More good economic news:
Despite signs that the recession gripping the nation’s economy may be easing, the unemployment rate is projected to continue rising for another year before topping out in double digits, a prospect that threatens to slow growth, increase poverty and further complicate the Obama administration’s message of optimism about the economic outlook.
The likelihood of severe unemployment extending into the 2010 midterm elections and beyond poses a significant political hurdle to President Obama and congressional Democrats, who are already under fire for what critics label profligate spending. Continuing high unemployment rates would undercut the fundamental argument behind much of that spending: the promise that it will create new jobs and improve the prospects of working Americans, which Obama has called the ultimate measure of a healthy economy.
Also, via Atrios, we learn that continuing jobless claims dipped because people simply are no longer eligible. And I have to agree with Atrios- what exactly is recovering in this recovery if everyone is broke and out of work and the numbers for everything except Government Goldman Sachs bonuses are down? I understand that unemployment is a lagging indicator, so please don’t spam the comments with that (it is an insight so trite it ranks up there with “correlation does not equal causation.” Thanks. I had intro to stats as an undergrad, too.).
And I’m being serious. What exactly are we basing these claims of green shoots and recovery on other than pixie dust?
Twisted Martini
We are the basing it on the principle that clapping louder will make the magical recovery ponies appear.
schrodinger's cat
Sixth post after the proclamation of going Galt.
John, Going Galt, you are doing it wrong.
For lessons on going Galt, please report to Tunch.
GambitRF
Actually, the pixie dust index came in 0.6% worse than expected also.
slag
Paul Krugman taught me that there’s no such thing as a jobless recovery. Is that trite enough?
Mnemosyne
“Recovering” = “Wall Streeters making profits through stock trading again”
PeakVT
It’s a pump and dump. The market isn’t the economy, but it does function as a bank account for the rich and their media whores.
Geeno
Yes, but Pixie Dust (TM) is an export product that have this economy back on its feet in no time.
Ash Can
@schrodinger’s cat: It’s becoming clear that for John, “going Galt” means avoiding everything but the computer. Either that, or it’s John’s version of the GOP codespeak of “I’m pro-family-values” actually meaning “yeah, baby, I’m a swinger.”
And BTW John, if it really is your birthday today as another poster mentioned, many happy returns.
Dork
Pixie dust just shot up 4.5% on the commodities index due to this post.
Elie
— What would be the point exactly of talking it down…saying that things are not good and there is nothing even slightly positive happening (green shoots). Would we feel better or know more about what to do…
If you receive a wound, and the doc takes of the bandage and says, “Gawd, this is going to be hard to fix and take a long time”, do you feel depressed and hopeless or energized for the fight? Alternately, if doc says ” Hey – this is serious but I already see a little healing on the sides here” — do you feel worse or better?
Cmon you guys…
And with folks like us around and Herr Krugman, the administration doesnt need to talk about the negative — they know that is going to happen in spades..
Feel better now?
Devon Cole
Ok. So I tried to place an ad on your site to wish you a happy birthday and I don’t know what the Hell I am doing, so it obviously didn’t work.
Regardless, I hope you have a happy birthday. Love you bro! xoxo.
gex
Those toxic assets don’t get any less toxic as more and more Americans find themselves out of work or taking pay cuts or working on furlough for free as they have been in California.
J. Bill
What I recall from the 80’s is that “recovery” is a technical term that refers to the time period following 6 months of recession. If things get worse during that period, it’s called a “weak recovery”.
Elie
–Happy birthday to you, happy birthday to you, happy Birth DAY DEAR JOHN — Happy birthday to you…
And many more…..!
Punchy
@Ash Can: He’s in his backyard, waiting for Lily to poop, so he can quickly run inside and immediately blog about it.
Napoleon
“Recovery” = “no need to regulate members in good standing of the Establishment simply because they almost blew up the economy.”
I almost e-mailed the writer of that article with a “WTF planet are you writing from”. As someone wrote about it is just an example of trying to clap louder.
harlana pepper
@Elie: On the other hand, is it fair to give people false hope when they should be preparing for the worst (which is what we should have been doing several years ago – but oh this magical bubble, why it would *never* burst, nevah!) I can tell you right now that, while I lived modestly all my life (even when I was married to a high-priced lawyer), I sure as fuck wished I had been living like a pauper now since at least I’d have some savings. Actually, I used to have savings back in he day, but that was pre-W.
