Financial Crisis - 2013 - ????

[Ryan Ruck]

News came out today that GDP reportedly rose 4% for 2014 Q2... Do they really expect us to believe a whopping 7 point swing happened?

U.S. GDP Grew 4% In The Second Quarter 2014

July 30, 2014



After an abysmal first quarter, the U.S. economy picked up steam in the second quarter with GDP coming in much stronger than expected.

On Wednesday, the Bureau of Economic Analysis released its advance estimate of real gross domestic product for the second quarter of 2014 — covering April, May and June of this year. The release showed output in the U.S. increasing at an annual rate of 4%. This is relative to the first quarter when real GDP declined 2.1% (an improvement from a previous estimate which showed a 2.9% decline).

In a note on the GDP number Joseph Lake, US analyst for The Economist Intelligence Unit, wrote, “The GDP numbers released this morning confirm what has been clear from business, consumer and labour market indicators over recent months: the US economy is making slow but steady improvement.” Lake added that that the economy has picked up the “ground that it lost in the largely weather-related slump in the first quarter.”

The increase in real GDP was largely due to growing personal consumption expenditure, private inventory investment, exports, nonresidential fixed investment, state and local government spending and residential fixed investment.

Imports, which negatively impact GDP, increased. Gains were also partially offset but a 0.8% decrease in federal government spending.

Jim Baird, chief investment officer atPlante Moran Financial Advisors, pointed out in a note that gains were “widespread.” Noting, “Whether or not the economy can break out of its sub-par growth pace of the last few years remains to be seen, but stronger job creation and surging confidence are positive signs.”

The price index for gross domestic purchases — which measures prices paid by U.S. residents — increased 1.9%, compared to 1.3% growth in the first quarter. Real personal consumption expenditures increased by 2.5%, up from the 1.2% increase in the first quarter.

The S&P 500 , Dow Jones Industrial Average and Nasdaq Composite were all in the green following the pre-market release.

BEA — a division of the Department of Commerce – will release its second estimate of Q2 GDP on August 28.

[Ryan Ruck]

Energy prices necessarily skyrocketing...

Average Price of Electricity Climbs to All-Time Record

July 29, 2014

For the first time ever, the average price for a kilowatthour (KWH) of electricity in the United States has broken through the 14-cent mark, climbing to a record 14.3 cents in June, according to data released last week by the Bureau of Labor Statistics.

Before this June, the highest the average price for a KWH had ever gone was 13.7 cents, the level it hit in June, July, August and September of last year.

The 14.3-cents average price for a KWH recorded this June is about 4.4 percent higher than that previous record.



Typically, the cost of electricity peaks in summer, declines in fall, and hits its lowest point of the year during winter. In each of the first six months of this year, the average price for a KWH hour of electricity has hit a record for that month. In June, it hit the all-time record.

Although the price for an average KWH hit its all-time record in June, the seasonally adjusted electricity price index--which measures changes in the price of electricity relative to a value of 100 and adjusts for seasonal fluctuations in price--hit its all-time high of 209.341 in March of this year, according to BLS. In June, it was slightly below that level, at 209.144.

Back in June 1984, the seasonally adjusted price index for electricity was 103.9—less than half what it was in June 2014.

Electricity prices have not always risen in the United States. The BLS has published an annual electricity price index dating back to 1913. It shows that from that year through 1947, the price of electricity in the United States generally trended down, with the index dropping from 45.5 in 1913 to 26.6 in 1947.



In the two decades after that, electricity prices were relatively stable, with the index still only at 29.9 in 1967—an increase of 12.4 percent over two decades.

However, from 2003 to 2013, the annual electricity price index increased from 139.5 to 200.750, a climb of almost 44 percent.

So far, overall annual electricity production peaked in the United States in 2007. Per capita electricity production also peaked in 2007, based on calculations made using data published by the Energy Information Administration and the Census Bureau.

However, in the first four months of this year (January through April)--according to the July edition of the Monthly Energy Review released yesterday by the Energy Information Administration--overall electricity production was up, with the nation having generated a total of 1,329,042 million KWH. That is more than the 1,281,300 million KWH produced in the first four months of 2013---and it is also more than the 1,298,675 million KWH generated in the first four months of the peak production year of 2007.

According to the Census Bureau, however, the resident population of the United States increased from 300,888,674 in April 2007 to 317,787,997 in April 2014. So, per capita electricity production in the first four months of 2014 (0.004182 million KWH per person) was less than the per capita electricity production in the first four months of 2007 (0.004316 million KWH per person).



The composition of U.S. electricity production in January-April 2014 was also somewhat different from the composition of production in January-April 2007. In both years, coal was the top source of electricity. But in the first four months of 2007, coal generated 644,052 million KWH, while in the first four months of 2014 it generated only 548,297 million KWH. That is a drop of 95,755 million KWH or about 14.9 percent.

