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Thread: weekend commentary - 'true' US unemployment

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    Default weekend commentary - 'true' US unemployment

    (snip)"The above chart shows the economy needs to create 150,000 jobs a month just to keep up with population growth. Over the past 3 months the economy has lost 232,00 jobs.(snip)

    The establishment data was an absolute disaster.

    51,000 construction jobs were lost
    48,000 manufacturing jobs were lost
    12,000 retail trade jobs were lost
    35,000 professional services jobs were lost

    18,000 government jobs were added [ but with public sector jobs serving as a drain on the economy, since these paychecks must be funded by tax dollars - sic]

    A whopping 93,000 goods producing jobs in total were lost (higher paying jobs), and even the lower paying service providing jobs such as those at Wal-Mart (WMT), Pizza Hut (YUM), Target (TGT) etc, provided a net gain of a mere 13,000 jobs.

    It should not be long now before even the service sector starts to contract. Wal-Mart has canceled many stores and so have other retailers. Consumers are shopping and eating out less. More layoffs are coming. No one should be denying that we are in a recession now.(snip)

    (snip)"This was a very weak jobs report. But it is even worse when one looks at Birth/Death Model assumptions.(snip)

    The BLS should be embarrassed to report this data. Its model suggests that there was a net jobs of 28,000 coming from construction businesses, 44,000 jobs coming from leisure and hospitality, and a whopping 142,000 jobs in total coming from net new business creation.

    Virtually no one can possibly believe this data. The data is so bad, I doubt those at the BLS even believe it. But that is what their model says so that is what they report. Just as there is mark to model in the investment world, there is mark to model in the BLS world."(snip)

    (snip)"The latest birth/death numbers appear to be from Mars, Pluto, or France. With housing falling like a rock and homebuilders demanding concessions from contractors, the BLS is assuming that 28,000 new jobs were added in construction and 7,000 new jobs in manufacturing. With subprime lenders blowing up everywhere (going out of business) the BLS is assuming 6,000 new jobs were added in financial activities. The total number of jobs added by such assumptions for February was 142,000 jobs.

    No doubt you will see some who will subtract 142,000 jobs from -80,000 jobs and conclude that 222,000 jobs were lost as opposed to the reported loss of 80,000 jobs. Such math is inaccurate because the establishment numbers are seasonally adjusted and the birth/death assumptions are not and one cannot simply add the two together and come up with an accurate total."(snip)

    (snip)"Table A-12 is where one can find a better approximation of what the unemployment rate really is. Let's take a look


    see for chart

    If you start counting all the people that want a job but gave up, all the people with part-time jobs that want a full-time job, etc., you get a closer picture of what the unemployment rate is. The official government number is 5.1% but Table A-12 suggests it is closer to 9.1%. I believe that is on the low side.

    Regardless, the trend in unemployment is now clear, it is rising sharply. Expect to see 6% this year. This report was a disaster."(snip)

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    Default Re: weekend commentary - 'true' US unemployment

    Newsflash: People lose jobs in Recession. Happened in 91-92, 2001
    Solution: Print Money, So Businesses can spend and operate at Full Capacity

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    Default Re: weekend commentary - 'true' US unemployment

    ^^^ no amount of money printing is going to resurrect the housing bubble ! Sorry ! Inflation via indescriminate money printing may allow distressed homeowners to stay current on the mortgages they couldn't afford by inflating their paychecks, but the same inflation increases their income taxes, property taxes, energy bills, utility bills, grocery bills etc. In the end, this simply revalues everything (except the existing mortgage) to a higher number of US dollars, leaving the distressed homeowner still unable to afford to maintain the lifestyle that he couldn't afford in the first place.

    Debt does not equal productivity ... and newly printed 'fiat' money equals additional debt. Businesses spending borrowed money to hire additional US employees equals additional debt. However, businesses spending borrowed money to purchase labor saving capital equipment, or a new factory in Vietnam, DOES increase productivity to offset the additional debt (but without adding to US employment).

    Actually, the main point of my post was to point out that the unemployment rate for unskilled Americans is likely to be far higher than 'official' statistics state, as well as being likely to get worse and worse with each passing month.

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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by Melonie View Post
    ^^^ no amount of money printing is going to resurrect the housing bubble ! Sorry ! Inflation via indescriminate money printing may allow distressed homeowners to stay current on the mortgages they couldn't afford by inflating their paychecks, but the same inflation increases their income taxes, property taxes, energy bills, utility bills, grocery bills etc. In the end, this simply revalues everything (except the existing mortgage) to a higher number of US dollars, leaving the distressed homeowner still unable to afford to maintain the lifestyle that he couldn't afford in the first place.

