Once more, claims have dropped on the weekly report. What is troublesome about this is although it is slowly declining, being optimistic is hard because the number of “under employed” and the economic indicators for manufacturing, construction and even the non-manufacturing (services) sectors of our economy are pretty much flat. Claims have to be under 250,000 claims a month just to keep up with population growth. Aside from that, the unemployment rate has been dropping more because people have been dropping out and quit actively looking for work.
The recession “officially” ended mid 2009. On Dec 5 of 2009 new claims were 474,000., unemployment rate was 9.8%. Our latest report was claims of 341,000 and the rate is 7.9%. This is the weakest recovery from a recession since WW 2. All the political rhetoric doesn’t stand up in the face of the numbers. “Be optimistic, things are getting better.” Are they really? Last GDP reading we went negative. Nationwide, manufacturing is struggling and in some areas declining again. Housing is making a marginal recovery in the low income housing sector because investors are buying up housing for rentals. The purchasing by “regular people” is barely moving up and new purchase contracts and refinancing applications is declining again. The economy is still flat in terms of real progress.
People complain that business is booming and corporations are sitting on a pile of cash. Business is still showing profits for two reasons. First is because they are still cutting jobs, trimming expenses and are not buying capital equipment or expanding their operation.Second those “expert analysts” that evaluate corporate earnings continually lower the expectations for companies so they report positively. The factor to watch is “revenues.” The bulk of corporations aren’t showing appreciable growth in revenues.Last, business is sitting on a pile of cash. Yes they are, because if they “repatriate” their overseas earnings they get taxed in the country of origin and here. Agree or not, business is also reticent to spend money until they get a better feel for how Obamacare is going to affect them plus the latest round of regulations are still being defined and implemented (Dodd-Frank).
Oh yes, let us not forget that Europe just released more depressed GDP numbers and their economies are realistically still in the toilet and they are one of our largest trading partners.
In closing: this is a brief outline for a lecture I am giving that will be followed by an active discussion session. I look forward to their comments and suggestions (all college students),. Partisan talking points aren’t allowed, respectful exchanges are mandatory but everything is on the table beyond that. Listening to them still gives me hope that we can still work through this mess we are in, if we work together.