Electricity production from nuclear power declined from 260,838 million KWH in January-April 2007 to 254,485 in January-April 2014. Electricity production from conventional hydroelectric power declined from 92,873 million KWH to 88,364. And production from petroleum declined from 24,974 million KWH to 14,931.

The largest increase in electricity production came from natural gas—which climbed from generating 234,331 million KWH in the first four months of 2007 to generating 318,958 million KWH in the first four months of 2014.

The 84,627 in additional million KWH of electricity that natural gas generated in the first four months of this year compared to the first four months of 2007 is more than all of the 68,516 million KWH of electricity generated by wind power in the first four months of this year.

The 68,516 million KWH of electricity generated by wind in January through April equaled 5.2 percent of the nation’s electricity supply during that period.

The 4,594 million KWH of electricity generated by solar power equaled 0.35 percent of the nation’s electricity supply in the first four months of the year.

[Ryan Ruck]

A Third Of Americans Delinquent On Debt

July 29, 2014

More than a third of the country is in trouble when it comes to paying debts on time; 35% of Americans have debt in collections, according to a study out Tuesday from the Urban Institute, which analyzed the credit files of 7 million Americans.

That means the debt is so far past due that the account has been closed and placed in collections. This typically happens after the bill hasn't been paid for 180 days. It also means the debt has been reported to credit bureaus and can affect someone's credit score.

Southern states especially stand out with the highest concentration of people delinquent. In 13 states — Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Texas, Nevada, New Mexico and West Virginia — and Washington, D.C., more than 40% of the population with a credit file has debt in collections. Nevada, one of the states hardest hit by the housing crisis and recession, has the highest share, at 46.9%.

The 77 million Americans with debt in collections owe an average of $5,200. That includes debt from credit card bills, child support, medical bills, utility bills, parking tickets or membership fees.

The share of delinquent households is "pretty disheartening," says Josh Bivens, research and policy director at the Economic Policy Institute. He calls the data a "powerful" reminder of the fact that many Americans are still battling for economic stability since the end of the recession.

"This is yet another really bad legacy of the Great Recession that we're just nowhere near climbing all the way out of," he says.

At the same time, a significant number of people with debt in collections aren't aware of the bill and may otherwise have great credit, especially when it comes to medical bills that patients often think were picked up by insurance, says Greg McBride, chief financial analyst for Bankrate.com.

"The numbers don't necessarily speak to the percentage of households that haven't been paying their obligations," he says of the data.

The research only draws on data from Americans with a credit file, so the researchers say lower-income consumers are underrepresented, and alternative forms of debt such as payday loans aren't included.

When it comes to overall debt levels, most comes from mortgages, which make up 70%, on average, of Americans' debt load. Wealthier states tend to have the highest amount of debt and percentage of debt held in mortgages, but the researchers point out that Americans with higher debt may also have higher incomes and better access to credit.

Hawaii tops the list with an average debt of $83,810; 80% of that is held in mortgages. States along the West and East Coasts follow closely behind. Those areas also have the highest housing prices.

"Total debt really mimics mortgage debt," says Caroline Ratcliffe, a senior fellow at the Urban Institute and one of the authors of the report. Ratcliffe classifies mortgage debt as what's generally considered "productive debt."

"We talk about credit and access to credit as a good thing, but debt as a bad thing," she says. "Access to credit can result in productive debt that moves us forward."

Among Americans with credit history, the average total debt load is nearly $54,000. But that number is significantly skewed once you factor in debt from mortgages. Americans with a mortgage have an average overall debt of about $209,000 compared with about $11,600 for those without a mortgage. Twenty percent of Americans with a credit report have no debt.

McBride cautions that mortgage debt isn't necessarily a negative financial indicator.

"Somebody with $400,000 in mortgage debt and no other debts could be in much better financial shape than the person with no mortgage debt but $10,000 in consumer debt," he says.

The states with the highest share of people with debt in collections are ranked relatively low when it comes to average mortgage debt, the data show. The researchers found mortgage debt is concentrated in high-cost, high-price areas, Ratcliffe says. The top 20% of areas with the highest mortgage debt account for almost half of all mortgage debt.

[Ryan Ruck]

11,472,000 Americans Have Left Workforce Since Obama Took Office

August 1, 2014

11.4 million Americans age 16 and over have left the workforce since President Obama took office in January 2009, according to data released today from the Bureau of Labor Statistics (BLS).

In July 2014, there were 92,001,000 Americans, 16 and over, who were classified as “not in the labor force,” meaning they not only did not have a job, but they didn’t actively seek one in the last four weeks.

This number has increased by 11,472,000 since January 2009, when the number of Americans not in the labor force was 80,529,000.

The number of Americans not in the labor force dropped slightly in July, down 119,000 from the 92,120,000 Americans not in the labor force in June.

