Saturday, December 31, 2011

Government Employment

Falling government employment is reducing the US GDP growth rate and prolonging the recession. A better idea is to keep level government payrolls while reducing military spending and provided support for workers making the military to civilian transition. I another idea is to time the reduction to when the economy is better.

The chart below shows total government employment for the federal, state and local governments combined.

The next chart show the split between the three types of government employment during the same period: Total, Federal, State and Local

One of the interesting things to note is that the huge decrease in government employment is entirely at the local level. That spending is used for education(teachers), police and fire protection. The federal government employment is flat, the state is down about 100K and local is down 500K. So basically all the job losses have come from state and local governments.

Another note: I have not figured out how to count contractors in government employment.

Friday, December 30, 2011

Mortgage Discrimination Suit Settled for $335 Million

The US Department of Justice settled a mortgage discrimination lawsuit with Countrywide Financial Corporation (CFC) for $335 million dollars on December 21, 2011. Here. The payment will resolve charges that Countrywide engaged in widespread discriminatory lending practices against Black and Hispanic consumers. The discrimination too place between 2004 and 2008. Countrywide Financial Corporation is now part of Bank of America.

The DOJ alleges that Countrywide would charge non-White consumers, with credit histories equivalent to Whites, higher fees and higher interest rates. It would also "steer" them to risky types of loans such as sub-prime mortgages or balloon payment schemes.

The DOJ stated that 200,000 Black and Hispanic borrowers were affected. "The complaint alleges that borrowers were charged higher fees and interest rates because of their race or national origin rather than their creditworthiness or risk."

You can read the DOJ complaint here.

Sunday, December 25, 2011

Black’s slammed hard in November’s positive unemployment report

Black’s slammed hard in November’s positive unemployment report

The unemployment rate dropped nearly half a percent to 8.6% and 120,000 (140,000 private) jobs were added. However, the civilian labor force decreased by 315,000 on a seasonally adjusted basis (and 405K non adjusted) . So the rate fell as a huge number of people give up on finding work.

The participation rate went down by minus %0.2, meaning the total population grew (+172K) but the labor force was smaller (-315K). So the labor force is adjusting to smaller demand. We don’t talk about how those people are surviving.

Black unemployment rose 0.4% to 15.5% which is scary since 137,000 Black people left the labor force and the population increased by 31,000. Blacks were 44% of the unemployed who left the labor force in November. The employment population ratio fell to 51.7%, so only about half of the Black population is working. For Whites the ratio is 59.5%.

The overall unemployment rate was 8.6%. The White unemployment rate dropped to 7.6% as an additional 267,000 Whites found jobs. The numbers of the White unemployed have decreased by nearly 500K last month because of jobs and labor dropouts. During the same period, the Black unemployment rate moved up to 15.5% and 193,000 Blacks lost jobs.

Retail employment added 50,000 positions (25K in retail clothing), leisure added 22,000 jobs and healthcare added 17,000 spots. Amazingly, non-farm payrolls were revised in September from +158K to +210K, the first time the economy generated over 200,000 jobs since June of 2007.

The rate for Hispanics (11.4%) was little changed but 54,000 Hispanic works left the labor force. The teenage unemployment rate was 23.7% and the Black teenage unemployment rate was 40%.

The number of long-term unemployed was recorded at 5.7 million (long term was 43% of total unemployed). The part-time employed for economic reasons was 8.5 Million and the marginally attached stayed the same at 2.6 Million.

Politically, the house republicans extended the payroll tax cut. The markets reacted to record corporate profits and weekly unemployment claims below 400,000.

Non-Farm Payrolls

In the news from the Establishments, hiring was strong very strong in retail, business services, health and education and leisure. Non farm payrolls increased 120,000 (140,000 private jobs offset by a loss of -20K). The number was above 100K but way below 200K, so the report is rated as “fair”.

Average work week was unchanged at 34.3 hours and wages fell by -$0.05 cents in November following a $0.07 raise in October. The employment diffusion index (a hiring signal) was still positive (55.4) but down 0.2.

As mention earlier, there was some very good news on revisions. September NFP was raised from +158K to +210K and October was increased +80K to 100K.
ADP reported an increase in payrolls of 206,000 positions.

Monster Employment Index moved down to 147 to 151, up 10% compared to last year and down 2% for the month. Monster said the index was slowed by limited retail hiring.

Thursday, December 15, 2011

Where do jobs really come from ?

