Posts Tagged
‘jobless recovery’
by ilene - October 16th, 2010 11:27 pm
Courtesy of Mish
Rasmussen Reports recently released an interesting survey that shows Homeowners Are More Pessimistic Than Ever About the Short-Term Housing Market
A new Rasmussen Reports survey finds that 32% expect the value of their home to decrease over the next year, the highest finding since Rasmussen Reports began asking the question regularly in December 2008.
Just 21% believe the value of their home will go up over the next year.
Looking longer term, people are feeling a bit better. Fifty-two percent (52%) of homeowners say the value of their home will increase over the next five years, the highest level of optimism measured since May.
For the second month in a row, only 55% of homeowners say their home is worth more than their mortgage. A third (33%), however, report that the mortgage is bigger than the home value.
Over half of Americans know someone who has lost their home because they could not pay their mortgage, but just 20% believe that when banks foreclose on a home, it’s generally due to unfair lending practices.
Recognition Phase
Some will look at the survey results and see a contrarian indicator. I rather doubt it. I do not think we bottom until homeowners sour on long-term optimism.
Given current conditions, housing inventory, shadow inventory, another jobless "recovery", and changing social attitudes from younger generations, home prices will likely stay depressed for a while.
So instead of the survey being a contrarian indicator, I view these attitudes as part of the recognition phase. Consumers are starting to realize the economic headwinds and what that will do to housing prices in the short-term, even if they have not yet figured out the long-term demographic mess.
Time and Price is the Only Legitimate Cure
The most encouraging sign in the report is that "a majority of Americans continue to oppose any government intervention in the housing market."
The only legitimate cure for what ails housing is price and time. Prices need to fall to the point there is genuine demand. When that happens, the bottom will be in, although appreciation off that bottom will be quite slow.
In the meantime, the Fed’s misguided attempt to prop up prices, in conjunction with all the interference by Congress, just stretches out the bottoming timeline.
Mike…
Tags: Federal Reserve, government intervention, housing inventory, Housing Market, jobless recovery, shadow inventory
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by ilene - April 4th, 2010 1:06 am
Courtesy of Robert Reich
The US economy added 162,000 jobs in March. Great news until you look more closely. In March, the federal government began hiring census takers big time. These are six-month temp jobs, and they tell us nothing about underlying trends in the labor market. It’s hard to gauge precisely how many were hired — probably between 100,000 and 140,000, although some estimates put the hiring as low as 48,000. Almost a million census workers will need to be hired over the next few months. Subtract these, and today’s job numbers are good but nothing to write home about.
There are some positive signs. Manufacturing payrolls expanded a bit, heath care employers added 27,000 jobs, and about 40,000 private-sector temp jobs were added. But payrolls continue to be slashed in financial services and the information industry.
Two big things to bear in mind:
First, government spending on last year’s giant stimulus is still near its peak, and the Fed continues to hold down interest rates. Without these props, it’s far from clear we’d have any job growth at all.
Second, since the start of the Great Recession, the economy has lost 8.4 million jobs and failed to create another 2.7 million needed just to keep up with population growth. That means we’re more than 11 million in the hole right now. And that hole keeps deepening every month we fail to add at least 150,000 new jobs, again reflecting population growth.
A census-taking job is better than no job, but it’s no substitute for the real thing.
Bottom line: This is no jobs recovery.
***
CORRECTION: In my March 30 posting, “Fraud on the Street,” I stated that a whistle-blower who’d alerted Ernst & Young to fraud had been fired by Ernst & Young. It’s actually worse than that. The whistle blower was from Lehman Brothers itself, and he was fired by Lehman when he tried to blow the whistle. Apologies to Ernst & Young. Even bigger condemnation of Lehman.
Tags: jobless recovery, Robert Reich
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by ilene - March 30th, 2010 11:23 pm
Courtesy of Mish
As the jobless yet supposedly nascent recovery plods on, states are finding it increasingly difficult to ignore their fiscal woes and pension deficits. The New York Times has some details in State Debt Woes Grow Too Big to Camouflage.