The participation rate, which measures the percentage of the civilian non-institutional population that participated in the labor force by either having a job or actively seeking one, increased from 62.8 percent in June to 62.9 percent in July.

In July, the number of unemployed Americans increased by 197,000 (from 9,474,000 in June to 9,671,000 in July), meaning they did not have a job even though they were actively seeking one.

While the number of unemployed increased in July, so did the number of employed Americans: In June, there were 146,221,000 employed Americans, and that number climbed to 146,352,000 in July, a one-month increase of 131,000.

The unemployment rate increased from 6.1 percent in June to 6.2 percent in July.

[Ryan Ruck]

Since I got a vacuum sealer earlier this year I've been going back and sealing up frozen food I previously had in freezer bags.

About this time last year I had started putting price per pound on the meats I was buying.

Since February of this year, the price per pound on the bone-in pork chops and boneless pork ribs I buy has gone from $1.98/lb to $2.99/lb. It had been steady at $1.98/lb since I first started marking the prices.

I'm betting a combination of PEDV and the economy. Food prices are at all time highs...

Price Index for Meats, Poultry, Fish & Eggs Rockets to All-Time High

June 17, 2014

The seasonally-adjusted price index for meats, poultry, fish, and eggs hit an all-time high in May, according to data from the Bureau of Labor Statistics (BLS).

In January 1967, when the BLS started tracking this measure, the index for meats, poultry, fish, and eggs was 38.1. As of last May, it was 234.572. By this January, it hit 240.006. By April, it hit 249.362. And, in May, it climbed to a record 252.832.

“The index for meats, poultry, fish and eggs has risen 7.7 percent over the span [last year],” says the BLS. “The index for food at home increased 0.7 percent, its largest increase since July 2011. Five of the six major grocery store food group indexes increased in May. The index for meats, poultry, fish, and eggs rose 1.4 percent in May after a 1.5 increase in April, with virtually all its major components increasing,” BLS states.



In addition to this food index, the price for fresh whole chickens hit its all-time high in the United States in May.

In January 1980, when the BLS started tracking the price of this commodity, fresh whole chickens cost $0.70 per pound. By this May 2014, fresh whole chickens cost $1.56 per pound.

A decade ago, in May 2004, a pound of fresh chicken cost $1.04. Since then, the price has gone up 50%.

Each month, the BLS employs data collectors to visit thousands of retail stores all over the United States to obtain information on the prices of thousands of items to measure changes for the Consumer Price Index (CPI).

The CPI is simply the average change over time in prices paid by consumers for a market basket of goods and services.

The BLS found that there was a 0.7% change in the prices for the food at home index in May, which tracks foods like meats, poultry, fish, eggs and dairy, as well as many others.

[American Patriot]

My wife was SHOCKED when we held a celebration party at the house a weekend back. We bought burgers, hot dogs and bratwurst, along with some steaks to go in the freezer for us for later.

She couldn't believe how expensive meat had gotten since she was shopping back in January last.

(My son and myself have been taking care of things and we've seen the steady increase. She got it all in one big splatter).

[American Patriot]

America Keeps People Poor On Purpose: A Timeline of Choices We've Made to Increase Inequality

How four decades of lobbying and legislation gave corporations dominion over our economy—and eroded the American middle class.
Document Actions

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posted Aug 21, 2014

---

This infographic was featured in The End Of Poverty, the Fall 2014 issue of YES! Magazine. It was adapted from Who Stole the American Dream? by Hedrick Smith. Random House Publishing Group, 2012, 592 pages.
Read more:

[American Patriot]

Well... I can't read that:

http://www.yesmagazine.org/issues/th...ces-we-ve-made

[American Patriot]

Here you go... it's all your bloody fault for saving your money.

Report: It’s YOUR Fault: Fed Says Americans Who “Hoard Money” Are To Blame For Poor Economy

September 8, 2014 / Daniel Crane

Despite arguments to the contrary from the Obama administration, mounting evidence suggests that the U.S. economy is rapidly falling back into negative growth territory. More Americans are out of the workforce than ever before, median household incomes are at levels not seen since 1967, and consumer spending is coming to a veritable standstill. The crisis is apparently so significant that a Federal Reserve governor recently said U.S. policymakers are crafting regulations that will force bank depositors to cover any losses should their financial institutions fail.


The question that many are asking is, how did this happen? How, after six years of recovery efforts and trillions of dollars printed, is it possible that the economy is not booming again?


This week the Federal Reserve published a report that claims to have figured it out and it turns out that the renewed economic downturn has nothing to do with foreign outsourcing, high taxation, increased health care costs for business or rising consumer prices for food and energy.


