Initial unemployment claims fell moderately less week to 453,000 from an upwardly revised 469,000 in the previous week.
That's nice and all, but we still find ourselves essentially unchanged for the year (and roughly 50% above the break-even level).
Initial Claims (blue) and 4-week Average (red)
Despite the stubbornly crummy data, stock futures turned positive following the report, which was accompanied by the final GDP revision, which showed the economy growing at 1.7% - still anemic, but ever so slightly less anemic than the 1.6% reported in the previous estimate.
Even with the slight bump, we're still left with an accelerating deceleration in growth, with output racing back to the center line, following the uncharacteristically brief and tepid recovery we enjoyed in 2009.
Real GDP Growth
Strategy Room 10-11
I'll be on Strategy Room at FoxNews.com today from 10-11 am
Jobs Band-Aid About To Be Ripped OffA one, and a two, and a...
Cognitive Dissonance Grows Too Loud For Lonely Krugman To Bear
Paul "One Note" Krugman, increasingly disheartened that ever fewer people are buying his argument that our economic malaise is the result of not enough government intervention, is sticking his fingers in his ears to drown out the dissent.
"It's been really frustrating." But he keeps hammering away, demanding action in one New York Times column after another, hoping "to establish a counter-narrative against what everyone else is saying."
"I've given up reading what other people write about me," Krugman says.
The naked failure of our most recent experiment with Keynesian economics has reminded most people - policymakers and citizens alike - why its premise of government being able to marshal resources back into prosperous alignment is so well discredited. For Krugman though, no turn for the worse can fail to reinforce his thesis that the cure is simply more of the poison that's already stricken us.
Aside from the ever tighter intellectual knots into which he must find his mind twisting to maintain his own theories, and the resulting loneliness that leaves him gazing up at his Nobel plaque for reassurance that he must be humanity's sole surviving voice of reason, it must be an epic bummer to be so unflinchingly grouchy and pessimistic about the future.
Krugman's well-established m.o. is simple: predict that recession is right around the corner. Quarter after quarter, year after year. It doesn't matter what stage of the business cycle we find ourselves in, whether a Republican or Democrat is in the White House or in control of Congress, or whether we're in the midst of the largest spending project in history and on the cusp of the largest tax hike in history. Doom is always impending and the only way to stop it is to tax more and spend more.
Nor does it matter that Krugman usually goes the better part of a decade being wrong about looming recessions. When they arrive (as they inevitably do, better than once a decade), he looks like a prophet with uncanny timing to anyone who hasn't noticed his one-note Chicken Littling never changes.
Krugman was "right" about the last recession, just as certainly as a weatherman who predicts a hurricane every day will be right a few times a year. Eventually, he'll again be right that wreck and ruin lie just ahead. He may even be right about that right now. But if he is, it won't be because we failed to empower the federal government to take an even tighter grip of the country's financial reins. It'll almost assuredly be the result of policymakers having already prescribed a historically unprecedented dose of the toxic medicine he unwaveringly peddles.
Alas, the moderate improvement we'd seen in the job market from the weekly jobless claims in recent weeks seems to have stalled and, as of this morning, reversed.
Initial unemployment claims rose to 465,000 for the week ended September 18, from an upwardly revised 453,000 last week. That leaves us back above the level where we started the year (and where we started Recovery Summer) and you'll note the weekly reading has crossed back above the less volatile 4-week average.
Economists were expecting a less ugly reading of 450,000 and stock futures are down the better part of 1% in the wake of the report.
Initial Claims (Blue) and 4-week Average (Red)
More Ruminations On Obama's CNBC Townhall (Now With Pictures)
See if you can stomach as many as 12 minutes of me prattling on about it.
From Fox Business Live, on yesterday's Strategy Room:
So We Have To Say Goodbye... To the Summers
Wow. Two days ago, no "determinations about personnel" had been made. Today (the last day of summer, poetically), National Economic Council director Larry "Recovery" Summers is packing his bags.
Supposedly, it’s because Harvard has a “strict two-year leave policy” for professors’ sabbaticals that Summers has to leave now. Really? They wouldn’t bend the rules for a former president of the university so that he can go on advising the president of the United States? If that’s true, how come we didn’t hear about Summers’s plans to leave long, long ago?Tim Geithner has no such sabbatical restriction with the New York Fed. Wonder how his cover story will read.
Obama Townhall Event: America vs. Investors12:00 ET on CNBC.
Update: My bad - the title is in fact "Investing in America".
Update: The Dow is up roughly 100 points going into the event. Any guesses where it'll be in an hour?
I'm going to go out on a limb and say it'll give up at least half of the gain.
12:03: Obama calls the crowd "good looking." Dow up 96.
12:07: After reminding people how bad the economy was when he took office, and claiming his programs saved us from another Great Depression, Obama wonders aloud what programs we can now put in plan to make sure we stay on the right path. Dow up 93.
12:20: Responding to commentary from Ken Langone about villainizing business, Obama asserts that his "modest" crackdowns, takeovers, contract nullification, and re-regulation enable the free market to work better. Dow up 96.
12:24: Answering a question about the death of the American dream for the next generation of Americans, Obama prioritizes improvements in the education system, making sure the markets working for a broad base of people, and accelerating business investment (referring to accelerating tax write downs for capital spending). Dow up 95.
12:27: Obama frames his planned tax hike for those making over $250,000 as a "tax break" since the rate those people will pay on their first $250,000 of income will remain unchanged (at the reduced rate set nearly a decade ago). Dow up 95.
12:32: "It's very hard to find evidence that we've done anything to squash business, rather than promote business." Dow up 86.
12:44: Obama cites problem with Tea Party as a misidentification of the culprits behind runaway government spending and deficit growth. Briefly noting the two wars, he presumably means Bush is the secret culprit behind Obama's tripling of the deficit. Dow up 94.
12:52: A hedge fund manager from Skybridge Capital and law school classmate of the President's tell him Wall Street feels like his pinata. Asked when he might stop whacking them, Obama reminds the man that he once made a speech discussing the importance of partnership between private and public sector. Dow up 97.
12:55: Q: How about a payroll tax holiday? A: Well, this is something we've examined. Dow up 105.
12:56: Q: Are you still examining it? A: We'll look at anything that we think makes sense. Dow up 101.
1:00: Well that was indeed a surprise. I'm not sure we heard even a single phrase, much less a hint of a policy proposal, that we haven't heard before. After an hour of recycled rhetoric, we're therefore literally unchanged with a gain of 100.
Maybe this was shrewd. What better way to convince the business community (and the people they employ) that you're out of new ideas of how to kick them around? Give an hour-long townhall and come with nothing to say.
Fun With Words: The "Obama Tax Cuts"
As of January 1st, income tax rates for individuals (and the many small businesses susceptible to such rates) will either go up for all, go up for some, or remain unchanged.
Obama fiercely advocates the middling solution. No change for low- and middle-income earners, tax hikes for individuals and affected businesses earning more than $250,000 per year.
In a fit of exquisite Washingtonian branding, this tax hike (the largest in history) is now being hailed as the Obama tax cuts.
Pelosi correctly notes that if Congress does pass the half measure, it would constitute an extension of existing tax cuts (for some). But the cuts being extended are - without any semantic wiggle room - Bush tax cuts. Obama was still busily organizing his local community into a state of impoverished disarray when those tax cuts became law.
There’s an effort underway amongst Democrats to re-brand the Bush tax cuts (except for those that apply to the top two brackets) as “the Obama tax cuts“:Josh Marshall, proprietor of the site where this report appeared, eagerly adopted Pelosi’s terminology.
At her weekly press conference this afternoon, House Speaker Nancy Pelosi predicted that Bush tax cuts on the first $250,000 of income will be extended. But she was unable, or unwilling to say whether the top-bracket tax cuts benefiting only the wealthy will be renewed.
“Without getting into procedure and timing and process, what we’re going to do is to say: At the end of the day the extension of the Obama middle-income tax cuts will take place,” Pelosi said. [emph. added]
For Change That Really Matters, Trust Your Bowels To Bowtrol
Like you, I've been scratching my head over the "excitement" Tim Kaine expected the new DNC logo would inspire in "Democrats across the country."
