An analyst in the investment racket once told me “Things don’t usually move as fast as you think they will, but when they start moving they often keep going longer and further than you think they will.” The year was 1994, at the end of a long recession, and boy was he right. Hopefully, last week’s unemployment stats together with this one bode well too:
(BB) — Jobless claims dropped by 23,000 to 381,000 in the week ended Dec. 3, the fewest since February, Labor Department figures showed today in Washington. The median forecast of 47 economists in a Bloomberg News survey called for a drop to 395,000. The number of people on unemployment benefit rolls and those getting extended payments also decreased. Companies are firing fewer workers yet may be reluctant to ramp up staff until demand picks up and there’s more clarity on tax breaks due to expire at year-end. While the jobless rate last month unexpectedly fell to 8.6 percent, the lowest in more than two years, faster job growth is needed to push the rate lower and spur consumer spending.
Yes, consumer spending is what drives our mass market economy, for better or for worse, not billionaires buying Maybachs and vacation homes. Apparently everyone knows this, even Bloomberg’s digital rag, except for Republicans and blue-dawg dems in congress.
“Apparently everyone knows this…” Yes, yes they do. It isn’t that some groups don’t know it, they are just being dishonest about it, and they are looking at their own individual areas.
The core problem is that when Corporation A decides to freeze salaries (or cut salaries or lay people off), it doesn’t affect the general economy in any meaningful way and gives them extra money. However, Corporations B thru Z see what Corporation A got away with, so they do it as well since they will individually benefit as well. The workers don’t have the option to jump from A to C since both corporations are doing the same thing, so there is no gain jumping from one to the other.
However, with all the corporations (A thru Z) pulling this stunt, the middle class doesn’t have the funding for all the little extras…and, in a mass volume economy, the result is a bad overall economic situation. Each corporation can legitimately point out that they are not the cause, because, by themselves, they aren’t the cause…all of them together working without constraints are the actual cause.
This is why the substantial corporation influence on government is such a terrible thing. They are working for their individual interests and push the government to support those individual interests, when government is the last line of defense to keeping the overall process working correctly. Corporate influence has destroyed that last line of defense, so it really isn’t a surprise that we are where we are today.
And sadly, until that influence gets severely mitigated, we won’t really recover in a meaningful fashion. Perhaps more jobs, but lower wages and a continuing overall decline of the US economy with continuing increase in corporate bottom lines until they abandon the US altogether and do the same to the next country.
Welcome to Mexico North…
Don’t forget government spending. i.e. direct unimpeded job creation
Early in the noughts HP shut down for a week to try to save some money. Everyone noticed the drop in commuters on the highways.
A few companies in Silicon Valley provide buses for employees who live relatively far away from the corporate headquarters. I ride one such, which gives me time (and WiFi) to read FTB. I have noticed over the past two years or so that commute times are getting longer and traffic is getting denser.
If traffic density is an economic indicator, then I shall temper my increased commute times with the hope that it means things are getting better.
@timberwoof: I saw an article in today’s or yesterday’s San Jose Mercury News (the newspaper of Silicon Valley (!)) that Silicon Valley leads the U.S. in job creation. Bad traffic for us locals may mean squat to the rest of the country…
We’re headed slowly in the right direction, but we face a couple threats. Obviously if things get significantly worse in Europe it’ll definitely affect the US. Also the Dodd-Frank financial reform certainly didn’t do enough to address the real causes of the 2008 crisis, so we might have to deal with another disaster. Plus, if you add in underemployment, the picture looks much worse.
Is recovery underway?
Yes, in the same sense that the heat death of the universe is underway. It’s timing, innit?