No, according to the Fed it is your fault. Apparently, you are not spending enough money. In order for the economy to recover you need to stop hoarding cash now and get out there and start buying more homes, cars, vacations, and electronics. Otherwise, you’ll only have yourself to blame when the system comes unhinged.
From the St. Louis Federal Reserve:

The issue has to do with the velocity of money, which has never been constant, as can be seen in the figure below . If for some reason the money velocity declines rapidly during an expansionary monetary policy period, it can offset the increase in money supply and even lead to deflation instead of inflation.


During the first and second quarters of 2014, the velocity of the monetary base2 was at 4.4, its slowest pace on record.


This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. This implies that the unprecedented monetary base increase driven by the Fed’s large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP.


Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP

Written by Mac Slavo
www.SHTFplan.com

Read more at The Daily Sheeple

[American Patriot]

Dollar gains as sterling, Aussie dollar and Brazilian real drop

By Karen Brettell
NEW YORK Mon Sep 8, 2014 1:15pm EDT

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Wads of British Pound Sterling banknotes are stacked in piles at the GSA Austria (Money Service Austria) company's headquarters in Vienna July 22, 2013.
Credit: Reuters/Leonhard Foeger







(Reuters) - The U.S. dollar gained against a basket of currencies on Monday to its highest in over a year as sterling plunged on fears over the outcome of Scotland's upcoming independence referendum and the Australian and Brazilian currencies also dropped.
Sterling dived to its lowest against the dollar in nearly 10 months after a poll for the first time showed Scotland was ready to vote to break up its three-century-old union with the rest of the United Kingdom.
With just 10 days until the referendum, a YouGov survey for the Sunday Times newspaper put approval of independence at 51 percent against the 'no' camp's 49 percent.
"The speed with which the polls have flipped has clearly been a shock to a lot of people," said Adam Myers, European head of FX strategy at Credit Agricole in London.
Until a week ago, financial markets and London-based authorities had regarded the risk of Scotland's departure as unlikely.
Sterling sank more than 1 percent, its most in 13 months, to trade at $1.6129 against the dollar. It was also almost 1 percent lower against the euro, driving the Bank of England's trade-weighted sterling index to its lowest since the end of April.
The dollar index rose to its highest levels since July 2013 as the Australian dollar and Brazilian real also dropped against the currency.
The Australian dollar fell 0.96 percent to US $0.9289, backing off from Friday's level of $0.9403, its highest since late July.
The Aussie has shown resilience despite recent U.S. dollar strength and a sharp decline in prices of iron ore, Australia's top export earner, in large part due to renewed carry trade demand. Investors are borrowing at low rates in euros and yen to buy higher-yielding Aussie assets.
The Brazilian real fell 0.05 percent as the country's presidential race was shaken up by a corruption scandal that allegedly involves state-run oil firm Petrobras and dozens of lawmakers, with both leading candidates forced onto the defensive after colleagues were implicated.
The greenback has gained despite disappointment over Friday’s U.S. employment report for August.
“Although it disappointed expectations, and many details were not positive, the market tended to overlook the number a little bit,” said Martin Schwerdtfeger, a foreign exchange strategist at TD Securities in Toronto.
“Other indicators are still showing that the U.S. economy will strengthen in the second half of this year," he said. "The payroll number did not change that.”
The euro fell slightly against the dollar, after coming under pressure on Thursday after the European Central Bank cut rates to new lows and launched an asset-purchase program to ward off deflation, and some see it as likely to continue to decline.
Market positioning still indicates a number of investors are short the euro zone currency, which is likely to weigh further, said Schwerdtfeger. “It’s very hard to find anyone at the moment that is trusting that the euro is going to go higher.”
The euro was last at $1.2922, just off a 14-month low of $1.2918 set on Thursday.

[Ryan Ruck]

U.S. Wages Down 23% Since 2008

August 11, 2014

U.S. jobs pay an average 23% less today than they did before the 2008 recession, according to a new report released on Monday by the United States Conference of Mayors.

In total, the report found $93 billion in lost wages.

Jobs lost during the recession paid an average $61,637. As of 2014, jobs in the same sectors paid an average of $47,171 annually.

"Under a similar analysis conducted by the Conference of Mayors during the 2001-2002 recession, the wage gap was only 12% compared to the current 23%--meaning the wage gap has nearly doubled from one recession to the next," stated the Conference of Mayors in a statement.

The report also found that 73% of metro area households earn salaries of less than $35,000 a year.

President Barack Obama, who is on a two-week vacation at Martha's Vineyard, has yet to comment on the dour economic findings.

[Ryan Ruck]

Survey: Americans' Pessimism On Economy Has Grown

August 28, 2014

Americans are more anxious about the economy now than they were right after the Great Recession ended despite stock market gains, falling unemployment, and growth moving closer to full health.

Seventy-one percent of Americans say they think the recession exerted a permanent drag on the economy, according to a survey being released Thursday by Rutgers University. By contrast, in November 2009, five months after the recession officially ended, the Rutgers researchers found that only 49 percent thought the downturn would have lasting damage.