California, New York and other states are showing many of the same signs of debt overload that recently took Greece to the brink — budgets that will not balance, accounting that masks debt, the use of derivatives to plug holes, and armies of retired public workers who are counting on benefits that are proving harder and harder to pay.
California’s stated debt — the value of all its bonds outstanding — looks manageable, at just 8 percent of its total economy. But California has big unstated debts, too. If the fair value of the shortfall in California’s big pension fund is counted, for instance, the state’s debt burden more than quadruples, to 37 percent of its economic output, according to one calculation.
Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a country, the fair value of its pension debt would push it outside the maximum permitted by the euro zone, which tries to limit government debt to 60 percent of gross domestic product, according to Andrew Biggs, an economist with the American Enterprise Institute who has been analyzing state debt. Alaska would not qualify either.
Professor Rogoff, who has spent most of his career studying global debt crises, has combed through several centuries’ worth of records with a fellow economist, Carmen M. Reinhart of the University of Maryland, looking for signs that a country was about to default.
“When an accident is waiting to happen, it eventually does,” the two economists wrote in their book, titled “This Time Is Different” — the words often on the lips of policy makers just before a debt bomb exploded. “But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite.”
Some economists think the last straw for states and cities will be debt hidden in their pension obligations.
Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states’ pension
…
Tags: accounting, California, deficits, jobless recovery, Mish, New York, pensions, states
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by ilene - February 13th, 2010 12:27 am
Courtesy of The Pragmatic Capitalist
David Gerstenhaber is a former Tiger Cub and President of Argonaut Capital Management. His distinguished pedigree is of the long line of successful traders that once traded under Julian Robertson (see Robertson’s guru outlook here). His global macro strategy fund has never lost money since its founding in 2000 and has averaged an annual return of 19%. What was a disastrous 2008 for most investors was another excellent year for Argonaut as Gerstenhaber guided the fund to a 12.3% gain. In 2008 he bet big against high interest rates in the UK and shorted the British Pound in response. Both were huge winners. The pound alone fell over 25% in 2008. He is well known for being a superb risk manager and has proven to be able to thrive in any market environment.
Although there have been signs of economic recovery Gerstenhaber hasn’t changed his bearish outlook all that much. In a recent interview with CNBC he said we are in a “contained depression”. He describes this as a period of very low growth and a jobless recovery. Although it is not technically a depression it will feel very much like one. He also believes the US consumer has been reset. Thinking with regards to spending and speculation will never return to what it once was.
He reiterates a belief of our own that the problem of debt continues to hinder the global economy. On the whole, the bailouts and government spending set a poor precedent. He says this is particularly true in Greece. While the bailout in Greece could be a near-term positive it is in fact a long-term negative and sets a very bad precedent. I couldn’t agree more. He says the Euro could remain depressed for an extended period of time due to this. He also says the Eurozone is still suffering from a battle with deflation and it is likely to continue for the foreseeable future.
In terms of the U.S. equity markets Gerstenhaber now says the market is fully valued and that the easy money has been made. He believes 2010 will be a very difficult year for equities as the U.S. government is making many of the same mistakes that were made in Japan. He says that we settled for a “workout” period as opposed to taking our medicine or inflating our…
Tags: contained depression, David Gerstenhaber, Equities, jobless recovery, Stock Market, sub-par growth
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by ilene - October 31st, 2009 12:26 am
Courtesy of Jesse’s Café Américain
There was a tension in the markets today despite the ‘good news’ in the headline economic numbers. The markets are also on edge ahead of the ADP and BLS jobs numbers next week. The much touted theory of a ‘jobless recovery’ is started to show some big holes in credibility, as well it should.
A jobless recovery is nothing more than a euphemism for a monetary asset bubble.
Trader confidence was shaken by more indications that CIT will declared a preplanned bankruptcy next week, and the observations by billionaire Wilbur Ross of an approaching meltdown in the Commercial Real Estate market which has been widely anticipated among the non-shill market analysts.
Gold showed a remarkable resilience today against determined short selling in the paper Comex markets. Here is a decent summary of the case that the gold bulls have been making, in addition to the standard observations about dollar weakness.
