November, 2012 Economic Trends, Statistics, And Expert Opinions

Over the past two days, as we do at the beginning of every month, we have been reviewing the political class antics, lunacy, and idiocy that we came across over the past month or so. Unfortunately, at the beginning of every month we also review the latest opinions, trends and facts of our nation’s current economic and financial situation. Since our economic condition continues to be in dire straits, one begins to wonder if the insanity and incompetence we continue to review about our political class is somehow related to the depressing economic condition we find ourselves in.

How do we know we are still in sad economic times? Consider the latest:

1) The latest two weeks have seen a total of over 750,000 Americans filing for first time unemployment benefits. You cannot honestly claim that we are in any kind of economic turnaround when well over a million Americans each month have found it necessary to file for unemployment benefits.

2) According to the Minneapolis Federal Reserve Board, using data from the Bureau Of Economic Analysis:

• Our recent economic growth has been slower in this recovery than in any of the previous post-World War II recoveries.
• In the three years since the Obama recovery started, the nation’s real GDP has risen only 6.7%, a growth rate that is substantially below the GDP growth rate in the 12 quarters after the 1980 recession ended, despite the fact that the 1980 recovery also endured an intervening 1981-82 recession.
• The rate of job growth of the Obama recovery is below every previous recovery as well if you start counting at the point where jobs bottomed out.
• The recovery during the Obama administration has reclaimed only about half the jobs lost during the recession. In all other prior recoveries since World War II, the number of jobs exceed the previous peak by this point in the recovery.
• As an illustration, if job growth under Obama kept pace with the previous worst recovery since World War II, there would be nearly 6 million more Americans with jobs today.

Not a pretty picture using official Obama administration data as analyzed by the independent Federal Reserve Board’s experts.

3) According to the latest version of an ongoing Rasmussen survey, as reported in the October 30, 2012 issue of Moneynews, a majority of Americans feel today’s children will have it harder than their parents had it. According to the findings, 53% of Americans think today’s children will not be economically better off than their parents were. Only 24% said today’s children will see better days than their parents did.

While these discouraging findings have recently improved slightly, it is still very sad that our economy has soured so much, without being fixed by the political class, that the majority of Americans are this pessimistic about their kids’ futures.

4) A Bloomberg article from October 26, 2012 reviewed a letter more than 80 heads of U.S. companies have signed as part of a campaign to reduce Federal deficits through spending cuts and tax increases because President Barack Obama hasn’t reached an accord with lawmakers that would avoid a fiscal cliff.

One of the signers of the letter, billionaire investor Wilbur Ross state: “It was really an announcement out of desperation. They (the 80 business leaders)were trying collectively as business leaders to fill the vacuum left by the political leadership of the President.”

Ross went on to say: “I think it’s tragic that President Obama appointed Simpson and Bowles, they came with relatively sensible suggestions, and he totally walked away and provided no leadership for them. If he had exerted leadership, we wouldn’t have the fiscal cliff that we have now. Policy makers should acknowledge that our growing debt is a serious threat to the economic well-being and security of the United States.”

The article goes to discuss how the uncertainty caused by the lack of leadership from the President and larger political class is creating a great deal of uncertainty in the marketplace. The uncertainty clouds future business opportunities and turns business leaders and owners into risk adverse individuals. Risk adverse individuals tend to be cautious and conservative in their business decisions, directly and negatively impacting the economy and unemployment rates of the country.

5) According to an Associated Press article from October 31, 2012, the Federal government will bump up against its debt limit of $16.39 TRILLION by the end of 2012, sooner than expected. This indicates that the Federal government is spending more money that it does not have a quicker pace than previously thought since it was generally believed that the debt limit would be hit in 2013.

Thus, as the nation plummets towards insolvency, the Washington politicians have been busy protecting their political careers than the protecting our fiscal future. This is just another example that proves term limits are neede more than ever. If term limits were in place, Washington politicians might be in Washington taking care of our future rather than taking three months off from governing, replacing it with politicking. Disgusting set of bad priorities.