And that was when the unemployment rate was 9.9 percent, compared with the current 6.2 percent.

"They're more negative than they were five years ago," said Rutgers public policy professor Carl Van Horn.

The slow pace of improvement during most of the recovery, now in its sixth year, has eroded confidence and slowed a return to the pay levels that many enjoyed before the economy suffered its worst collapse since the 1930s. About 42 percent of those surveyed say they have less pay and savings than before the recession began in late 2007. Just 7 percent say they're significantly better off.

The survey results dovetail with estimates that the median household income was $53,891 in June, according to Sentier Research. That's down from an inflation-adjusted $56,604 at the start of the recession.

Each year of subpar growth has compounded the anxieties of many Americans. In contrast to the robust snapbacks that coincided with most economic rebounds, this recovery proved tepid well after the recession had ended. Consumers struggled with an overhang of mortgage debt and the risk of layoffs for much of the recovery. A majority of those surveyed say they fear that job security has all but disappeared and that they'll have little choice but to work part time during retirement.

"No current worker had ever experienced this before," Van Horn said. "This recession was everywhere."

Researchers at Rutgers' John J. Heldrich Center for Workforce Development surveyed online a national cross-section of 1,153 adults between July 24 and August 3. The margin of error was plus or minus 3 percentage points. The survey is part of a broader series of polls taken over multiple years to study the consequences of the recession for workers.

Recent evidence of economic strength has done little to brighten most Americans' outlooks. The Standard and Poor's 500 stock index has surged more than 170 percent since bottoming in March 2009. Yet only 14 percent of the respondents said the gains have affected them a lot —a sign of either meager investments or the extent to which families unloaded their stock holdings near the bottom of the market.

Employers have added an average of more than 244,000 jobs a month since February, a vigorous pace that recalls the dot-com era of the 1990s.

Over the past 12 months, the unemployment rate has dropped more than a full percentage point from 7.3 percent to a nearly normal 6.2 percent.

This month, job growth helped propel the Conference Board's consumer confidence index to its highest reading since October 2007. The index often tracks the unemployment rate.

The gap between the index and the Rutgers survey likely reflects the type of questions posed by the university researchers. They asked about family finances, job satisfaction, retirement plans and the specific consequences of the recession. By contrast, the confidence index asks about broader perceptions of business and employment conditions and plans to buy autos, homes and household appliances.

[Ryan Ruck]

Record 92,269,000 Not in Labor Force; Participation Rate Matches 36-Year Low

September 5, 2014

A record 92,269,000 Americans 16 and older did not participate in the labor force in August, as the labor force participation rate matched a 36-year low of 62.8 percent, according to the Bureau of Labor Statistics.

The labor force participation rate has been as low as 62.8 percent in six of the last twelve months, but prior to last October had not fallen that low since 1978.

BLS employment statistics are based on the civilian noninstitutional population, which consists of all people 16 or older who were not in the military or an institution such as a prison, mental hospital or nursing home.

In August, the civilian noninstitutional population was 248,229,000 according to BLS. Of that 248,229,000, 155,959,000—or 62.8 percent--participated in the labor force, meaning they either had or job or had actively sought one in the last four weeks.



The 92,269,000 who did not participate in the labor force are those in the civilian noninstitutional population who did not have a job and did not actively seek one in the last four weeks. Because they did not seek a job, they did not count as “unemployed.”

Of the 155,959,000 who did participate in the labor force, 146,368,000 had a job and 9,591,000 did not have a job but actively sought one. The 9,591,000 are the unemployed. They equaled 6.1 percent of the labor force—or an unemployment rate of 6.1 percent (which was down slightly from the 6.2 percent unemployment rate in July).

The 146,368,000 people employed in the United States in August was up 16,000 from the 146,352,000 who were employed in July.

[Ryan Ruck]

Japan Says Economy Contracted 7.1 Percent In 2Q

September 8, 2014

Japan's economy shrank more sharply in the second quarter than first estimated and the latest indicators suggest only a modest bounce back since then.

The world's third-largest economy contracted at an annualized rate of 7.1 percent in the April-June quarter, according to updated government figures Monday. The initial estimate released earlier this month said the economy contracted 6.8 percent. Business investment fell more than twice as much as first estimated.

The economy's contraction was expected after Japan increased its sales tax from 5 percent to 8 percent on April 1.

So far, data for the current July-September quarter suggest any rebound in growth is likely to be modest and slow in materializing.

A government survey of "economy watchers" released Monday showed confidence in the economy's prospects deteriorated in August.

Business activity surged early in the year, with the economy growing 6 percent in January-March, as consumers and businesses stepped up purchases to avoid paying more tax.

Prime Minister Shinzo Abe has championed an aggressive stimulus program aimed at ending chronic deflation that has discouraged corporate investment and dragged on growth. A sustainable recovery will require strong corporate and private spending, since exports and public spending have so far done little to lift growth.