To be sure, it's impressively unpleasant to gaze upon, but it's good to see they're sticking with the "change" theme, given that the party has controlled Congress for going on four years and the White House for nearly two.
Apparently inspired by the MTA's fine line of D-Train merchandise (or possibly Dewey's Pizza), the logo's grandeur was well expressed by Allahpundit, who imagines it to be "something Tim Kaine did himself, half-drunk, after a single Photoshop tutorial, with a ten-minute deadline." Ace is, um, less charitable.
I don't know what to with that.
But do try it yourself if you've got an Android phone.
Initial unemployment claims beat expectations again this week, dropping to 450,000 from last week's upwardly revised 453,000 (yes, we had an inkling we'd see an upward revision, didn't we). We're now nearly unchanged year-to-date (and Recovery-Summer-to-date) on both the weekly jobless number and the 4-week average, but at least we've pulled back from the uglier 500,000+ range we visited in August, following a month of skyrocketing claims.
Dauntingly, we're still around 100,000 above the breakeven level, at which the economy would cease hemorrhaging net jobs.
But hey, at least things now appear to be getting worse slower. Three cheers for second derivative improvement.
Initial Unemployment Claims (Blue) and 4-week Average (Red)
Robert Gibbs has tweeted plans to introduce an emergency appropriation of up to 420 characters for all White House Twitter accounts.
Citing extraordinary and unforeseen economic circumstances, Gibbs rebuked critics, saying, "Remember, we inherited an enormous and unwieldy allotment of 140 characters. Tripling it will enable us to more eloquently communicate our plans to clean up this mess."
Obama Feels Your Pain
It's 90s theme night at the White House.
Concerned with appearing aloof as he parties and golfs his way to oblivion, the current occupant of the White House channeled Bill Clinton today.Pressed for further comment, Obama noted that, "While the economy is not yet da bomb, if greedy high-earning Americans will show me the money, I promise you a job market that's totally spongeworthy."President Obama told a small crowd in Fairfax, Va., on Monday that he would stand in the hot sun with them and “feel their pain.”
He was meeting with a Fairfax family for a backyard discussion on the economy in an effort to improve voter perceptions about his empathy with ordinary people.
Unlike former President Clinton, who famously felt the pain of voters during a recession, Obama has not connected emotionally with voters over their worries and fears.
Think the R&D Tax Credit Will Spur Capital Investment? Obama's Likely New CEA Chair Doesn't.
One wonders if his appointment would force him to change his well-documented tune.
(HT: Rortybomb, via Marginal Revolution)
Looks like Goolsbee is the perfect pick to succeed Romer — his advice is already being ignored even before he’s been hired.
Although there appears to be an abiding faith among policy makers that tax incentives can influence the investment decisions of firms and serve as a tool for stabilizing the economy, empirical evidence for the connection is weak. Econometric research has commonly found that tax policy and the cost of capital have little effect on real investment. Economic theory predicts that the marginal user cost of capital should be the primary determinant of investment demand but actual estimates of the price elasticity of nvestment … mostly lie between zero and -0.4… The evidence that investment is only modestly responsive to price has been one of the most robust findings of the empirical investment literature…
In addition to their large revenue costs, investment tax subsidies may give large, unintended rents to capital suppliers without increasing real investment until several years later because of the short-run asset price responses of capital goods. For policy makers interested in using tax policy to stimulate investment or, especially, to smooth business cycle fluctuations, the results are not promising.
Jobless ThursdayDoth my eyes deceive?
In the week ending Sept. 4, the advance figure for seasonally adjusted initial claims was 451,000, a decrease of 27,000 from the previous week's revised figure of 478,000. The 4-week moving average was 477,750, a decrease of 9,250 from the previous week's revised average of 487,000.
To be sure, 451,000 is still awful (and still nearly unchanged from the beginning of the year), but the decline of 27,000 was significantly greater than the 3,000 expected.
Initial Unemployment Claims (Blue) and 4-week Average (Red)
Update: Yep, they doth.
