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Unemployment Crisis Continues | Print |  E-mail
Written by James Heiser   
Friday, 08 October 2010 17:00

The last pre-election monthly report from the Labor Department on the ongoing loss of jobs in the American economy has been released, and the news is likely to bode ill for incumbents. A pattern of underestimations in predictions of weekly and monthly rates of unemployment detracts from President Obama’s efforts to spin the nation’s economic woes to his political advantage.

According to a CNN story, Obama greeted the news as one more opportunity to blame Republicans for not engaging in even more reckless spending that has already taken place:

Obama blamed the net job loss on layoffs at both the U.S. Census and state and local governments. He slammed the GOP for opposing additional state assistance.

"We have to keep doing everything we can to accelerate this economy," he said during a visit to a Maryland brick and masonry company. Too many Americans have been "swept up in the most devastating recession of our lifetimes."

The delivering of such an assessment at a brick and masonry company seems fitting, since the only "acceleration" that is taking place in Obama’s plan for the economy is toward the "brick wall" of national insolvency. With an accumulated federal deficit now over $13.5 trillion — a deficit of over $128,000 per taxpayer — the grotesque financial recklessness of both parties in Washington, D.C. is an established fact.

The administration has consistently overestimated the ability of their economic schemes to alleviate the nation’s economic woes. As noted in early September, the Obama administration had originally claimed that the President’s stimulus plan would have reduced unemployment to 7.5 percent by last month. Instead, the unemployment rate generated by the Labor Department continues to remain stuck at a virtually unchanging rate month after month.

Despite Obama’s efforts to spin the economic news as if a recovery were underway, and merely lagging behind expectations, an article at WashingtonPost.com highlights the long-term damage done to the economy:

The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.

Private payrolls that exclude government agencies climbed 64,000, less than forecast, underscoring the concern expressed by some Federal Reserve policy makers that the rebound from the worst recession since the 1930s has been too slow and may require easier monetary policy. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011, which may restrain consumer spending, the biggest part of the economy.

Given that the same economists who rosily estimated only a 5,000 job drop when the actual rate was 95,000 now say that the unemployment rate will be “at least 9 percent” through the entire next year is profoundly disconcerting, to say the least. When the November election and then the Christmas shopping season has passed, the nation’s economy could easily face the danger of further decline if the newly-elected Congress does not turn from the failed policies that have exacerbated the economic decline.

Despite the unemployment news, some on Wall Street seem bent on continuing to live in denial. The delusional disconnect on Wall Street was noted by Jeff Cox at CNBC.com:

The Dow's rebound to 11,000 on Friday seemed almost inevitabile [sic] as investors shook off all the bad news and instead focused on slivers of hope in jobs, government intervention and politics.

By nearly any measure, Friday's nonfarm employment report was a disappointment: Payrolls dropped 95,000, the so-called "real" unemployment rate jumped to 17.1 percent and one of the few growth areas came in restaurant and bar jobs.

However, the real unemployment number is far more than "disappointing" — it is disastrous. The 17.1 percent rate means that one in six Americans are either unemployed and still looking for a job, or have given up seeking employment. In one respect, one can hardly blame the workers who have given up; after all, for 17 months the official unemployment rate has exceeded 9.4 percent; as Veronica Smith of the AFP observes, this is “the longest stretch since the start of monthly figures in 1948.”

As noted previously, this report is the last monthly assessment prior to the November 2 mid-term elections. What remains to be seen is how voters will respond to a persistent record of unemployment that has extended for nearly a year and a half, and which "experts" now maintain will last for at least the year to come.

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Jay said:

0
Order reduction in mortgage principle
First, the mortgage companies engage in predatory lending practice and now they're engaging in predatory foreclosure practices. At what point, will Congress realize that the ONLY real solution is to provide a non-litigious, orderly manner for home-owners to right the sinking, in the red home-ship.

By this I mean reduce their principle owed. A simple solution would be to force the homeowner and mortgage company to pay for their own appraisals. Then have a binding arbiter average the two, mediate any final details and set the new principle amount. This long slog, death throws we're witnessing is not doing anything to get the housing crisis behind us. In fact, it's making it worse. It's merely extending the misery.

As such and for better or for worse, home prices are WAY over-valued. Globalization has been eating our lunch for 20 years now. The low to middle income family standard of living has decreased substantially over this period, boosted only by the mirage of low interest rates.
 
October 08, 2010
Votes: +0

Flu-Bird said:

0
Wheres the stymulus jobs?
So whats become of the jobs that that pork ladden stymulus package was suppost to create anyway how come the unemployment is rising will our dictator explain this or just go out and play some more golf
 
October 09, 2010
Votes: +2

Rob said:

0
Reduce mortgage principles
jay -

forcing the private industry to reduce the principle owned sounds good and heart warming on the surface. the problem is no one is forced to purchase a house at a specific value. you can claim the mortgage companies engage in predatory lending, but in reality all they are is a middle man pushing non-existent money to people. This non-existent money is what the federal reserve creates and then loans out - as the money permeates the system each bucket the money lands in gets weighted down with interest.

people were not educated or informed enough to purchase a home whose value was inflated. no lender put a gun to my head and forced me to purchase my home.

are millions of homes over-valued and individuals up-side down in the mortgage? yes. but simply making this 'quick fix' of principle reduction does nothing to teach people economic realities. Yes, this is a harsh lesson, but we have millions of people and at least two generations of folks that are totally dependent on gov't largess - lessons such as being upside down in your house need to be learned.

waving a magic wand to force a principle reduction does nothing but make everyone feel good. In the long run everyone will be worse off because a valuable lesson would not be learned.

 
October 10, 2010
Votes: +1

Jay said:

0
@ Rob
Rob,

You make very good points, and my one modification would be to hit people's credit. I had to short-sale my home last December. Well, I used to have excellent credit, now it's just average. It's my understanding that a short-sale only affects one's credit for about 18 months. As such, I should not have suggested that this was a get out of jail free card. Rather, there has to be some consequence to the borrow just as there has to be to the lenders. For the lenders, they'll take it on the chin in terms of write downs and how it affects their bottom line. Again, my biggest problem is that our government isn't thinking of a quicker fix instead of this very long slog we're now on.
 
October 10, 2010
Votes: +0

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