JenJen
So, like, you’re a cuspy-Gemini-Cancer? Interesting. Not surprising, but interesting!
Happy Birthday, John!
As far as the green shoots go, aren’t they an invention of the Dow-obsessed lazy media? Out here in Ohio-land, economic condition “feel” as though we’re at the bottom, and stuck there. I’m one of those people who believes economic perceptions kind of matter.
Ali Velshi is coming on CNN at 3:00 and he will probably explain it all to me, hopefully while wearing a funny hat.
Scruffy McSnufflepuss
Happy birthday!
peach flavored shampoo
@Devon Cole: Please, for the love of God, keep trying. Wipe the chesty trollop off the top left of my monitor.
gbear
They say it’s your birthday, well it’s my birthday too, yeah (well, on thursday). Birthdays suck.
harlana pepper
What’s Tunch getting you for your b-day?
Elie
Napoleon —
We have a challenge. There would be SO MANY people to take to jail it presents problems. And many still have their hands on the tiller of our economy in various ways.
This is such a catastrophe in so many ways, but we can’t just fix it and the cost of the life of the larger organism. How much of our “body” can we hack off — even if we acknowledge the disease of the portions? We can hack some off but how much.
These people and their corruption are deep in the tissue of our economy AND our culture — political and social.
I am hoping that we will eventually be able to bring some appropriate justice but I recognize that the effort will not be minimal or without certain risks.
Our “house” sits on major parts of rotten foundation. How to fix without tearing the whole thing down?
Our corruption did not happen just recently. It is the product of years and years of actions and decisions. The fix will have to match the effort it took to trash it — perhaps be even harder?
kwAwk
Perhaps we need to have a trite competition.
My reply though perhaps trite is that if the unemployment number is a trailing indicator that maybe we should look at the leading indicators?
One would be month over month GDP in which the decline is slowing dramatically.
Another would be manufacturing orders which are picking up.
Then we could look at housing starts, which are up too.
And then there is the always popular stock market performance. Up too!
kay
I don’t get it either.
Could it have something to do with the distribution? The unemployment rate for college graduates is 4.9%. It’s 10% for high school graduates, and 19% for those without a high school diploma. The people who “shape opinion” are still basically fully employed? Is that it?
Was the distribution in the Depression like this?
Ash Can
@harlana pepper: I bet it’s something he made all by himself.
Riggsveda
What exactly are we basing these claims of green shoots and recovery on other than pixie dust?
I’ll take “ignorance” for $500, John.
Napoleon
@J. Bill:
Recovery does not refer to any time period that automatically starts at some predetermined mark (like 6 months in your post – in fact I think we are now close to 1 1/2 years officially into a recession so on the 6 month theory of yours we would be a year into a recovery).
Michael
For me, the beginning of an economic recovery would include the following highly visible features:
– Broken windows, a mob melee and fires on Wall Street, to be accompanied by similar events in Westchester County, Fifth Avenue, the Hamptons, the Harvard Business School, Wharton and the COMEX;
– A sudden set of simultaneous audits of political activity in megachurches all over the south, along with the FEC penalties and lifted exemptions that come as a result;
– The actual use of those alleged FEMA megacamps that the goobers continually complain about.
Elie
Harlana:
I hear you and do not dispute that there is value in helping people to survive this. However, is saying things are bad the best way to do that or do we need a more positive message about what to continue to do as things slowly improve —
Unfortunately, I think that this is going to be a long haul issue — not only for the “recovery” but the profound changes that we need to make in everything from the types of jobs and pay as well as benefits to the structure of the market and the regulations that will hopefully protect us better..
Our task is huge and getting huger when the foreign policy issues effecting all of this get thrown in. We are neck deep in doo doo and I guess to me just trumpeting that message over and over doesnt really do much…
That said, I hear your point and think that there is definitely a role for good information to people to help counsel and shape their adapting to this horrible time…
Personally, I am still thinking about having some chickens — I have actually talked to our neighbor behind us to work out if we really want to do this. We also have a great garden filled with good veggies…Hell, a couple of goats…. Nevermind!
kwAwk
I would think that a recovery starts at the point in which GDP growth ceases to be negative, or if perhaps more specific when the downward slope of GDP growth approaches 0.
Napoleon
@kay:
Well many of them are in Washington which is a city that has not only undergone phenomenal growth in the last 8 years or so but my understanding is that it is one of the only pockets of the country (along with some places like Oklahoma and Wyoming) to basically escape the recession.