Abe will be watching data from the current quarter as he decides later in the year whether to go ahead with a further 2 point increase in the sales tax to 10 percent in 2015.

Surveys show the public opposes a further tax increase, though increases are needed to counter ballooning public debt, which now is more than twice the size of the economy.

The revised data Monday show business investment fell more than twice as much as estimated before, or 5.1 percent, while private residential spending sank 10.4 percent in annual terms.

"Theoretically, there should be no impact from the consumption tax increase on corporate spending or long-term corporate planning, but a large number of Japanese corporations seemed to see a large impact from the hike on final demand," said Junko Nishioka, an economist at RBS Japan Securities in Tokyo.

"We are not that pessimistic for the future picture of the Japanese economy," Nishioka said, forecasting a "V-shaped recovery," supported by stronger wage growth.

Conditions remained weak in July. Real incomes fell 6.2 percent from a year earlier and household spending dropped.

The survey of economy watches, a grassroots assortment of service industry workers and others thought to have a good real-time sense of business activity, was at 47.4 in August, down from 51.3 in July and the first drop in five months.

"Industrial production was still 2 percent below the second quarter average in July, and we have yet to see a turnaround in capital spending," Marcel Thieliant of Capital Economics said in a commentary.

[Ryan Ruck]

Survey: U.S. Workers Face A Dim Future

September 8, 2014

U.S. workers face a dim future, with stagnant or falling pay and fewer openings for full-time jobs.

That's the picture that emerges from a survey of Harvard Business School alumni.

More than 40 percent of the respondents foresee lower pay and benefits for workers. Roughly half favor outsourcing work over hiring staffers. A growing share prefer part-time employees. Nearly half would rather invest in new technology than hire or retain workers.

At the same time, it's becoming harder for the executives to find skilled workers, according to the survey results being released Monday.

Jan Rivkin, one of the survey's lead authors, suggested that a failure by companies to develop a skilled workforce could ultimately hurt those companies and the competitiveness of the U.S. economy.

"The bleak picture facing middle and working class Americans are the canary in our coal mine," said Rivkin, a Harvard business professor. "Eventually, that will come back to haunt business."

The survey reflects the unevenness of the recovery from the Great Recession. Since the recession officially ended more than five years ago, many of the gains in employment, income and wealth have failed to circulate through the entire economy.

Few workers have received meaningful pay raises. Median household incomes, adjusted for inflation, are below their pre-recession levels, according to estimates by Sentier Research. The median income was $54,045 in July, about 4.6 percent lower than when the recession began in late 2007.

The survey suggests that incomes aren't likely to increase much anytime soon. Forty-one percent of respondents see lower wages and benefits ahead; just 27 percent expect pay raises.

The survey's responses run counter to some traditional economic models. Historically, a falling unemployment rate — the U.S. rate has dropped steadily to 6.1 percent — tends to spur competition among employers for workers and leads them to raise wages and salaries.

The survey found that many companies are reluctant to add jobs if other alternatives exist. Only 25 percent said they preferred investing in employees, compared with 46 percent who would rather spend on technology. Forty-nine percent favored outsourcing work over hiring.

The companies have become more dependent on part-timers in the past three years and say it's harder to fill skilled positions.

The survey report notes that companies could invest more in education to improve workers' skills. Companies tend to donate to schools for computers, backpacks and scholarships, rather than programs that might better prepare students for careers. Only 27 percent of respondents said their companies have partnerships with community colleges.

The survey drew on responses from 1,947 Harvard Business School graduates, ranging in age from 26 to 98. Among the respondents who are working, 40 percent said they had a title of chief executive or its equivalent.

The economic recovery has left many executives feeling more optimistic about the competitiveness of the U.S. economy compared with the first survey of alumni taken three years ago. Slightly less than half say the economy is becoming less competitive relative to other countries. That marks an improvement from 71 percent who said so in 2011 and 58 percent who did in 2012.

These executives have reasons to be more upbeat. The Standard & Poor's 500 stock index closed last week at a record high. Stock gains have been fueled in part by solid profits from publicly traded companies. And the median compensation for a chief executive at a publicly traded company topped $10.5 million last year, according to an analysis by the Associated Press.

But the survey results indicate that such gains might ultimately be unsustainable. Without educated workers and rising standards of living, the economy faces a greater risk of stagnating. The results indicate that doubts about the economy have faded during the recovery but that the economic divide poses a longer-term challenge to continued growth.

"One way to think about it: The ship is sinking more slowly," Rivkin said.