A commenter notes that nine states did not report data this week because of the holiday (apparently it's unseemly to report labor statistics near Labor Day). Instead, the Labor Department (and in the case of California and Virginia, the states themselves) made up a number.
And wouldn'cha know it - three of the five states showing the biggest declines in unemployment claims this week were among ones that didn't report: California (-4,127), Illinois (-2,114), and Michigan (-599).
Expect to see a sizable revision next week.
Harry Reid Blameless For Economic Woes
Senate majority leaders are essentially powerless and incapable of helping to steer the economy toward wreck and ruin, explained Harry Reid, while sweeping the knickknacks on his desk into a cardboard box, no matter how closely said ruin follows one's assumption of such an impotent office.
"I had nothing to do with the massive foreclosures here," Reid said during an appearance on the ABC News/Washington Post "Top Line" program, adding that he also had no part in contributing to the state's dismal unemployment figures.
Reid contended in today's interview that "it would take a real stretch" in order to think that he caused the country's economic problems. Instead, Reid argued, he worked against many of the policies enacted during the administration of George W. Bush that were to blame for the economic crisis.
"I don't have any hand in what took place during the Bush administration. I tried to rein that in," Reid said.
And yet, nothing went to hell until he and Nancy rode into town.
In Midterm Desperation Play, Obama Rules Out Recovery, Assures Persistent MalaiseThat's one way to go.
This Is the Way Recovery Summer Ends
Not with a bang, but a rising unemployment rate.
Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today. Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).
"About" unchanged, yes, but ticking up from 9.5% to 9.6%.
A look at total nonfarm employment year-to-date shows just how clearly the engines of economic growth have stalled as more and more stimulus dollars are wrenched from the private sector and washed through federal coffers.
Total Nonfarm Emplyoment, YTD 2010 (in millions)
While rising public sector jobs typically artificially inflate the total employment number, government payrolls are still declining from their Census-driven peak levels earlier in the year, so now they're making the numbers look worse. As noted above, the private sector did actually add some 67,000 jobs in August.
Sadly, that's barely half the number needed just to keep up with population growth (or to keep the unemployment rate from rising further) and it's below even the average pace managed so far during this notably underhwelming year.
Increase In Private Employment, YTD 2010
Not only is the unemployment rate showing no sign of declining; it has yet to show any real sign of stabilizing. Even if a robust recovery were suddenly to take root, we'd see the inevitable spike in the headline unemployment rate as disaffected workers rejoin the labor force and begin being counted again. Sadly, there's no indication that such robustness is upon us, so expect a gradual upward drift (or at best a hover at these rates near 10%) in the months ahead, unless Congress has a sudden change of heart (or leadership) regarding tax policy.
Ed's got more.
A little splash of less-bad-than-expected news today, as initial unemployment claims came in at 472,000, slightly better than the 475,000 forecast. That was a drop of 6,000 from last week's upwardly revised number.
Two consecutive weeks of declines is a welcome departure from recent trends (the less volatile 4-week average had moved higher for each of the prior four weeks), but not enough to reverse much of the carnage wrought by Recovery Summer.
Joblessness remains stubbornly worse than at the beginning of the year.
Initial Unemployment Claims (Blue) and 4-Week Average (Red)
ADP Jobs Report Shows Job Market Contracting
In its monthly preview of the government's jobs data, ADP reported in its August employment report that private sector payrolls did not grow at the anemic pace expected. Instead, we swung from moderate growth to moderate contraction.
Private sector employment decreased by 10,000 from July to August on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from June to July was revised down slightly, from the previously reported increase of 42,000 to an increase of 37,000. The decline in private employment in August confirms a pause in the recovery already evident in other economic data.
Analysts had expected an increase of 13,000.
Those same analysts expect the government's report (due out Friday morning), which includes public employees, to show a loss of 120,000 jobs. A similar downside surprise would imply a loss of 143,000 instead.
Now that we've turned negative again (for the first time since turning positive in February), a look at private payrolls over the last year suggests that without the costly distortions of swollen government ranks and massive swings of Census workers, the private labor market barely got to enjoy any recovery at all before policymakers set us on the course for double-dip recession.
That's a pretty meager hump between the troughs.
Private Payrolls (in thousands)