It's Still The Economy, Stupid


Friday, September 05, 2003  

Jobs market still stagnant

On Thursday, the Labor Department released data showing unemployment claims had "unexpectedly" risen to 413,000 for the week. Today, BLS released data showing the economy had "unexpectedly" lost another 93,000 jobs.

I'm at issue with how unexpected these numbers are. If corporate profits are stagnant, state and local governments are contemplating layoffs to fix their budget woes, and industrial capacity is well below the level needed to require new workers, I don't see how any improvement in the employment or unemployment situation can be very long-lived. Most economic forecasts, however, are based more on the prevailing trend of the data, since changes in trend are rare and economists are trying to minimize the magnitude of their error. Seemingly, the press treats these forecasts somewhat like the Oracle of Delphi. I anticipate their shock and alarm when next quarter's GDP growth comes in significantly less than the 3.5% that is currently being forecast.

Meanwhile, as we have come to expect, the Bush administration followed up this bad job news with another terror alert. The Fed and Co are rushing to damage control too. It seems Fed Governor Bernanke thinks deflation is just as bad as Al-Qaeda.

For those keeping score at home, the number of jobs lost since Bush's inauguration is now 2,675,000. Yesterday, Atrios gives us the shorter George Bush.

posted by Teddy | 7:10 AM |


Wednesday, September 03, 2003  

Still bleeding

We're quickly learning what happens when the Federal Reserve tries to stimulate an economy that doesn't need to create jobs. As a result, we should see the last week's GDP release tempered by another mediocre Employment Situation. At the forecasted rate of 15,000 new jobs for August, employment should recover to February 2001 levels in, oh, 139 years. Remind me to dig up George Bush's corpse and congratulate him.

The rally this week in stocks continues to beat up bonds. The benchmark 10-year treasury had yet another one point decline and the yield rose to a new high for the year at 4.6%. The one-and-a-half point increase has dropped refinancing activity by 80%. When mortgage brokers start worring about their jobs, what does that say for the rest of us?

Continue reading "Still Bleeding" over at thehotseat.

posted by Teddy | 12:01 PM |
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