Friday, January 08, 2010

So Much For Good Economic News; 85K Jobs Lost Last Month

Sphere: Related Content

The Obama administration has been talking "green shoots" and other such nonsense about the economy over the last few months with no real data to support the claim. We all want to get out of this economic swamp and Obama knows that in an election year the only thing that will save the House and Senate is some kind of economic turnaround so they caress even the most gloomy numbers to make them better. They talk of a 2nd stimulus when the first has driven us deeper into trouble and other such magic potions and elixirs that will be the magic that will bring us back to where we were four years ago.

None of it works and the employment numbers get bleaker and bleaker:

(Reuters) - U.S. employers cut 85,000 jobs in December, confounding expectations the labor market was finally stabilizing and piling pressure on President Barack Obama to spur job growth.

The jobless rate held steady at 10 percent, the Labor Department said on Friday, but it would have marched higher if a surprisingly large number of discouraged jobseekers had not left the labor force.

November payrolls were revised to show the economy actually added 4,000 jobs rather than losing 11,000, as initially reported, breaking a streak of 22 consecutive monthly losses. With revisions to October, however, the economy lost 1,000 more jobs than previously estimated over those two months.

Unemployment remains the Achilles heel of the economy's recovery from its worst recession in 70 years, with job creation critical to sustaining the recovery when government stimulus fades.
Note the word "unexpectedly" isn't used in this assessment but usually whenever the MSM writes about a new jobs report, those of us living in the real world where Barack Obama is not the Messiah generally expect it to be worse.

Anyway, the recession grow deeper and we haven't even seen the effects that will follow once states realize that the feds can't quite prop up their budgets anymore and the easiest way to cut obligations is to clear the payrolls. How bad will that be? Way worse than even I can dare to fear. Look at this chart taken from a Rockefeller report:

I ask you, where is the money going to come from? States are being starved for revenue, the federal government can't afford anymore debt and if they try to buy more, who will buy with the Chinese growing wary?

That leaves only a massive increase in taxes by the states such as bumping up sales taxes thus stunting purchasing and further hurting jobs and manufacturing. States have no options but to start shedding workers and it won't be blue collar jobs because of union pressure so it will be the middle class management-type positions flooding the job-seeking market with many people who haven't worked in the private sector previously and probably willing to take any job available subsequently driving down earning power. A truly vicious cycle.

But it gets worse. States will severely curtail funding for municipalities and that will drive up property taxes--generally included in ones mortgage--leading to a new round of foreclosures and more bank failures. Again, a vicious cycle.

It's not all bad news, however. If the public pressure keeps up with Tea Party gatherings and people contacting their congressman about every vote, we may be able to cut the administrations legs out on everything from health care to a second stimulus. Incumbents are scared to death right now as are liberal bastions and they know that if we don't stop spending, Democrats will be sent to exile so far out they will see Sarah Palin's house from their front porch.
So how do we make this better? We start by voting out every incumbent who voted yes on the stimulus and health care. We also demand that those we choose to support are those who will not vote for another entitlement, pledge to reduce deficits and will cut spending instead of increasing taxes. We must then pay attention and hold them accountable and not just while in the recession but when we come out of it and start prospering again. We must find men and women--from both parties--who support low taxes on business and individuals and make raising taxes a thing of the past.

This is the time for action and the repercussions can be like ripples expanding for a generation. We can make fiscal sanity the norm instead of a rarity.

No comments: