651,000 Jobs Lost in February; Rate Rises to 8.1%

This is feeling more and more like a depression isn't it? And it's only expected to get worse. Those who have jobs now should feel lucky:

Another 651,000 jobs were lost in February, adding to the millions of people who have been thrown out of work as the economic downturn deepens.

In a stark measure of the recession’s toll, the Bureau of Labor Statistics reported on Friday that the national unemployment rate
surged to 8.1 percent last month, its highest in 25 years. The economy has now shed more than 4.4 million jobs since the recession started in December 2007.

And economists expect that unemployment will continue to rise for the rest of the year and into early 2010, with the unemployment rate reaching 9 to 10 percent by the time a recovery begins. With so many job losses occurring in manufacturing, economists say that many workers will struggle to find new jobs that pay as much as they had been earning, even when the recession ends.

“This is not people being on furlough for six weeks or a month or two — this is permanent job losses, and that is what makes this so difficult,” said John Silvia, chief economist at Wachovia. “That is very telling in terms of how we’re really restructuring the overall economy.”

Job Losses in Recent Recessions

Scary.

Paul Krugman's "On The Edge"

I appreciate that Krugman wrote this column. The debate over the stimulus package by the Republicans feels disingenuous and very partisan to me. Instead of working with the president and the Democrats, many of the Republican senators are opposing the bill because of the old buzz words of "wasteful liberal spending" and "pork" and keep demanding more tax cuts to save the economy.

What they don't understand or don't seem to care is that the general theory of Keynesian economics advocates deficit spending during economic downturns to help create jobs and maintain employment. Sure, there is some waste in this stimulus bill. But most of the programs and money allocated in the bill are going to organizations with the express interest of creating more jobs.

Also, this Republican stance against hypocritical to me. We just went through 8 years of the largest increase in government size in the history of our nation and almost every Republican was behind the president on that, despite the many flaws in the Bush's White House thinking. Yet when a plan, created by many of the best economists today, to help a failing economy comes out, all they can do is rip it. Plus, I think after 8 years of Bush tax cuts and the state of our economy now, it's pretty obvious that tax cuts are not the only solution to fixing the economy. It stinks, I tells you.

Anyway, I've said my two cents. Here's Krugman:

A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.

It’s as if the dismal economic failure of the last eight years never happened — yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there’s a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.

Somehow, Washington has lost any sense of what’s at stake — of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again.

It’s hard to exaggerate how much economic trouble we’re in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.

Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving — a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren’t selling enough to use the capacity they have. And exports, which were one of the U.S. economy’s few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.

Meanwhile, our main line of defense against recessions — the Federal Reserve’s usual ability to support the economy by cutting interest rates — has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall.

It’s no wonder, then, that most economic forecasts warn that in the absence of government action we’re headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that “absent a change in fiscal policy ... the shortfall in the nation’s output relative to potential levels will be the largest — in duration and depth — since the Depression of the 1930s.”

Worst of all is the possibility that the economy will, as it did in the ’30s, end up stuck in a prolonged deflationary trap.

We’re already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken.

As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.

And deflationary traps can go on for a long time. Japan experienced a “lost decade” of deflation and stagnation in the 1990s — and the only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?

Would the Obama economic plan, if enacted, ensure that America won’t have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that’s why the efforts of Republicans to make the plan smaller and less effective — to turn it into little more than another round of Bush-style tax cuts — are so destructive.

So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next.

It’s time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation’s future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.

Economy Sheds 598,000 Jobs in January

Bad, bad news:

WASHINGTON — The United States lost almost 600,000 jobs last month and the unemployment rate rose to 7.6 percent, its highest level in more than 16 years, the Labor Department said Friday.

It was the biggest monthly job loss since the economy tipped into a recession more than a year ago, and it was even worse than most forecasters had been predicting.

In addition, the government revised down its estimates for previous months by 400,000. For December, the government revised the job loss to 577,000 compared with an initial reading of 524,000. Overall, it said, the nation has lost 3.6 million jobs since it slipped into a recession in December 2007.

“Businesses are panicked and fighting for survival and slashing their payrolls,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think we’re trapped in a very adverse, self-reinforcing cycle. The downturn is intensifying, and likely to intensify further unless policy makers respond aggressively.”

Wow. This feels like another depression, doesn't it?

The GDP shrinks 3.8% in the 4th quarter of 2008

I know this sort of like beating a dead horse, but the fucking economy sucks:

The United States economy shrank at its fastest pace in a quarter-century from October through December, the government reported on Friday, as consumer spending and business investment collapsed, signaling more economic contraction in the months ahead.

In the broadest official accounting of the toll of the credit crisis, the government reported that gross domestic product shrank at an annual rate of 3.8 percent in the fourth quarter of 2008. While that was less than economists’ expectations of a 5.5 percent drop, the decline would have been much steeper — more than 5 percent — if shipments of goods had fallen as sharply as orders.

On a personal note, I will be graduating from Grad School in May during the worst economic crisis in a long time. That means very few jobs. Lucky me.

And it just keeps getting worse... more than 65,000 jobs to be cut

You have to wonder when the bottom is going to fall out with this economy. It certainly hasn't yet:

Employers have tried to nip and tuck their labor costs by reducing overtime, shortening the workweek and freezing wages, but now, they are reaching for the saw.

On Monday alone, companies across the employment spectrum announced more than 65,000 job cuts in the United States and around the world, a stark sign that businesses are enduring a painful, protracted downturn.