6) According to two experts, as documented in an October 26, 2012 article in Moneynews, the country is likely to drop into recession mode by early 2013. Laurence Fink, CEO of asset management giant BlackRock and the Congressional Budget Office both agree that a combination of rising taxes and cuts to government spending coupled with continued uncertainty in Europe will likely cause a U.S. Combine these factors with a fast approaching debt limit fiasco and all of the pieces for a recession are coming together.

Much like the band played on as the Titantic sank, our politicians politicked on as our economy sank.

7) An article from Bloomberg News on October 26, 2012 had some quotes from a Federal Reserve Board president, the one member of the Board that dissented when the Fed decided to implement Quantitative Easing III. We have previously reviewed how much of a failure the first two phases of Quantitative Easing were, printing money and pumping that newly minted fake money into the economy to the tune of $2.3 TRILLION to no avail.

Federal Reserve Bank of Richmond President Jeffrey Lacker said he was against the decision by the Fed this week to continue on with additional bond buying because the effort is ineffective and may increase the chances of high inflation: “Further monetary stimulus now is unlikely to result in a discernible improvement in growth, but if it does, it’s also likely to cause an unwanted increase in inflation. Improvement in labor market conditions appears to have been held back by real impediments that are beyond the capacity of monetary policy to offset.”

In other words, the political class in Washington has not done their job to develop and implement a coherent and effective economy recovery plan and the Federal Reserve Board is out of ideas that will make a difference in the economy short of increasing the rate of inflation. And the politicians politicked on.

8) And finally, consider two quotes from an October 25, 2012 Moneynews article. Peter Schiff, CEO of Euro Pacific Capital had some pessimistic views of the near term future of the U.S. economy: “When America's creditors wake up, particularly those foreign governments now shouldering the lion's share of the burden [financing U.S. debt], concerns over our twin deficits [our trade deficit and spending deficit] will return with a vengeance. Black Monday [the massive stock market collapse in 1987] is more likely to occur in the currency and/or bond markets, with safe-haven flows moving into gold, not Treasurys.”

Marc Faber, publisher of the Gloom Boom & Doom Report, was also quoted. He also expects exploding government debt to cause a crisis, and not just in the United States: “I think within five to 10 years you have a colossal mess everywhere in the Western world.”

That is enough bad news for today from the world of economics and fiscal sanity. And the politicians politicked on.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/

November, 2012 Economic Trends, Statistics, and Expert Opinions, Part 2 - Doom And Gloom Prevail Again

This is a second of three posts we will do this week relative to the current economic and financial trends, statistics and expert opinions. Yesterday we learned again our dire our financial situation is in this country.

We are spending money faster than even the politicians expected to, adding considerably to our national debt, CEOs across the country are freaking out over the “fiscal cliff” by restricting their hiring and business expansion plans, an independent analysis by a branch of the Federal Reserve Board concludes that economic conditions are very bad, Americans filing for unemployment benefits continues to be a a very high weekly rate, etc.

But we could not get all of the economic distress into that single post:

1) According to the latest government labor statistics released last week, the unemployment rate rose last month from 7.8% to 7.9%. This was caused by 170,000 Americans losing their jobs in September, bringing the total number of unemployed Americans to a despicable 12.3 million people.

Now part of the reason why the unemployment rate went up is that more people signaled they were actively looking for a job. This could be a good sign as for as optimism. However, an additional statistics released last week, the percentage of Americans working or looking for work rose for a second straight month in October to 63.8%, just barely up from the 31 year low of 63.5% that was incurred the month before.

In addition, in another sign of the economy's persistent weakness, average hourly pay dipped a penny to $23.58. In the past year, average hourly pay for most workers rose only 1.15, the smallest annual gain on record since1965.

All in all, a pretty lousy jobs report…again this month.

2) A November 2, 2012 article in Moneynews talked about the opinion of Robert Shiller, considered the most insightful and knowledgeable expert about the U.S. housing industry. In an interview with CNBC, he predicted that it could take 50 years for the housing industry to get back to previous levels.