El Cid
Hey, I don’t get paid all that often, and I probably will have to stop paying for health insurance but at least I know a lot of people on Wall Street are able to enjoy life, and that’s really what’s important.
YellowJournalism
@harlana pepper:
To the tune of “The Twelve Days of Christmas”, starting at five:
FIVE ANGRY GLARES!
Four soggy hair balls
Three yowls for food
Two scratched-up arms…
And a Furminator full of his hair!
Happy Birthday, John.
Bill H
Okay, Mabel, disregard the flames in the living room. The bedroom isn’t on fire and the forecast is for rain, so we can cancel the call to the fire department.
Violet
Happy Birthday, John! Hope you are having a great day.
Facts? You want facts? Pfffft. I don’t think this talk of green shoots is anything more than a way to calm down the markets. Markets are emotional and fear does crazy things to them and the rest of the economy. Talking about green shoots calms down the fear, thus slowing the panicked freefall. That’s all it is. They’re running on hope fumes at this point.
Ed Drone
Actually, imports of US Pixie Dust™ have been curtailed in most every country in the world. The only countries still importing OUR Pixie Dust™ are those whose native production has fallen to near zero. Heavy tariffs apply in any case (in fact, the collection of those tariffs is just about the only positive effect of Pixie Dust™ that I can see).
Ed
Shinobi
Why the same thing that hundreds of Chiropractors, Reflexologists, Homeopaths, and Astrologists do, wishful thinking.
Also, HAPPY BIRTHDAY!
Kirk Spencer
I have been saying it appears the economy has stopped plunging. It’s not rebounding, mind you, but the plunge…
I am using the following indicators to make this statement.
1) Logistics – transportation. Starting in early 2008, rail loads started declining. They’ve nominally leveled out over the past three months. (see Railfax go down to the Weekly Loaded Units charts in particular.)
2) Monthly Retail Sales and Durable Goods sales in the May reports were slightly up from April (source). April itself was down from March, but significantly less down than preceding month declines.
3) The same collection of sources as (2) shows both housing starts and new residence sales to have leveled off and begin a (very) slight increase. New house prices have also flattened.
Retail and Durable goods sales accounts for almost all the PCE portion of the GDP. New Residence sales are a large proportion of PDI.
Due to when these began flattening I expect 2d quarter GDP numbers to be negative, again – though possibly not as much so as the 1st quarter. Barring rude surprises – and there are several places such could appear – I anticipate 3d quarter GDP change to be close to zero. Simply because I’m not convinced things are really fixed I expect 4th quarter to reflect 3d quarter.
Yes, I think we’re done plunging, though not yet rebounding. Since a lot of the stimulus is keyed to late 2009 and goes through 2010, we’ll probably see the rebound then.
Keith
Wasn’t the last recession a jobless recovery, too? Seems if we can’t recover from a recession without adding a ton of jobs (TWICE), then we have something deeper going wrong we need to fix.
gnomedad
@Elie:
What Elie said.
Also, Roubini sees hope.
Also, Happy Birthday, John!
Elie
Speaking of “green shoots”
John — I always put a few small clippings from wheat grass in my cats’ food. I have very few hair ball upchuck problems though they both still like to make dramatic retching sounds on my bed in the middle of the night!
Seriously, I also think that the wheat grass helps their nutrition and my old guy, Bill had bad coat problems before I put them on about a teaspoon of finely clipped wheat grass mixed into their food once a day…I buy it at the grocery store in the organic section and just leave it on my kitchen window sill in a bowl with less than an inch of water in it to keep it watered from below. Usually lasts at least a week and a half…
Death By Mosquito Truck
@gbear:
Happy Birthweek, gbear. Balloon-Juice is a better place because you are in it. I find you interesting, informative and entertaining. Birthdays may suck at a certain point in our lives but without them we’d just be memories.
Col. Klink
Although we probably won’t have a serious recovery for at least another year or so, I think it is fair to keep in mind that nearly all projections and indicators were looking at a Great Depression style crisis a mere three months ago. We do seem to have dodged a 1929 total global wipe-out if nothing else.
Kirk Spencer
Normally when I post it shows up, even if I’m getting moderated. Now it doesn’t show up, but an attempt to repost says I’ve already submitted that post.
Did my two links get me sent to spam-land?
