What will it take to get America fully employed again?(Read article summary)
The US economy is only creating half the jobs it would need to to move back towards full employment. At this rate, replacing the lost jobs will take until 2020.
Bebeto Matthews / AP / File
How are things on the pampas?
Tolerably fair, it appearsâ€¦
We just got here. Too soon to rush to judgment. From what we can tell, though, the poor Argentines seem to be shooting themselves in the footâ€¦and the legâ€¦and everywhere else. Theyâ€™re going to be taking out buckshot for yearsâ€¦
It should be a great time for the pampas. They have some of the richest, flattest, best-watered farmland in the world. Farm prices are high. Other prices are fairly low.
But leave it to the politicians to mess things up. Argentine beef â€“ which ought to be the countryâ€™s most prized export â€“ is losing market share, especially to the Uruguayans. How come? Because the Argentines taxed beef exports in order to keep prices low at home. You see, the gauchos can manage an economy too!
What was the result? Farmers switched from raising cattle to raising soybeans. And wouldnâ€™t you know it, then, they had a disastrous drought.
More on that story as we find out moreâ€¦
In the meantime, letâ€™s look at the hottest market in the world â€“ the gold market.
Gold is so hot itâ€™s hard to believe it wonâ€™t melt down. Watch out.
And remember, the bull market in gold is a distraction. The big story now is still the Great Correction. Itâ€™s here. It continues. And it will take years to sort out.
Consumer credit went down $3.3 billion in August â€“ the 7th month in a row of decline. Just what youâ€™d expect in a correction.
If this is not a Great Correction, itâ€™s doing a good impression of one.
In the one-two punch long feared by many economists, hiring by businesses has slowed while government jobs are disappearing at a record pace.
Companies added just 64,000 jobs last month, a slowdown from 93,000 jobs in August and 117,000 in July, the Labor Department reported Friday. But over all, the economy lost 95,000 nonfarm jobs in September, the result of a 159,000 decline in government jobs at all levels. Local governments in particular cut workers at the fastest rate in almost 30 years.
â€śWe need to wake up to the fact that the end of the stimulus has really hit hard on local governments,â€ť said Andrew Stettner, deputy director of the National Employment Law Project. â€śThere is much more of a slide in the job market than what we really need to clearly turn around.â€ť
With the waning of the $787 billion Recovery Act passed in 2009 and credited with increasing employment by millions of jobs, finding new policies potent enough to speed up the recovery has proved difficult.
Meanwhile, Investorsâ€™ Business Daily has more bad news. At the present rate it will take another 10 years to get those jobs back:
The US economy lost 95,000 jobs in September, far worse than expectations for no change in employment. More Census-related temp jobs ended, as expected, but state and local governments slashed staff far more than predicted.
So far in 2010, the US has added just 613,000 jobs â€“ for a monthly average of 68,111.
Employment bottomed in December 2009 at 129.588 million â€“ two years after peaking at 137.951 million. At this yearâ€™s pace, the US wonâ€™t recoup all those 8.36 million lost jobs until March 2020 â€“ 147 months after the December 2007 high.
That would obliterate the old post-World War II record of 47 months set in the wake of the 2001 recession.
The current jobs slump also is the deepest of any in the post-war era, with payrolls down as much as 6.1%. They are still 5.6% below their December 2007 level.
With state and local governments likely to shed workers for at least the next year or two as budget woes continue, the hiring burden will fall entirely on the private sector.
Private employers did add 64,000 workers last month, but that was a little less than consensus forecasts and far below whatâ€™s needed.
The US needs to create 125,000-150,000 jobs each month just to absorb new workers and prevent unemployment from rising. So returning to the old peak employment a decade later would hardly suggest a healthy labor market.
It is worth pausing a minute to think about that last paragraph. Itâ€™s not enough just to get back the 8.36 million jobs that were lost in the crisis. The US also needs to create about 15 million MORE jobs over the next 10 years in order to stay even with population growth and return to full employment. Thatâ€™s about 23 million all together.
Well, guess how many jobs were created during the last 4 months. None. Instead, the economy LOST nearly 400,000 jobs. So you could say that at the present rate, Hell will freeze before we recover those 8.36 million jobsâ€¦and it be even longer before the economy is back at full employment.
Does that sound like a correction to you? It does to us.
What happens to people in a correction? They get poorer. And hereâ€™s the evidenceâ€¦ For the first time in 70 years, New York residents are earning less money than they did the year before. This report from Reuters:
The recession put a 3.1 percent dent in the personal incomes of New York state residents, who endured their first full-year decline in more than 70 years, according to a report released Tuesday. Paychecks or net earnings tumbled 5.4 percent, while dividends, interest and rent slid 8.4 percent, to a grand total of nearly $908 billion, the state comptrollerâ€™s report said.
Not only did New Yorkersâ€™ personal incomes fall â€śalmost twiceâ€ť as much as they did in the nation as a whole, but they have yet to recover to pre-recession levels, Comptroller Thomas DiNapoli said.
The drop occurred even though the job-destroying recession was milder in New York than in the rest of the country.
One reason for the hit to New Yorkerâ€™s pocketbooks is Wall Streetâ€™s dominance among the stateâ€™s employers; pay and job security are often highly volatile in the securities industry.
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