Friday, August 06, 2004

Economy: Can't Keep Their Stories Straight,

It's bad when you see two stories with blatantly contradicting titles in the same edition of a publication like the NYT. The first story is about the "good job environment".

Job Picture Looks Good Now, but Recession Left Fears That Endure

Published: August 6, 2004

WHEN the July employment numbers are released today, the Bush administration will hail them as proof that the economy is doing well, and it will have a point. But despite rapid job growth this year, many Americans continue to believe there is a job crisis.

Why is that? Some blame an overly negative press, but the real answer may be found by delving into the statistics. New numbers from the Labor Department show that the job downturn of 2001 and 2002 was surprisingly damaging to experienced workers, particularly older ones.

During that downturn, the unemployment rate never rose above 6.3 percent, a figure that would have been considered excellent in previous downturns. The latest number, for June, is 5.6 percent. In the late 1990's, American employers had to hire almost anyone who wanted work. There were reports of employers hiring consultants to help them find ex-convicts to take jobs. It stood to reason that when the bust came, it would be a case of last-hired, first-fired. Reliable long-term workers would be safe.

As it happened, many newly hired workers did suffer. But they were not alone. The Labor Department periodically surveys what it calls "long-tenured displaced workers," people who lost jobs they had held for at least three years, and lost them not because they were fired for cause but for other reasons like a plant closing or the elimination of a position. In a dynamic economy, of course, some such workers are always losing their jobs. In the late 1990's, there were relatively few of them and most found new jobs quickly.

But by early 2004 - after anyone laid off in 2001 or 2002 had had more than a year to find work - many long-tenured workers who lost jobs in the downturn were still suffering. During 2001 and 2002, tenured workers were more likely to lose their jobs than in any downturn since 1981-82, when the unemployment rate hit 10.8 percent. And those who found new jobs took bigger pay cuts - an average of 18.7 percent - than in the past.

It used to be that even among experienced workers, the age group most likely to suffer in a downturn was workers who were 25 to 34 years old. It's never fun to lose a job, but the young are more likely to be resilient and less likely to have family responsibilities. Over all, young workers were still most likely to lose jobs in the last downturn. But among workers with at least three years on the job, the most vulnerable workers were those 55 to 64.

Of those experienced workers who lost their jobs in 2001-2, 36.1 percent stayed out of work so long that they exhausted their unemployment benefits. That number is much higher than in the 1990-91 downturn.

There are limits to what can be shown with such data, but the numbers are consistent with a surge in outsourcing of jobs. Such outsourcing may be affecting long-established plants and companies, which are more likely to have experienced, older workers who will have trouble finding jobs comparable to the ones they lost. And people who see friends losing such jobs may be more likely to conclude that the job market is bad, whatever the statistics say.

None of that changes the fact that the economy is expanding, although the pace of growth has slowed, and it should be noted that the layoff numbers are based on a January survey. That was just before hiring accelerated.

I shouldn't probably call this reporter a liar. The interior of the article does contain some good info. But in what sense can this job situation be called "good"? How can anyone run a lead like: "Despite rapid job growth this year, many Americans continue to believe there is a job crisis."

Job growth has not been rapid. Not by absolute terms and not by historical terms. As a matter of fact, the NYT ran a new headline today emphasizing just that:
Job Growth Grinds Nearly to Halt in July, Labor Dept. Reports

Published: August 6, 2004

Job growth ground nearly to a halt last month, the Labor Department reported Friday, in a new sign that the economy has weakened in recent months.

Employers added just 32,000 jobs in July, a small fraction of what forecasters had expected and the smallest gain this year. The government also announced that job growth in May and June was less than initially estimated.

How can anyone call that rapid job growth? Yet that's the summary and the headline's conclusion, that the job situation is "good" and job growth is "rapid". Is that insane or what? Most analysts were predicting between 200,000 and 300,000 jobs gained, and instead we had both only 32,000 jobs reported and a downward revision of past month's numbers. (MSNBC)

Furthermore, we have reports that Hedge Funds are topping out.
Hedge Fund index falls 1 percent in three months to June 30
By Deborah Brewster

Updated: 10:49 a.m. ET Aug. 6, 2004

NEW YORK - The hedge fund juggernaut appears to have slowed sharply, with inflows from investors drying up along with returns.