    Debt does not equal productivity ... and newly printed 'fiat' money equals additional debt. Businesses spending borrowed money to hire additional US employees equals additional debt. However, businesses spending borrowed money to purchase labor saving capital equipment, or a new factory in Vietnam, DOES increase productivity to offset the additional debt (but without adding to US employment).

    Actually, the main point of my post was to point out that the unemployment rate for unskilled Americans is likely to be far higher than 'official' statistics state, as well as being likely to get worse and worse with each passing month.
    There are two different types of inflation. Which I'll point out soon through the Co-Op Story.

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    Default Re: weekend commentary - 'true' US unemployment

    So much for the unregulated free market. Never has worked, never will work.

    The best model for economic stability has shown to be democratic socialism (such as in Norway and Canada). The economic ideal touted by Milton Friedman only looks good on paper. Unfortunately human beings are emotional and have different levels of intelligence and education, so a truly free market would never work.

    Hopefully the United States can acknowledge this and make changes in our system accordingly.

    *I bring this up because the current economic woes are due either directly or indirectly to deregulation of the banking and mortgage industries over the last 10-20 years. Many proponents of industry deregulation have been Friedman economists.


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    Default Re: weekend commentary - 'true' US unemployment

    It is important to remember that unemployment is (as Saint Ronald said,) "the lagging economic indicator." People lose jobs after the recession starts. The employment numbers still suck even after the recover has begun.

    Keep that in mind if you are trying to find the deepest point in order to buy like mad.
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    Default Re: weekend commentary - 'true' US unemployment

    were at a level technologically where we truly could create a condition of leisure not an imemployment problem!
    psh!

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    Default Re: weekend commentary - 'true' US unemployment

    norway and canada have about as many people combined as a single US state. what works for them is simply not applicable to the USA.

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    Default Re: weekend commentary - 'true' US unemployment

    ^^^ I would also point out that the 'trick' to the apparrent success of Norway and Canada's semi-socialized economies is the availability of 'money for nothing' in the form of domestic raw materials. Pumping 'free' oil out of their own ground at a recovery cost of say $25 per barrel, and exporting that same oil at a price of $100 per barrel, serves as the 'engine' for these economies ... as opposed to entrepreneurialism serving as the 'engine' for the US economy (with the exception of the state of Alaska, which in many ways mirrors the economies of Canada and Norway).

    Thus it can be argued that the economic stability of Canada and Norway is only as stable as the output from their oil / gas wells ! Both of these gov'ts have made far reaching 'promises' to their citizens in the form of health care / social benefits / retirememt benefits, thus as gov't incomes from oil / gas production start to seriously decline the cost of fulfilling those 'promises' will fall increasingly on the shoulders of these countries (remaining) citizens in the form of increasingly burdensome taxes ! This is the reason that many young Canadian and Norwegian 'professionals' are already looking to develop their careers outside of Canada / Norway ...


    It is important to remember that unemployment is (as Saint Ronald said,) "the lagging economic indicator." People lose jobs after the recession starts. The employment numbers still suck even after the recover has begun.
    Agreed that unemployment is a lagging indicator ... especially so when the official gov't statistics aren't reporting accurately LOL ! But I would add that there is a new wrinkle which creates a different set of conditions re the traditional 'unemployment cycle'. In the past, rising US unemployment was linked to the cyclical rise and fall of domestic economic activity / production. However, today, rising US unemployment is linked to a non-cyclical fundamental shift in domestic production ... i.e. the permanent outsourcing of former US production to other countries. Thus it may be the case that the profitability of a US company is increasing at the same time the domestic employment levels of that US company are decreasing ! It may also be the case that the increase in US unemployment levels won't have a 'bottom' or an eventual 'upturn' this time !

    ~
    Last edited by Melonie; 04-06-2008 at 07:25 AM.

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    Default Re: weekend commentary - 'true' US unemployment

    So...

    What are the implications of that for the average American? Or to put it another way...

    What jobs and industries tend to do well during times of recession? What investments and companies historically weather recessions well?

    Even during the Great Depression, some industries still performed well and turned a hefty profit. Historically, certain industries are "recession-proof". What are they?

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    Default Re: weekend commentary - 'true' US unemployment

    ^^^ alcohol, tobacco, sexually oriented businesses, repair services, repossession services, low end goods manufacturers, low end goods retailers etc. There is also another segment of businesses that will usually do very well, because their profits are 'guaranteed' by US gov't subsidy policy (i.e. agrobusiness, ethanol, solar to name a few).