Whick
The Washington Post article you linked to offers this:
Now the first of those encouraging signs is that we just lost 350 thousand jobs last month instead of 600 thousand like the month before. Not too encouraging, because you can always look forward to a point when there are no more jobs left to lose, but that’s not a good place to be.
The stock market has been rising, and that is a leading indicator, pardon my triteness. If investors can look at how bad things have gone and still raise their expectations about future earnings, maybe they know something. Pixie dust might push a bull market to be irrationally overpriced, but at this point the market is about as sober as it can get.
On consumer spending, you can read from Bloomberg:
Consumer spending in the U.S. probably rose in May
BombIranForChrist
What a lot of Americans don’t realize now is that when our economy does recover, it’s not going to recover to the levels of the last decade, because the levels of the last decade were fake.
So, once again, the Democrats, as incompetent as they already are, have the additional challenge of bringing people back to reality after a decade of Republican delusion.
And the Republicans will be more than happy to cast this “back to reality” as “failure”. Then the people, as incompetent as WE are, will re-elect the Republicans, and the Republicans + the “blue dog democrats” will allow the fake economy to get going again, and so it goes forever until China buys the US.
There is a lot of blame to go around, but let’s face it. Americans are dumb and short sighted. The polling numbers on healthcare are promising, but my opinion of the US’s citizens is about as low as that of Dick Cheney.
Comrade Dread
The green shoots illusions are simply to convince your middle class investor who dreams of buying low and selling high to get rich, into putting his money into the system and sharing the risk/letting the rich, well-connected get out with more of their money.
David Atkins
Mnemosyne said it:
TenguPhule
To be fair, I like to think that if Dick Cheney shot your average US citizen, they’d shoot back.
LD50
California unemployment is now at its highest level since 1941. Can we blame this on FDR somehow?
Elie
BombIranforChrist —
While I share a bit of your cynicism, no activist for change can afford to hate the people that they at least in theory want to help. If even the people theoretically on “your side” are stupid and not worthwhile, what are you FOR and who indeed is perfect enough to warrant your wanting the best for them…
I have little patience with elitists from either side. Yes, people are imperfect and do things that hurt themselves and us. That said, being a progressive, I DO see progress and improvement over the centuries of human existence.
Utopians have driven many to the slaughter houses as often as the autocrats and oligarchist’s. They come from the same place – one on each side of the same coin — they have all the answers and have the only “right” way and everybody else better do it that way….
anticontrarian
Didn’t you hear? Goldman, Sachs is posting record profits.
Kirk Spencer
Let’s see if it will work without the links.
I, for one, have been saying the plunge is done. The rebound won’t happen (probably) till very late this year at the earliest, early next year (first quarter) more likely.
Indicators for this:
1 – Logistics. Rail loads dropped beginning January of last year with a serious plunge beginning around April. Around March of this year they began leveling off. They’re still down compared to last year, but on a week to week and month to month basis they’re running a ‘normal’ (up and down by seasonal effects) rate. Things are moving.
2 – Retail sales have quit declining. Durable goods sales have quit declining. Numbers of new homes sold are no longer falling, and the prices aren’t declining either. All of this is over the past three to five months.
3 – manufacturing (excluding cars) may have quit falling. In my opinion two months isn’t enough to say as certainly as the items I listed in the second point.
These economic drivers all say we’re done falling. If they’re accurate we’ll still see negative growth in GDP for the second quarter, but the third will be around 0% change. Barring a rude surprise – and there are plenty of opportunities – fourth quarter will reflect the third, and first quarter of next year will show slight growth.
asiangrrlMN
@Elie:
Honestly? I would want the first. Because it’s true. I feel relieved because what I believe to be true IS true. If I heard the second, I would either look at the doc like she’s crazy, or I would begin to doubt myself. In addition, I would be ok with the latter if it were actually true or if she was working hard for it to be true, but I wouldn’t be comforted if she were saying it so she could rush me out the door in order to play golf.
In other words, if the people saying it are actually working on improving our market system and Wall Street regulation and such, then, yes, I could tolerate a little bit of rah rah. However, I see it as a way to shunt aside the need for actual reform and regulation enforcement on Wall Street, so it’s twice as bothersome.
CaseyL
Happy Birthday, John! Many, many happy returns!
Recovery will take a while, and be slowed down further by what jolly well should be a drastically reformed economic/financial structure. (Any recovery that does NOT include a drastically reformed economic/ financial structure will crash again, and harder, within the next decade. “Bank” on that.)