Hedge funds, as measured by the Hedge Fund Research Composite index, showed their first quarterly loss in two years in the three months to June 30. The index, which measures 19 strategies worldwide, fell by 1 percent.

Net investment fell sharply to $7.5 billion, also the lowest level in two years. Inflows have averaged more than $20 billion a quarter for the past year.

HFR is one of several hedge fund databases competing for business in the rapidly growing sector. All have slightly different data and methodologies, but tell the same story: investors have been pouring money into hedge funds just as the asset class has begun showing historically low returns.

Returns have been skimpy for months, prompting questions about whether hedge funds are the all-weather performers investors hoped for. The HFR index rose just 2.7 percent for the six months to June, lagging the Standard and Poor's 500 index, which gained 3.44 percent during the same period.

This is a clear sign that the arbitrage market is oversaturated. Too much money and too much leverage chasing too few arbitrage opportunities. JHC, the market is probably completely overwound with derivatives and options contracts out there if this is the case, that the Hedge funds are crowding in so much that they've squeezed all the profit out of a very tightly wound market.

Along with the ever more tightly wound oil market which seems to have no indication of deflating, the entire situation has become pretty shaky. We may be looking at a systemic market top right now. The Federal Reserve has increasingly fewer and fewer options. It can raise interest rates, and stabilize the dollar thereby leading to a gradual decrease of the oil price but at the cost of stalling the already shaky job's growth. Or it can keep interest rates flat or even drop them, but only at the cost of pushing inflationary growth out of control.

Hence we would have a situation where overseas banks are tightening their interest rates while we were flat or loosening our monetary supply. The dollar's value would drop and then we'd have more inflation. More inflation with flat or stagnant growth is a situation called stagflation. As my readers may recall, the oldman has predicted this stagflation scenario many months ago.

It seems that we're just right about on top of that coming true. Nor is their relief around the corner, since as Billmon points out the leading economic indicators are all on a downward trend.
That's why for the past few months I've been keeping a close eye on the Economic Cycle Research Institute's leading index. It has a pretty good record of forecasting major turns in the economy, based on things like jobless claims, mortgage applications and stock prices. And since early May it's been falling at a pretty rapid clip:

This suggests that some of the conventional excuses offered for the second quarter slump in growth - like the notion that was all due to higher gas prices - are just wishful thinking. The economy does appear to be heading into a more prolonged slowdown - as the ECRI's director recently told the Financial Times:

"Our indicators clearly say that the June softness was not a pause that refreshes - they turned down in a very convincing way," said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

"Yes, profits are going to slow and job growth will slow - they may even disappoint - but the economy is still going to grow. A recession is not in the cards at this point."

The problem - not least for Bush - is that the economy doesn't have to fall back into recession in order for him to lose his job. Given recent productivity trends, slower GDP growth - say in the 2-3% range - would imply much slower job creation, maybe even no job creation. Wage growth, which is already lagging inflation, would slow to a crawl.

Billmon is just agreeing with a conclusion that the oldman came to many months ago. The signs were pretty clear for anyone to read who actually paid attention to what was really going on, and didn't let themselves get carried away by the hype over a few select numbers. The economy is on the verge of laying down being either very sick or actually falling back. It is a situation where older workers are at an all time high of unemployment and disatisfaction. It is also a situation hedged in on every side by the continuing and past outlays of our government, and where an increasing interest rate environment would jack up debt service so much it would cripple discretionary spending.

I thought we would have more time before it all started coming home to roost, but apparently from the sick noises the economy is making the beginning of the time of turbulence and trials isn't very far away at all.


At October 3, 2005 at 10:32 PM, Blogger harvey said...

I nice blog I have one too Horse racing tips galorehorse racing tip uk

At October 4, 2005 at 4:31 AM, Blogger business said...

Hey, you have a great blog here! I'm definitely going to bookmark you!
I have a personal debt consolidation loan
site/blog. It pretty much covers personal debt consolidation loan
related stuff.

Come and check it out if you get time :-)

At October 11, 2005 at 2:58 AM, Blogger gastips said...