Gold Market Reaching the Breaking Point
Meanwhile, nine more commercial banks rolled over this week.
North Houston Bank, Houston, TX, with approximately $326.2 million in assets and approximately $308.0 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
Madisonville State Bank, Madisonville, TX, with approximately $256.7 million in assets and approximately $225.2 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
Citizens National Bank, Teague, TX, with approximately $118.2 million in assets and approximately $97.7 million in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
Park National Bank, Chicago, IL, with approximately $4.7 billion in assets and approximately $3.7 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
Pacific National Bank, San Francisco, CA, with approximately $2.3 billion in assets and approximately $1.8 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
California National Bank, Los Angeles, CA, with approximately $7.8 billion in assets and approximately $6.2 billion in deposits was closed. U.S. Bank National Association, Minneapolis, MN has agreed to assume all deposits. (PR-195-2009)
San Diego National Bank, San Diego, CA,
…
Tags: Gold, jobless recovery, meltdown in commercial real estate, Wilbur Ross
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by ilene - October 30th, 2009 1:17 am
Courtesy of Jesse’s Café Américain
For the first time we had a ‘jobless recovery’ after the tech bubble bust thanks to the wonders of Greenspan’s monetary expansion and the willingness (gullibility?) of the average American to assume enormous amounts of debt, largely based on home mortgages, the house as ATM phenomenon. Not to mention the large, unfunded expenditures of the government thanks to tax cuts and multiple wars.
Now the pundits are talking about the hopes for another jobless recovery.
Who is going to go deeply into debt this time? It looks like its the government’s turn. And the expectation is that foreigners will continue to suck up the debt.
If you think this explosion of Federal debt will facilitate a stronger US dollar you might be suffering from ideological myopia or some other delusion.
Some years ago we forecast that the financiers and their elites would take the world down this road of leveraged debt and malinvestment, and then make you an offer that they think you cannot refuse. They will seek to frighten you with a collapse of the existing financial order, because that is what they fear the most themselves, for their own unique positions of power.
The offer will be a one world currency, which is a giant step towards a one world government, managed by them of course. Once you control the money, local fiscal and social preferences start to matter less and less.
This theory seems more plausible today than it did then.
Tags: Federal debt, financiers, jobless recovery, one world currency
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by ilene - September 2nd, 2009 8:49 pm
Courtesy of Karl Denninger at The Market Ticker
Steve Liesman once again stunned me with his lack of understanding of matters economic today, when he commented that "in all recessions since 1970 at least the original part of it (recovery) has been jobless."
Yes, Steve, but why is any of this a surprise? What part of this graph isn’t instantly obvious to anyone with more than two firing neurons in their head?
That’s credit and population growth normed to a base of 1970. Population went from roughly 205 million to roughly 304 million during that time, a 50% increase.
Outstanding consumer credit went from $128 billion to $2,525 billion, or a 1,973% increase – and this is only consumer credit, ignoring mortgages, financial firm credit, business credit, commercial real estate and of course government debt!
Why are we not seeing "robust" economic growth when we exit recessions? Why is there no real hiring going on? Why can we not have a robust economic recovery? Why are we are replacing good jobs with "McJobs" that pay half as much – or less? And more importantly, where did all the "so-called prosperity" really come from, especially from 1994 on?
In each and every instance of recession from 1970 onward we have "pulled forward" more and more demand and created fake "prosperity" through the creation of ever more debt that we have goaded consumers to take on. By doing so we have crippled the ability of the economy to grow, redirecting as much money as possible to a handful of people and firms (commonly known as "banks" and other "financial companies") instead of directing that effort and money into productive enterprises such as building cars, television sets and similar items.
THIS time though the recession didn’t come from "ordinary business conditions"; it instead happened because the credit carrying capacity among both consumers and businesses hit the wall – they could no longer make the debt service payments and started to default.
It began with "subprime" mortgages but that was nothing other than the first "hiss" of trouble out of the pressure vessel as the structural integrity of the fraud-laced credit system, where "capacity to pay" became a bad joke, had begun to disintegrate.