    However, there is a distinction between the 'company' profits paid to executives / investors / stockholders, and the paychecks of company employees. This is even more complicated in today's economy when the 'company' may actually have foreign ownership ... meaning that any US dollar denominated profit may actually translate into a loss when the 'company' factors in currency exchange rate moves when booking the entry in Euros or Yen at corporate headquarters. The same applies in reverse to American owned 'companies' who are selling into export markets where the customers are buying products with Euros or Yen but the corporate profits are being booked in US dollars.

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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by Melonie View Post
    Agreed that unemployment is a lagging indicator ... especially so when the official gov't statistics aren't reporting accurately LOL ! But I would add that there is a new wrinkle which creates a different set of conditions re the traditional 'unemployment cycle'. In the past, rising US unemployment was linked to the cyclical rise and fall of domestic economic activity / production. However, today, rising US unemployment is linked to a non-cyclical fundamental shift in domestic production ... i.e. the permanent outsourcing of former US production to other countries. Thus it may be the case that the profitability of a US company is increasing at the same time the domestic employment levels of that US company are decreasing ! It may also be the case that the increase in US unemployment levels won't have a 'bottom' or an eventual 'upturn' this time !

    ~
    This is idiotic analysis. The segment which got outsourced significantly was Software development and it started as early as 2000. Now, due to outsourcing US has been able to create 'Twice' the number of jobs in Software Industry compared to 2000. Not to consider the improved wealth of India who are buying iPods and Dells/HPs

    Bottomline,
    There ain't enough people in this world to do all the jobs

    Work always creates more work.

    Just count the number of people who are managing outsourcing in the US. An industry which never existed before

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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by Melonie View Post
    ^^^ alcohol, tobacco, sexually oriented businesses, repair services, repossession services, low end goods manufacturers, low end goods retailers etc. There is also another segment of businesses that will usually do very well, because their profits are 'guaranteed' by US gov't subsidy policy (i.e. agrobusiness, ethanol, solar to name a few).
    I think, though, that we're facing an entirely NEW recession--one that we haven't really faced in the past.

    For example, you mention alcohol and tobacco... It is certainly true that spending on these items will continue to be higher, but in the example of tobacco: As individual states have consistently raised the prices on a pack of tobacco, more and more smokers have QUIT SMOKING. That being said, it seems more reasonable that a prolonged recession in this day and age would cause a reduction in tobacco.

    Additionally, in the realm of sexually oriented businesses... It's true that they have historically done well in times of recession, but I don't think that will be the case in he 21st century. People still need their sexual outlets, but in time of recession, they will not be as free with their spending as in other times. These days, you don't NEED to hit up your local adult bookstore for porn mags and videos; you can get all of that for free on the Internet. And you don't need to go to a stripclub to get a naked woman rubbing herself all over you; you only need a fifth of whiskey and one of the numerous sluts that exist in our modern society.

    This is what worries me... I think we are quickly getting to the point where technology and the social accetability of promiscuity is making our jobs somewhat redundant. Nowadays, stripclubs are seen as a luxury. As our customers feel the pinch in their wallets, they won't be able to afford their luxuries anymore--especially not when they can see naked women for free on the Internet and at parties.


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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by Morgan_TX View Post
    I think, though, that we're facing an entirely NEW recession--one that we haven't really faced in the past.
    I think you are correct. But for reasons beyond high tech access to vice.

    1. This time around we are going into recession during a war. As a general rule war is an economic stimulus. Not this time. Economic contraction in war time looks to me to be an indicator of the failure of the state itself. In other words, we have bigger worries than unemployment increases.

    2. We are seeing bank failures. This is really bad news for the economy. Basically, our government doesn't have the money to be bailing out these banks to the tune of billions of dollars. We have been borrowing from other nations like China and Saudi Arabia at a higher rate than ever before. This is the national debt. At the rate we are going, we are going to be so in hock to the rest of the world we won't be able to repay our debts.


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    Default Re: weekend commentary - 'true' US unemployment

    Correct me if I m wrong, but I believe tobacco and alcohol will do well in a recession/depression. Depressed people will drink more, although they may turn to cheaper and "stronger" types of drinks, and hungry people will smoke more because cigarettes decrease appetite! Sexually oriented businesses may do well also, but I don't think Melonie is talking about strip clubs. She probably means prostitution. Although if things get really bad, I don't think prostitutes will be getting rich, they'll be working to put food on the table since the "customers" around them will most likely be poor. The rich guys will be off to other shores.

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    Default Re: weekend commentary - 'true' US unemployment

    lets hear it for malt liquor!