Nice Blog! Its great how useful the internet can be with its wealth of information. I will try and visit you blog on a regular basis to help you out.

If you want any Gas Saving Tips feel free to visit atlanta gas prices

See ya soon.. :)

At October 11, 2005 at 9:10 AM, Blogger St Louis Cardinals BUFF said...

So many blogs and only 10 numbers to rate them. I'll have to give you a 9 because you have a quailty topic.

Free Access To More Information Aboutdiscount airline travel

At October 12, 2005 at 6:36 PM, Blogger doer said...

Hello, just visited your blog, it's informative. I also have a **paid survey** related website. So please visit and hope that it's useful to you

At October 26, 2005 at 10:27 PM, Anonymous Anonymous said...

Wow, I really like this one. I have a website that talks mostly about earn money working at home You should check it out sometime.

At October 27, 2005 at 5:36 PM, Blogger Google Page Rank 6 said...

Want more clicks to your Adsense Ads on your Blog?

Then you have to check out my blog. I have found a FREE and Legitimate way that will increase your earnings.

Come Check us out. How to Boost Your AdSense Revenue

At October 29, 2005 at 9:44 AM, Anonymous Anonymous said...

GlobalGasPrice.comI came across which tells you all the gas prices in your area by zip. Gasoline prices change frequently and prices within a few blocks varies up to 20 percent. It is important to be able locate the gas station with the lowest priced fuel. Our sites allow the you check the gas prices online before you pay too much.
We designed the site with you in mind. We all know how costly gas is. Finding the lowest gas station is important as it could save up to $300 a month.

At October 31, 2005 at 8:18 AM, Blogger EQ said...

The U.S. Government is the nation's largest provider of financial assistance to women & minority owned small businesses. The U.S. Small Business Administration (SBA) is Congressionally mandated to assist the nation’s small businesses in meeting their financing needs. The SBA has small business loan programs and services to meet most small business needs. More information on U.S. Government Small Business Loans can be found at ****

How do Government SBA Small Business Loans work?

When a small business owner applies to a lending institution for a business loan, the lender reviews the application and decides if it merits a busiuness loan or if it requires an SBA guaranty. SBA backing on the business loan is then requested by the lender. In guaranteeing the business loan, the SBA assures the lender that, in the event the borrower does not repay the loan, the government will reimburse the lender for its loss. By providing this guaranty, the Small Business Administration helps tens of thousands of small business owners get financing they would not otherwise obtain.

How much money can I borrow?

Here are a few examples of what you can get from SBA small business loans programs:

7(a) Loan Guaranty Program

The 7(a) Loan Guaranty Program is the SBA's primary small business loan program. A maximum loan amount of $2 million has been established for 7(a) business loans.

Low Documentation Loan (SBALowDoc)

SBALowDoc is the SBA’s quick and easy program that provides a guaranty on small business loans of $150,000 or less. Once you have met your lender’s requirements for credit, the lender may request an SBALowDoc guaranty for up to 85 percent of the loan amount. You complete the front of a one-page SBA application, and the lender completes the back. At SBALowDoc centers, the agency processes completed applications within 36 hours.


This method makes it easier and faster for lenders to provide small business loans of $250,000 or less. The SBA provides a rapid response through its PLP processing center in Sacramento, Calif.— within 36 hours of receiving the complete application package. Lenders use their own procedures to approve and service the loans.


The CommunityExpress pilot program is designed to spur economic development and job creation in untapped rural and inner city communities by providing loans and technical assistance. Loan proceeds may be used for most business purposes, including start-up, expansion, equipment purchases, working capital, inventory or real-estate acquisitions.
To be eligible for CommunityExpress, current or prospective small businesses must be located in low- and moderate-income urban and rural areas.

While CommunityExpress is similar to SBAExpress, here are some differences:

• CommunityExpress focuses on predesignated geographic areas that primarily low- and moderate-income urban and rural areas.

• The maximum loan amount under CommunityExpress is $250,000.

• CommunityExpress lenders, together with the National Community Reinvestment Coalition, provide hands-on technical training and support, both before and after loan closings, through community-based, nonprofit NCRC member organizations.