[Ryan Ruck]

Milk Costs Most Ever To Signal Higher Prices For Pizza

September 8, 2014

Milk futures rose to a record as exports by the U.S. climbed amid shrinking inventories of cheese and butter, signaling higher costs for pizza and pastries.\

The U.S. shipped a record 17 percent of milk production in the first half, according to Alan Levitt, a spokesman at the U.S. Dairy Export Council. Cheese stockpiles in July dropped 8 percent from a year earlier, and butter supplies tumbled 42 percent, the Department of Agriculture said last month. U.S. dairy costs are higher than world prices, signaling imports will increase, said Jon Spainhour, a partner at Rice Dairy LLC.

“Usually, we use the first six months of the year to build the inventory we’re going to sell in the last six months,” Spainhour said in a telephone interview from Chicago. “People are saying that ‘I know those imports are coming in, but in the meantime, I’ve got to make sure I’ve got enough to get on the supermarket shelf.’ ”

Milk futures for September settlement rose 0.7 percent to close at $24.45 per 100 pounds at 1:11 p.m. on the Chicago Mercantile Exchange. Earlier, the class III variety, used as a cheese benchmark, reached a record $24.47. The price has jumped 26 percent this year.

Dairy consumption increases in the North American autumn as U.S. football fans boost pizza orders and bakers need more butter for holiday cakes and pastries, Spainhour said.

U.S. cheese consumption will rise to a record 4.88 million metric tons in 2014, USDA data shows. Milk use will climb to an all-time high of 93.4 million tons.

“We just didn’t build the stocks we needed to, and domestic cheese buyers are still scrambling to build that inventory,” Spainhour said.

In July, retail whole milk was $3.65 a gallon, the most for the month since 2011, according to the Bureau of Labor Statistics.

[Ryan Ruck]

U.S. Labor Market Is Losing Flexibility, and That's a Bad Sign For Jobs

September 9, 2014

Last week we heard from the Bureau of Labor Statistics that job growth in August was disappointing—and that labor force participation is as low as it's been in decades. Last month, a Brookings Institution study said our economy is is increasingly dominated by older, established firms, with a decline in entrepreneurship of the sort that drives innovation and job growth. Now, a paper from Steven Davis of the University of Chicago and John Haltiwanger of the University of Maryland says American job markets have become less fluid. There's less shifting among jobs and reduced "churn" (hiring and firing) at least partially because of increased dominance of the economy by large, established firms. Just as bad, the labor markets are increasingly burdened by regulation. This is a problem, they argue, because "reduced fluidity has harmful consequences for productivity, real wages and employment."

I can't be the only one seeing a pattern here.

Government regulation almost certainly plays a big role in the increased dominance of the U.S. economy by large firms. The Index of Economic Freedom points out, "the overall cost of meeting regulatory requirements has increased by over $60 billion since 2009, with more than 130 new regulations imposed." The Fraser Institute's Economic Freedom of the World: 2013 Annual Report (PDF) is tougher, noting that that "To a large degree, the United States has experienced a significant move away from rule of law and toward a highly regulated, politicized state."

While the Index insists "The labor market...remains flexible," this is not a regulatory environment conducive to the creation of new firms without politicial connections and inexperienced in navigating red tape. It is an environment that advantages large, established firms that can survive the bureaucracy—but which don't make for the fluid job markets that Davis and Haltiwanger find so beneficial.

And there's a real question as to how flexible America's labor markets remain. Davis and Haltiwanger write:

[G]overnment restrictions on who can work in which jobs have expanded greatly over time...the fraction of workers required to hold a government-issued license to do their jobs rose from less than 5 percent in the 1950s to 29 percent in 2008. Adding workers who require government certification, or who are in the process of becoming licensed or certified, brings the share of workers in jobs that require a government-issued license or certification to 38 percent as of 2008.

They add that "the spread of occupational licensing and certification raises the cost of occupational mobility." They also point to other regulations, such as minimum wage rules and the erosion of employment-at-will, which "reduce labor market fluidity, sometimes by design."

The Economist points out that the heavily regulated labor market is a model that has proved disastrous for economic dynamism and the simple ability to make a living elsewhere.

In Spain, for example, centralised wage bargaining and other protections for workers made it difficult for employers to sack permanent employees or cut their wages (these rules were recently eased). Instead, firms hired armies of temporary workers, who bore the brunt of the massive job losses that began in 2007.

America has long been an exception where workers might lose jobs but could easily find new ones—and where it was relatively easy to take risks with the new businesses that created those new jobs. As that changes, we risk sinking into the doldrums that have given Europe such a sluggish economy, and which may have already gained a foothold here.

[Ryan Ruck]

Happy days are here again! Can't you all feel the surge?

Surge Of Hiring Cuts US Jobless Rate To 5.9 Pct.

October 3, 2014

A surge in hiring last month helped drive the nation's unemployment rate down to a six-year low of 5.9 percent - within striking distance of what economists consider a healthy level.

The encouraging numbers - contained in the last government report on unemployment before the midterm elections - pushed the Dow Jones average up 209 points to 17,010 and could give an important boost at the polls to Democrats and to incumbents in general.

