately, their celebrations were a bit premature the Commerce Department today announced their final estimate of third quarter GDP… Not surprisingly third quarter GDP was a lot lower than they originally estimated:

Third-quarter GDP was originally estimated two months ago at a 3.5% annualized rate but was revised down to 2.8% growth in last month’s estimate. The revisions come from more complete data than was available at the first and second estimates.

The 2.2% revised growth rate is the strongest since the third quarter of 2007, just before the recession began.

Still, economists surveyed by MarketWatch had been expecting only a minor revision to 2.7% in the third estimate. See our complete economic calendar.

Economists are forecasting stronger growth — about 4% on an annualized basis — in the fourth quarter ending Dec. 31. They also see annualized growth of about 3% in the first half of 2010.

The revisions to third-quarter GDP were in three major areas: Business investment, consumer spending, and inventories.

Final sales increased at a 1.5% annual pace, revised from 2.5%. Gross domestic purchases — sales to U.S. residents — rose at a 3% annual rate, revised down from 4%.

The revisions shouldn’t surprise anyone, as Ed Morrissey notes the first-time home buyer tax credit and the Cash for Clunkers program accounted for roughly half of the original estimate of 3.5%. Assuming they still account for 1.5% of the final estimate that leaves a rather anemic 0.7% growth in the third quarter… That’s not a recovery, that’s life support!

James Pethokoukis has more on the political implications here.

Good News: National Debt Already Tops Debt Limit

From CBS News:

The latest calculation of the National Debt as posted by the Treasury Department has – at least numerically – exceeded the statutory Debt Limit approved by Congress last February as part of the Recovery Act stimulus bill.

The ceiling was set at $12.104 trillion dollars. The latest posting by Treasury shows the National Debt at nearly $12.135 trillion.

A senior Treasury official told CBS News that the department has some “extraordinary accounting tools” it can use to give the government breathing room in the range of $150-billion when the Debt exceeds the Debt Ceiling.

Were it not for those “tools,” the U.S. Government would not have the statutory authority to borrow any more money. It might block issuance of Social Security checks and require a shutdown of some parts of the federal government.

Right, we’re already in debt up to our eyeballs and what’s the Democrats plan?

Keep spending… Look folks, you can’t spend your way to prosperity. Anyone who tells you you can probably thinks an alcoholic can drink his way to sobriety.

Related

• The Audacity of Debt – Wall Street Journal

WSJ: Geithner Under Fire Amid Frustration on Economy

Normally I’d say the calls for Treasury Secretary Tim Geithner’s resignation were just hot air but given the recent disclosures about his role in AIG bailout while President of the New York Federal Reserve Bank, I suspect this is more than just normal political blustering:

Snowballing frustration about the economy burst into a political fracas Thursday, with several lawmakers calling on Treasury Secretary Timothy Geithner to resign over angst about unemployment and Wall Street bailouts.

The criticism came largely from House Republicans, who have long been critics of the Treasury secretary. Mr. Geithner’s job status doesn’t appear to be in serious jeopardy and several Democrats at a congressional hearing leapt to his defense.

But joining the anti-Geithner chorus in increasing numbers are more liberal Democrats who say the White House’s economic policies haven’t done enough to boost job growth. The degree of venom aimed at Mr. Geithner is also unusual, as was his willingness to fire back.

During a Joint Economic Committee hearing on Capitol Hill, Rep. Kevin Brady (R., Texas) told Mr. Geithner “the public has lost all confidence in your ability to do the job.”

Mr. Geithner traded barbs with the Republicans, occasionally raising his voice to the point of shouting. “What I can’t take responsibility is for the legacy of crises you’ve bequeathed this country,” he told Mr. Brady.

Rep. Peter DeFazio (D., Ore.) a vocal liberal who called on Mr. Geithner to resign this week, said in an interview that the Treasury secretary’s policies are too closely geared to Wall Street. “Quite frankly, all the gambling on Wall Street is doing nothing to put people back to work in America and rebuild our economy,” he said.

I’m not sure the President can save Sec. Geithner this time, frankly given his tax troubles he never should have never been confirmed as Treasury Secretary in the first place,  but that’s an aside. What’s happening here is the effects of 10.2 percent unemployment and the election results in New Jersey and Virginia are starting to take hold.

Democrat’s on Capitol Hill are starting to worry about the 2010 mid-terms and are trying distance themselves from the White House’s economic policies. Second Republican’s are no longer scared of the White House… At least not so far as the economy is concerned. If they were they wouldn’t be calling for Sec. Geithner’s resignation, particularly to his face.

You can read the full the Special Inspector General’s report on on the AIG bailout Special Inspector General here (PDF).

Related

• Geithner under fire over AIG payments – Financial Times
• Pressure mounts for Geithner to resign – Washington Times
• Liberal Democrat Calls For Geithner’s Resignation – The Public Record

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