7(m) Microloan Program

The SBA’s Microloan Program provides very small loans up to $35,000 to small businesses and not-for-profit child-care centers through a network of locally based intermediary lenders. In addition to making the loans, the intermediaries provide management and technical assistance to microborrowers and potential microborrowers.

What can I use the loan proceeds for?

You can use an SBA small business loan to:

• expand or renovate facilities;
• purchase machinery, equipment, fixtures and leasehold improvements;
• finance receivables and augment working capital;
• refinance existing debt (with compelling reason);
• finance seasonal lines of credit;
• construct commercial buildings; and/or
• purchase land or buildings.

How do I repay the loan?

The length of time for repayment depends on the use of the loan proceeds and the ability of your small business to repay the loan.The term is usually 5 to 10 years for working capital, and up to 25 years for fixed assets such as the purchase or major renovation of real estate or purchase of equipment. There are no balloon payments, prepayment penalties, application fees or points permitted with these small business loans. Repayment plans may be tailored to each individual small business.

How do I get started?

You submit a business loan application to a lender for initial review. If the lender approves the business loan subject to an SBA guaranty, a copy of the loan application and a credit analysis are forwarded by the lender to the nearest SBA office. After SBA approval, the lending institution closes the business loan and disburses the funds; you make monthly loan payments directly to the lender. As with any loan, you are responsible for repaying the full amount of the loan. Visit **** for more info.

At November 2, 2005 at 2:39 AM, Anonymous Anonymous said...

Great Blog. I have found a site on asia travel agent . You may find it useful at asia travel agent

At November 3, 2005 at 12:51 AM, Blogger Dokdo Island said...

offers or buyers

These days trade business much easier since internet development.
On net, we can find well made trade portal site.
In fact, those cool sites help your trade business.
How many countries? what kinds of products?
Yes, we can not count.
Around the world, someone looking for your products, and a company
want to import your goods.
Trade portal site become huge marketplace so it called "emarketplace."
How many emarketplace do you know.
Which emarketplace do you recommend.
I am proudly tell you the emarketplace ""
You may not buy korea, but you can buy and sell what you want. trade service managed by kotra(un profit trade agency)
Your marketing budget will be save and business increased.
Check what do you want to know about
export free import lead trade.

At November 7, 2005 at 10:11 AM, Anonymous Anonymous said...

Gasoline prices change frequently and prices within a few blocks varies up to 20 percent. It is important to be able locate the gas station with the lowest priced fuel. Our sites allow the you check the gas prices online before you pay too much.
We designed the site with you in mind. We all know how costly gas is. Finding the lowest gas station is important as it could save up to $300 a month.

Check Out :

At December 17, 2005 at 7:19 PM, Anonymous 5LINX said...

I found a company that pays $10 - $50/hr for shopping the classifieds!

Work At Home $10 - $50/hr Easy part/full time work, no boss, no commute, no set hours, paid every 12 days..

I'm making over $500 a day with this company and will be happy to help you do the same.

Hurry postions are filling fast!

At January 23, 2006 at 3:06 PM, Blogger Paul Adams said...

I just came across your blog and wanted to
drop you a note telling you, Friend, how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my site:
credit equity home line rate
It covers credit equity home line rate related contents.
All the best!

At January 25, 2006 at 6:24 PM, Anonymous Anonymous said...

10,000 people a week will see this site(Guaranteed)

At March 6, 2006 at 1:48 PM, Blogger coutra said...

Hello! This is a great blog. I just got back home from shopping with the wife and the kids and decided to log on and do some web surfing.(needed a break if you know what I mean) I came across your blog and really enjoyed it. Not many people keep their blogs up to date and most of the blogs I do fine are not even relevant to the blog topic. I bookmarked your blog for future reference.
Anyways keep up the great work and if you don�t mind I will forward your blog off to a few of my buddies. Thanks a bunch!loan mortgage originator second

At September 27, 2006 at 8:47 PM, Anonymous xango said...

How can that be?

At March 16, 2013 at 4:05 AM, Anonymous Anonymous said...

buy ativan negative side effects ativan - ativan withdrawal vertigo


Post a Comment

<< Home