On CNBC today, WH economist Christina Romer said the president is committed to “doing whatever it takes” to turn around the economy. And she did not rule out a second stimulus plan. Yet the president will not cut corporate taxes or investment taxes — even temporarily much less in a permanent way that would boost confidence and certainty. I think the WH believes it can pretty much ride this out, 2012 being a long way a way and Dems have structural advantages in 2010.
Politics and policy from inside Washington
Economist David Rosenberg thinks the jobs report was, in effect, a boot heel stomping all over the green shoots:
1) The headline came in at -467k compared with -350k consensus and the back revisions were negligible (+8k). At no time in the 1990 or 2001 recessions did we ever come close to seeing such a detonating jobs figure, not even at the depths of those downturns, and yet we have a whole industry of ‘green shoot’ advocates today telling us that the recovery has already arrived. As always, the devil was in the details.
2) In almost every industry, job losses were deeper in June than they were in May. The diffusion index fell to 28.6 from 31, which means that nearly three-quarters of the corporate sector is still in the process of shedding jobs.
3) The Household Survey showed a 374k job decline, and all centered in full-time jobs. In fact, we have lost a record 9 million full-time jobs this cycle, more than triple what is normal in the context of a post-WWII recession, with over 2 million pushed onto part-time work (and the number of people now working part-time because they have no other cho! ice due to the weak economy has more than doubled).
4) This in turn has take the total hours worked in the private sector down to a new record low of 33 hours from 33.1 hours in May – in fact, what this means is that if companies had kept hours worked at May’s levels, then to achieve the same labour input that they achieved would have required a 800,000 job slice!
Pimco bond guru — and occasional White House economic adviser – Bill Gross paints a really depressing economic future
The fact is that American consumers have suffered a collapse in wealth of at least $15 trillion since early 2007. … And when potential spenders feel less rich by that much, the only model one can use to forecast the future is a commonsensical one that predicts higher savings, lower consumption, and an economic growth rate that staggers forward at a new normal closer to 2 as opposed to 3½%. … As unemployment approaches 10%, what is less well publicized is that the number of “underutilized” workers in the U.S. has increased dramatically from 15 to 30 million. Those without jobs, as well as those individuals who only work part-time and have become discouraged and stopped looking, total 30 MILLION people. The number is staggering. Commonsensically, one has to know that many or most of these are untrained for the demands of a green-oriented, goods-producing future economy. Imagine a welding rod in the hands of an investment banker or mortgage broker and you’ll understand the implications quicker than any economist using an econometric model. …
If long-term economic growth declines by 1½% then profit growth will as well. This, after settling at perhaps half of absolute peak profit levels of 2007, because of the rise of savings rates from 0 to 8% or higher. But to add to the woes of the investor class, one has only to observe that their share of the pie is shrinking. What does the General Motors example tell us all about the rebalancing of power between the investor class and the proletariat? What do trillion-dollar deficits and the recent reinitiation of PAYGO government programs tell you about the future of corporate tax rates? They’re headed higher. Do you really think that a national health care program can be paid for with cost-cutting as opposed to tax hikes at insurance companies and benefit-paying corporations throughout all sectors of the American economy? The new normal will not be investor-friendly unless your forecasting dial is turned to “Pollyanna” or your intelligence quotient is significantly less than 100.
According to the Labor Department, the economy lost 467,000 jobs and the unemployment rate ticked up to 9.5 percent in June. But lots of workers have stopped looking for work and that skews the unemployment rate. If workers were looking for jobs in the same numbes as they were in June 2008 (we are talking about the labor force participation rate which was 66.1 percent then and 59.5 percent now), the unemployment rate would be at 10 percent.
Also consider that the broader unemployment measure (unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers) is 16.5 percent. Even worse, the unemployment duration numbers took a sharp dive.
Oh, and those folks who are working are working fewer hours:
In June, the average workweek for production and nonsupervisory workers on private nonfarm payrolls fell by 0.1 hour to 33.0 hours–the lowest level on record for the series, which began in 1964. The manufacturing workweek rose by 0.1 hour to 39.5 hours, and factory overtime was unchanged at 2.8 hours.