We pushed the envelope of fraudulent credit creation and the sale of fraudulently-underwritten debt too far – and it blew up in our collective
…
Tags: consumer credit, credit, debt, Economy, jobless recovery, Karl Denninger, Ponzi-style scams, Recessions, Steve Liesman
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by ilene - August 3rd, 2009 3:03 pm
Here’s an excellent article by Mish explaining, in detail, what he meant when he wrote the "bottom may be in." – Ilene
Courtesy of Mish
Mish,
Most of the deflation blogs I lurk at here and there are pretty adamant that things are going to get worse. You always seem to hedge that the "bottom might be in." When I look at all I have learned from you and others regarding the state of the economy, I just can’t hold out hope the bottom might be in. The jobs are not coming back. Why do you feel the need to qualify?
Likewise "VaAppraiser" asks:
Mish, I also am wondering what bottom you keep referring to? I do not like gloom and doom predictions but I am in the camp with all the others that we not seeing spring here (re: green shoots). Looks more like the end of fall… but I am no expert in the larger matters. What I do know and have expertise in is the housing markets I cover. I have written on some other sites that there is no way any of the markets I cover have reached their bottom.
In the best markets, they still have just under 6 months inventory and we are about 75% of the way through our selling season. If this were the inventory going into the season, yes…we could be bottoming but we are getting ready to go into our slow season…not the bottom by far. I believe inventory will shoot up to 9-12 months pretty quickly. Then prices drop, especially with short sales and REO’s having such a big percentage of the market.
Recovery? What Recovery?
Before we can address the question "is the bottom in?" we must answer the question: "the bottom of what?" Moreover, we must also state a timeframe. The latter is critical.
- In general, when I say the bottom may be in, I am speaking of the GDP. Yes, GDP is a very flawed measure, but given all the economic stimulus, it is highly likely the GDP will rebound for a quarter or two, perhaps more.
- In regards
…
Tags: bottom may be in, housing stock market, jobless recovery, Jobs, lost decades, recoveryless recovery, unemployment
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by ilene - June 10th, 2009 1:37 pm
Is the U.S. Economy Headed for a “Jobless Recovery?”
By Don Miller
Associate Editor, Money Morning
Could the U.S. economy be looking at a "jobless recovery?"
After the worst financial crisis since the Great Depression reached its apex late last year, the U.S. economy has shown signs of life in recent months. Stock prices have soared. The housing market – once in veritable freefall – seems to be bottoming out in preparation for an eventual upsurge. And just last week, the government said that businesses cut jobs in May at the lowest rate in six months, a report that offered encouragement both to investors and to the millions of U.S. workers who have lost their jobs.
But U.S. Federal Reserve Bank Chairman Ben S. Bernanke threw cold water on hope for a full-blown economic rebound when he hinted that the U.S. labor market could well be facing a jobless recovery – an upturn in which the economy and corporate profits advance, but virtually no new jobs are created to compensate for years of layoffs.
Just this week, economists at the Federal Reserve Bank of San Francisco said they see signs that the current turnaround could mimic the aftermath of the 1990-1991 recession – a wheezy, drawn-out recovery with little hiring that means years of additional problems for U.S. workers.
"This projection indicates that the level of labor market slack would be higher by the end of 2009 than experienced at any other time in the post-World War II period,implying a longer and slower recovery path for the unemployment rate," the Fed economists wrote. "This suggests that, more than in previous recessions, when the economy rebounds, employers will tap into their existing work forces rather than hire new workers. This could substantially slow the recovery of the outflow rate and put upward pressure on future unemployment rates."
Unemployment Damage Widespread
Alongside other economic indications of a stabilizing housing market and rising consumer confidence, the unemployment figures offered a glimmer of hope that we may be on the cusp of an economic turnaround and the end of job destruction.
But it’s highly unlikely this economy will produce meaningful job creation anytime soon. The financial fallout from the biggest recession in 60 years is likely to be so costly and so pervasive that new-job creation is likely to be virtually nonexistent for years to…
Tags: job creation, jobless rate, jobless recovery, part-time work, unemployment
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site