His opinion is in opposition to the latest government statistics. The Commerce Department recently reported that new-home sales jumped 5.7% in September from August to their highest level in more than two years. In addition, housing starts rose to their highest seasonally adjusted annual rate in the past four years Shiller’s own index of housing prices rose 2% in August over the same time in 2011. This was the biggest year over year gain since July, 2010.

But Shiller is not buying the growing optimism and that the housing industry is ready for a strong rebound anytime soon: "This may well be the bottom for housing for some years. But next week’s election, the Dec. 31 fiscal cliff and Europe’s debt crisis could throw housing for a loop.”

He also points out, probably correctly, that in the coming years home prices will be depressed by sales from retiring baby boomers moving to urban areas from the suburbs: "It can get big as it was again maybe in 50 years. This housing bubble was a once-in-a-lifetime thing, I imagine. Although, you know, the market might be more volatile, so the future is always unknown. My general idea is that we're not going into a nationwide boom and not many places will show booms in the next few years.”

Thus, not much hope from the foremost housing expert that housing will help jumpstart our bad economy.

3) In a November 1, 2012 Bloomberg News article, Bill Gross, who operates the world’s biggest mutual fund at Pacific Investment Management Co., asserted there is no evidence that investment is being spurred by the third phase of Federal Reserve’s quantitative easing program.

Recall that the first two phases of quantitative easing printed $2.3 TRILLION worth of fake money and pumped that into the economy via bond purchases, with no positive results: “All of the money being created and freed up is elevating asset prices, but those prices are not causing corporations to invest in future production. Lower interest rates are being used to consume as opposed to invest.”

Why anyone thought that the third phase would do any good, when the first $2.3 TRILLION did not good, is beyond reason or logic. And Gross is not too optimistic that the Washington political class will do any better than the failed policies of the Fed when it comes to viable economic policies: “Fact is they’re [politicians] all the same -- bought and paid for with the same money. Pulling a Democratic or Republican lever will deliver the same results every four years.”

Great, one of the best investors ever sees gloom and doom regardless of who in the Federal government he is looking at.

4) And finally, let’s look underneath some of the labor and employment data released by the government last week besides the fact that first time unemployment claims continued at sky high levels and the unemployment rate increased to 7.9%:

• If the size of the willing labor force had stayed the same since January, 2009 the unemployment rate would not be 7.9% but 10.6%. 10.6% is the same rate of unemployment as the month that Obama took office, indicating not a lot of real improvement since he was sworn in.
• Remember, the $830 billion economic stimulus program was supposed to have reduced the unemployment rate to about 5.2% by now. The administration's economic efforts and resultant ignorance have left us over 4 million jobs short of this stated goal despite the $830 billion, almost $3 TRILLION in Fed quantitative easing, and the wreckage of numerous failed economic programs, e.g. Cash For Clunkers.
• Hourly earnings have risen only 1.6% so far this year, less than the rate of inflation.
• Unemployment rate for blacks rose to 14.3%.
• The teenager unemployment rate is still about 25%.
• Long term unemployed (27 weeks or more) was little changed at 5.0 million (40.6 percent of the unemployed).
• The better and truer barometer of the economy, the U-6 unemployment rate, which includes marginally attached workers (those who are not actively looking for work but have indicated they want a job and have looked for a job in the past 12 months) and people who are looking for full time work but settle on part time work for economic reasons, also saw little change, moving from 14.7% after September to 14.6% today.
• This U-6 unemployment measure translates into about 23 million Americans who are not working to their desired level of employment.
• When Obama became President, the U-6 rate was 14.2% and just six months ago it was 14.5%. Thus, based on this truer measure of employment, unemployment, and under employment, this administration is taking us in the wrong direction.

The experts are gloomy, the numbers are gloomy, unemployed Americans are gloomy the economy is gloomy. Have a great day!

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.

Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/