Henry Bloget, the discraced internet analyst for Merill Lynch, has a great piece about where jobs come from. Here. His premise is that rich people do not create jobs, instead it is middle class spending and business response to that spending that really creates jobs.

A CEO who make 100 times what his workers make does not consume 100 times more. Instead they save the money. Instead, they consume only 3-5 times more than the average middle income family or if they are greedy 10-15 times more. Let's be honest the rich only need one yacht, 3 homes and 6 cars not 100 Hyundai's, 40 homes, 50 apartments and ten trailers. The middle class puts much more money back in the economy than the rich ever do.

Economists will argue the money eventually end up in the system as investments but then we have an over supply of investment capital and a shortage of consumption. However the investment capital is "parked" while a shortage of demand feeds the recession.

This central fact of supporting middle class spending has escaped trickle down, right wing economists for the last 30 years. It took Occupy Wall Street to awaken us to this simple fact. Inequality matters. It matters a lot. Economic theory is behind the curve again. Our models are chasing, not leading, the current reality.

New economic models, where broad happiness is the goal, show us that successful societies seek a balance of incomes and consumption across classes. Income equality and social justice lead to societies with greater happiness, civic participation, equality and happiness. The best societies, in our opinion, have an equal income distributions.

So how do we get there. We must support policies that reduce income inequality like a $10 minimum wage, unions, and progressive taxation. We must support government's responsibility to promote income equality that makes us all better off. But government alone is not he answer. We also have a responsibility to be smarter consumers; to support businesses that pay a decent wage and hire local employees; that innovate; and support social justice. We must demand better of government and ourselves.

Sunday, December 11, 2011

Do we really need any more stuff ? (or the end of demand)

This Christmas, shopping is setting new records. In a slow growth economy, retail sales are off the charts(up 6.7%, on-line up 10%). The fear of a double dip recession is long past. This is the spending shot, the demand, the positive buying spree we are all looking for; so I say thank goodness., but trouble lie ahead. Consumer are buying on debt and not saving.

Unemployment has dropped thanks to a jump (50K [BLS]) in retail hiring in November. On a personal side note, I still can't get quick service at Wal-Mart, Starbucks or my local gas station. I guess this is a good thing. This is the demand we are looking for. All of the current liberal economists say we must increase demand to bring down unemployment. Demand increases both investment and short term consumption, both of which create jobs. But keep you eye on investments, capital and labor hiring, the sure sign of a positive business outlook.

We are out of the woods, but long-term, we may be at the limit of growth through material consumption. We are looking at a new frontier where demand is for services and experiences. The hospitality and entertainment industry are growing and construction is shrinking. We are spending on healthcare, entertainment, comfort and security not bigger homes, cars are TVs. We are materially satisfied.

Right now, even the poorest have a basic level of physical level of comfort. We have a car, TV, refrigrator, stove and clean water. We may not have personal security or quality education but we have a microwave.

We also have a safety net. We have unemployment insurance, TANF, and social security. No longer do the elderly suffer. But we must look ahead and see where the future demand will come from. Then we can position ourselves as Black people and as a country to meet this future demand. It is the only way to bring unemployment down long term.

Monday, December 5, 2011

Manufacturing Employment has bottomed out at 11.5 million

We are keeping our eye on Manufacturing employment because it means so much to the economy.

Here is the longer term trends from 1939. We peaked around 1980 and things have really tanked since the year 2000.

There is some hope: Since December 2009 the trend has been slightly positive.


Sunday, December 4, 2011

Visit Black Business News for Websites and Links

Reminder, most of the websites and links are posted on our sister blog: Black Economic and Business News which can be found here.

Links are only rarely posted in the Evil Black Economist Blog anymore.

Saturday, December 3, 2011

Newt Gingrich says "Poor people need jobs"

The story is here. Here.
and here.

Well, maybe Newt did not exactly say the right thing, but he does have a point about work and jobs being part of raising and developing children to be happy, productive citizens.

Actully, Newt, total screwed up a really good point by saying instead, poor people only want illegal jobs and we should abolish child labor laws.

Gingrich is right but also wrong. His is right: Kids should have jobs so they can learn the value of work. In fact everyone who wants to work should have a decent job with good pay. He is also right about jobs in our community should stay in our community. I see lots of people working in our communities: Construction, police, shopkeepers, teachers but none of them live there or look like me. He is wrong about abolishing child labor laws or cutting taxes on the wealthy which would do nothing to fix the cycle of poverty problem. Truth is: Is just playing the race/class card to fire up his crazy base, but at least Newt is interesting.

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