Since the economic/financial structure will, one hopes, be drastically reformed, it’s impossible to know what recovery will look like, because the industries we normally associate with major employment (auto and financial industry) are the ones which will see the most structural changes.
Maybe we need a return to the model that did very well for us until the 1980s, when Reagan and Congress not only made the country safe for fabulously bloated mega-corporations to devour small businesses but also made the country very UNsafe for small businesses not wishing to be devoured – that is, bring back the locally-owned small- to medium-sized business as the true engine of the economy.
media browski
Happy birthday John!
Now why the heck are you channelling Sirota? Read Hale Bonddad stewart if you don’t know the answer to this question.
And relax!
Patrick
I think Congressmen and the MSM members simply cannot be given information that is not a soundbite. Bernake couldn’t go and explain, “wow, in February, I was convinced the entire global economy was heading for depression, but now I’m very hopeful that the worst has been avoided and we are seeing signs we are towards the end of the trough.” Throw in another group, Wall Street, which would have sold off 30% on that testimony. So, Bernanke needed a soundbite and said, “I see green shoots!”
As far as soundbites goes, this one was up there with the greats.
But if you are halfway intelligent, you can see that the recession continues to worsen. But the point is that the Depression chance has receded. Fears of deflation seem to be gone, and job losses have plateaued.
Elie
asiangrlMN —
I see your point. But your selection of number one is based on your lack of trust that #2 could actually happen…that someone wasnt just pulling your leg that there WAS healing on the edges.
The problem of course is that we have more than one event, feedback opportunity. If ALL you EVER hear is number 1 — well how long does it take to stop being hopeful. For number 2 — if that is all you hear, that there is SOME progress — YOU actually have to be unwilling to accept that. And if you are UNWILLING to accept that it MIGHT be healing, well — what is wrong with YOU?
I dont want to be harsh with you, my friend but really — the deeper issue is that you need proof that some sort of progress is being made, if I read you clearly. What would be enough to turn off that unwillingness to accept SOME sort of healing?
Again — this whole period is more about the mirror of who WE are and less about the event itself. All the literature on achieving difficult things or overcoming disaster talks about positive attitude (while at the same time, in synch with what you say) being realistic about your real situation…I think that the titration is dicey but I would rather land on the optimistic can do side. Why? Because it is easier for me to operate out of half full than empty and because people need not only realism but the strength of possibility. If you can give them the power of possibility from just a naked, realistic assessment that the wound is horrible and will take a long time to heal — if at all — well, you are better than I. I think that I must give the wounded, including myself, a different message: I/We are wounded but I see some healing around the edges and it looks less inflammed than yesterday.
Just me.
Nathanael
SERIOUS ANSWER.
Wholesale (and further-back-in-production-chain) purchases — “manufacturing orders” — are up for the first time in months.
This is probably because panicked retailers didn’t buy *anything* for over a year, allowing their stock to drop to near nothing. So, when they realized that people were still, in fact, buying something, they had to make a few wholesale orders.
It likely doesn’t mean anything more than that, but people are seizing on it as “good news”.
Nathanael
“Numbers of new homes sold are no longer falling, and the prices aren’t declining either.”
Um, actually this one is wrong. Last I checked the FT, the prices were still falling. Though the numbers of new homes sold, from a huge backlogged inventory, *had* increased (to really really low levels) — the number of *used* homes sold was still dropping, meaning that new homes are simply preferable to old, at these prices. Housing bubble bursting still has a long way to go.
But as for transport, looking at rail loads misses the continued transfer of traffic from road to rail; truckloads (which seem to be reported on a longer delay and more vaguely) seem to still be going downhill, though not very much (they may flatten out any time).
The flattening in goods sales is meaningful, and is the one bright spot. Unfortunately that may just mean we’ve hit a “low equilibrium”. There’s no reason to expect growth from that point.
Kirk Spencer
@Nathanael: I didn’t use the FT, I used what the Census reports. (Yesterday my post that included links got eaten, we’ll see what this one does.)
And as I said, what the indicators show is that we appear to have stopped plunging. MY guess is that we’ll see an uptick in about six months. Which means, by the way, that we are establishing a new equilibrium/baseline. If we were going to return to the previous we’d expect to see another race higher that required economic brakes (such as higher interest rates) be applied.
nbova
Keep your fingers crossed. Pray for the best and expect the worst… That’s what I’m going with at this point.