Monday’s toll included 20,000 cuts at Caterpillar, the world’s largest maker of construction and mining machinery; 8,000 jobs at the wireless provider Sprint Nextel; 7,000 workers at Home Depot, and 8,000 from the expected merger of the pharmaceutical makers Pfizer and Wyeth. The beleaguered automaker General Motors announced that it would cut shifts at plants in Michigan and Ohio, where the downturn has hit hardest, eliminating some 2,000 jobs.

And Texas Instruments said after the market closed on Monday that it would cut 3,400 jobs or 12 percent of its work force through 1,800 layoffs and 1,600 buyouts or retirements.

Circuit City Going Out of Business

If you need to go buy electronics, now is the time to go do it at Circuit City:

Bankrupt Circuit City Stores Inc., unable to work out a sale of the company, said Friday it will go out of business _ closing its 567 U.S. stores and cutting 30,000 jobs.

The nation's second-biggest consumer electronics retailer is the latest casualty of an unprecedented pullback in consumer spending that has driven other brands such as KB Toys, Mervyns LLC and Linens 'N Things into bankruptcy. Experts believe there will be more to come.

"This is the only possible path for our company," Circuit City's acting Chief Executive James A. Marcum said in a statement. "We are extremely disappointed by this outcome."

Jeez. How much worse can this economy get?

The World is Crumbling: Unemployment Hits 7.2%, 16-Year High

Looks the world continues to go to shit in 2009. So far it looks like the only people who are having a good 2009 are me, Roland Burris and Slumdog Millionaire:

With the recession in full swing, the nation’s employers shed 524,000 jobs in December, the government reported Friday, and a rapidly deteriorating economy promised more significant losses in the months ahead. December’s job losses brought the total for 2008 to 2.6 million, spanning a recession that started 12 months ago.

The unemployment rate jumped to 7.2 percent in December from 6.8 percent in November and 5 percent last April, when the recession was four months old and just beginning to bite. More than 11 million Americans are now unemployed, and their growing ranks seem likely to put pressure on President-elect Barack Obama and Congress to act quickly on a stimulus packagethat mixes tax cuts and public spending.

“These numbers, back to back, of more than a half million a month suggest that the U.S. economy is in a freefall,” said Nariman Behravesh, chief economist at IHS Global Insight. “It’s scary, and it indicates that unless something is done and done quickly to turn this economy around, we’re looking at an awful situation this year.”

Feds cut interest rates to nearly zero

I didn't get to comment on this the other day, not that anyone gives a shit about my opinion but the Fed lowered the interest rate to nearly zero, and it's bound to effect us all:

The Fed's decision to nudge its key fed funds rate to a range of zero to 0.25% — along with its plans to buy securities that are backed by mortgages — should mean lower consumer interest rates, particularly mortgage rates. Low mortgage rates mean that more people can afford to buy houses, which will help revive the moribund housing market. A drop in mortgage rates will also allow homeowners to refinance their loans at lower rates, easing some of the burdens of their debts.

Low rates also make it cheaper for companies to borrow and expand. That, in turn, is a powerful economic stimulus. Most major banks, including Bank of America and Wachovia, lowered their prime lending rate to 3.25% from 4% Tuesday...

Well, you have to hand to the government at least, they aren't sitting on their hands Herbert Hoover style, watching the unemployment rate hit double digits. Hopefully it will help.

But it should be noted there is a reason that they are lowering the interest rates so low. It's because the economy sucks more than balls it has in over 50 years. Just from my own anecdotal evidence, I know about 20 people who lost their jobs in the past 6 months. It's only going to get worse before it gets better...

Oh Fuck... Jobless Rate Soars to 6.7% in November

Well we knew the economy was bad. Stock prices are dropping. Big banks are going under. But I'm not sure anyone knew it was this bad:

With the economy deteriorating rapidly, the nation’s employers shed 533,000 jobs in November, the 11th consecutive monthly decline, the government reported Friday morning, and the unemployment rate rose to 6.7 percent.

The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.

All I can say is holy motherfucking shit. This is already the longest recession since the Great Depression. And things are not getting better anytime soon... expect things to get worse.

Recession officially started in December 2007, Dow drops 680 points

I remember having a conversation with a very conservative friend in December 2007; it could have been in January or February of 2008 as well. I declared then that the economy was very close to recession; all of the indicators showed it. The number of jobs being created was slowing, the housing bubble was on the verge of collapse and while the Dow was still very high, there were signs that it would begin to fall too...

My friend, a disciple of Sean Hannity, declared how wrong I was, how there was no recession in sight, that I was a liberal boogieman trying to bring socialism to the free market. He cited obscure stats on websites, and mentioned President George W. Bush and Sean Hannity as evidence.

I scoffed. I told him obviously his view had everything to do with right-wing politics, and mine had nothing to do with politics. I know little about the complexity of economic theory, but I know who are gutless ideologues, and who are smart people assessing a situation based on their intelligence, and at the time all the people who I believed were smart, were telling me that the economy was in trouble.

Flash-forward to today:

The difference, of course, is that the country entered a recession exactly one year ago, at least according to the Business Cycle Dating Committee, which is made up of seven prominent economists, most from the academic sector. The group made their official announcement on Monday that the economy entered a recession in December 2007.

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators,” the members said in a statement. “A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough.”

The committee noted that the contraction in the labor market began in the first month of 2008 and said that the declines in most major indicators, like personal income, manufacturing activity, retail sales, and industrial production, “met the standard for a recession.”

“Many of these indicators, including monthly data on the largest component of G.D.P., consumption, have declined sharply in recent months,” they wrote.

Well, let me say this now to George W., Sean Hannity and my friend: I fucking told you so. In my view, this is just another data point that partisan hacks are the worst way to run a government. I've made this argument before on this blog, so I will not bore you with more rants, but geez, how can one man, his administration and his cronies, be so hugely wrong about so many things?