U.S. employers added a robust 248,000 jobs in September and generated 69,000 more jobs in July and August than previously reported, the government said Friday. That helped bring unemployment down from 6.1 percent in August.

The jobless rate now stands at the lowest level since July 2008, in the middle of the Great Recession, and is getting close to the roughly 5.5 percent that the Federal Reserve considers consistent with a healthy economy.

In a speech in Princeton, Indiana, President Barack Obama exulted over the numbers, noting that businesses have added jobs for 55 months in a row, the longest such stretch on record.

He credited "the drive and determination of the American people," and added: "It's also got a little bit to do with some decisions we made pretty early on in my administration."

Nevertheless, other gauges of the job market still bear scars from the recession. Wages aren't rising. And the number of people out of a job for more than six months or stuck in part-time jobs when they want full-time ones remains elevated.

An Associated Press-GfK poll found that the economy is the top issue in voters' minds as the Nov. 4 elections near, and while most signs point toward improvement, 62 percent of likely voters still consider the economy "poor," little changed from two years earlier.

Given the latest conditions, the Fed may not move up its timetable for raising interest rates to control inflation, economists say. Most expect the Fed won't act until the middle of next year.

Friday's data "are generally consistent with the Fed's economic forecasts and therefore should not change their thinking," Doug Handler, an economist at IHS Global Insight, said in a note to clients.

The Fed has kept its benchmark interest rate near zero for almost six years in an effort to encourage more borrowing, spending and growth.

When the Fed begins raising the rate, the effects will ripple throughout the economy and could have a profound impact on businesses and consumers. Rates for mortgages, auto loans and credit cards will probably rise. Businesses may cut back on borrowing. And stock markets frequently drop when rates rise.

Lower unemployment usually forces up wages as employers bid for a dwindling supply of job-hunters. Higher paychecks can also push up prices. Some Fed policymakers have already warned that unemployment is low enough to spur higher inflation.

But Fed Chair Janet Yellen has said the unemployment rate may exaggerate the strength of the job market.

For example, there were 7.1 million people working part-time jobs last month even though they want full-time work. That figure is up from just 4.6 million before the recession.

And among the 9.3 million unemployed, 3 million have been out of work for more than six months. That figure has declined in the past three years but is still more than twice its precession level.

Another example: The share of adults working or looking for work fell to just under 63 percent last month, the lowest level in 36 years. That's down from 66 percent before the recession.

About half that decline has occurred because of increasing retirements by baby boomers and other demographic changes, economists say. But much of the rest has occurred because many of the unemployed have gotten discouraged and have given up looking for work.

Average hourly pay fell a penny last month to $24.53. In the past year, it has increased just 2 percent. That's barely ahead of the 1.7 percent inflation rate. In a healthy economy, wages usually rise 3.5 percent to 4 percent a year.

Last month's job gains occurred in many higher-paying industries. Professional and business services, a category that includes engineers, accountants and architects, added 81,000 jobs, the most in seven months. Construction companies added 16,000 jobs, while government jobs, which usually pay solid wages, rose 12,000.

Many economists boosted their economic forecasts after the report and now expect growth will reach an annual rate of 3.5 percent in the July-September quarter. That would follow the healthy 4.6 percent pace in the second quarter.

Oh, wait, that's not the economy surging. That's just the constant stream of bullshit!

4 Of 5 Top Job Additions In September Were Low Or Minimum Wage

October 3, 2014

Interested why despite the euphoric headline NFP print, a cursory glance deeper inside the payrolls report reveals weakness after weakness, with both participation plunging again and wages the worst since last summer? Here is the answer: 4 of the top 5 largest job additions in September, retail trade, leisure and hospitality, education and health and temp help, were of the lowest quality, and paying, jobs possible. So yes, America added a whole lot of minimum wage waiters, store clerks, groundskeepers and temps: truly the stuff New Normal "recoveries" are made of.

And even more good news!

Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force

October 3, 2014

While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest print since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate, which in September slid from an already three decade low 62.8% to 62.7% - the lowest in over 36 years, matching the February 1978 lows. And while according to the Household Survey, 232,000 people found jobs, what is more disturbing is that the people not in the labor force, rose to a new record high, increasing by 315,000 to 92.6 million!

And that's how you get a fresh cycle low in the unemployment rate.



So the next time Obama asks you if you are "better off now than 6 years ago" show him this chart of employment to the overall population: it speaks louder than the president ever could.

[Malsua]

Can you smell the books a cookin? It's amazing we have these low unemployment numbers right before an election...and then right after the election, they come back with 'oh, we released bad data, we're correcting it now
"

[American Patriot]

You know what's really sad? They laid off more people here at work. They don't count those contractors in the jobless rates either because there's a "chance" (in HELL) they will be brought back into their companies if things kick off. Not ONE government worker has been laid off.