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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by xanfiles1 View Post
    This is idiotic analysis. The segment which got outsourced significantly was Software development and it started as early as 2000. Now, due to outsourcing US has been able to create 'Twice' the number of jobs in Software Industry compared to 2000. Not to consider the improved wealth of India who are buying iPods and Dells/HPs

    Bottomline,
    There ain't enough people in this world to do all the jobs

    Work always creates more work.

    Just count the number of people who are managing outsourcing in the US. An industry which never existed before

    Here is a reality report for anyone reading this.

    Other industries outsourced include:

    Automotive
    Textile
    Furniture
    Kitchenware
    Electronics

    all, hell, why bother listing em all out. Go to the store, flip over the item and see where it was made.

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    Default Re: weekend commentary - 'true' US unemployment

    Other industries outsourced include:

    Automotive
    Textile
    Furniture
    Kitchenware
    Electronics

    all, hell, why bother listing em all out. Go to the store, flip over the item and see where it was made.
    All true, with many additional items not actually bearing the 'Made in ____' label i.e. 'fresh' fruit and vegetables, foreign manufactured component parts that wind up being 'assembled' in America, foreign based services from call centers to tech support to accounting to X-ray/lab test interpretations, etc.


    Sexually oriented businesses may do well also, but I don't think Melonie is talking about strip clubs. She probably means prostitution. Although if things get really bad, I don't think prostitutes will be getting rich, they'll be working to put food on the table since the "customers" around them will most likely be poor. The rich guys will be off to other shores.
    yes, exactly. However, the comment does apply to 'extras girls' in strip clubs, who will definitely cut into the earnings potential of 'clean' dancers and in the end will probably wind up doing 'extras' at prices not that much over the basic price of a lap dance / vip if the current 'insourcing' of dancers trend continues.


    I will reiterate that just because a particular 'business' traditionally does well during economic downturns does NOT mean that those business profits will be shared with workers / employees right along with management or stockholders.

    ~
    Last edited by Melonie; 04-07-2008 at 09:40 AM.

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    Default Re: weekend commentary - 'true' US unemployment

    also include into the list packaging materials, because people will be moving a lot, and storage unit companies. Maybe even matufacturers of RVs.

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    Default Re: weekend commentary - 'true' US unemployment

    Thats true, I called the bank and apparently those calls are getting answered by somebody in India now.... which is infuriating actually. I don't think I am the only person who is hostile to this. I wanted to ask the lady how much she gets paid. You know its like $1 /hr or something.
    Jeeze, I didn't join an Indian bank, why do I have to talk to India about my visa statement.

    I want to call Sally down at the branch... but she got laid off and turned to drinkin and became homeless. And the Indian replaced her. You know what I mean.



    Quote Originally Posted by Melonie View Post
    All true, with many additional items not actually bearing the 'Made in ____' label i.e. '...foreign based services from call centers to tech support

    ~

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    Default Re: weekend commentary - 'true' US unemployment

    also include into the list packaging materials, because people will be moving a lot, and storage unit companies. Maybe even matufacturers of RVs.
    good thought process, but probably an incomplete thought process. yes more packaging materials will be required by people being displaced from their homes, but the same local packaging material manufacturers will also be supplying fewer packaging materials to local businesses. Yes more people may be shopping for RV's or mobile homes as a result of being displaced from their homes, but there will probably be a glut of repossessed RV's and mobile homes as a result of additional personal bankruptcies being filed by current owners of RV's and mobile homes that cuts into new RV and mobile home sales as well as creates downward pricing pressure that reduces manufacturers' profit margins. You're probably correct about storage unit companies though, since I can't think of any offsetting reduction i.e. businesses typically do not utilize storage units.

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    Default Re: weekend commentary - 'true' US unemployment

    Quote Originally Posted by Melonie View Post
    good thought process, but probably an incomplete thought process. yes more packaging materials will be required by people being displaced from their homes, but the same local packaging material manufacturers will also be supplying fewer packaging materials to local businesses. Yes more people may be shopping for RV's or mobile homes as a result of being displaced from their homes, but there will probably be a glut of repossessed RV's and mobile homes as a result of additional personal bankruptcies being filed by current owners of RV's and mobile homes that cuts into new RV and mobile home sales as well as creates downward pricing pressure that reduces manufacturers' profit margins. You're probably correct about storage unit companies though, since I can't think of any offsetting reduction i.e. businesses typically do not utilize storage units.
    Campers and RVs are very cheap right now (well, unless you want to drive one.)

    Soon the price will go up as people choose to down size (chuckle.)

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