Less than Meets the Eye

To the rose-colored glasses set, all the "good" data we've been seeing lately is proof that economic recovery is at hand. But is that really the case?

Take the decline in initial and continuing jobless claims that has taken place over the past several months. In theory, that's a sign that the worst may be over as far as unemployment is concerned.

There's more to it than that, however. For one thing, the number of people claiming emergency unemployment benefits has surged nearly 500 percent since November of last year.

Moreover, the claims data fails to account for those who have exhausted their benefits, or who are ineligible because they still have one of the two or more low-paying jobs they need to survive.

The same can be said for other statistics that suggest the economy is stabilizing or even improving. In "Housing 'Shadow Inventory' Rises," The Economic Populist points to one example:

It was only last week that the real estate industry was celebrating the good news.

The number of home listings within 27 major U.S. metropolitan areas slipped 2.42 percent in November 2009, compared to a month prior, and is down 27.64 percent compared to a year ago, according to a monthly report of homes listed for sale on Multiple Listing Services (MLS) in the markets surveyed by ZipRealty, a national real estate brokerage.

Fewer homes for sale means the supply and demand dynamics have turned up, which means that the housing market is bottoming, right?
Not so fast.

(Bloomberg) -- The number of homes that may be in the pipeline for a sale because of foreclosure and delinquency climbed about 55 percent to 1.7 million at the end of September, according to estimates by First American CoreLogic.
The “shadow inventory” rose from 1.1 million a year earlier. Such properties include those taken over by banks and mortgage companies and those where the loans are at least 90 days delinquent, the Santa Ana, California-based research firm said in a report today.

What is actually going on is that the homes that should be hitting the market in rock-bottom auction sales, are actually being held up in the pipeline because of HAMP, temporary state moratoriums on foreclosures, and already overwhelmed banks reluctant to take on more inventory.

Comments

[roger]

Mass delusion is nothing new.
In the beginning credit give the illusion of prosperity,
then turns into its opposite. solutions? maybe....
1 increase exports 2 inflate away debt, 3 high taxation,
4 default.
In the 20's ,Germany chose solution 2 and 4

[Kid Dynamite]

even simpler, Michael - job loss data MUST improve (if a slowing rate of losses is improving) eventually because everyone can only be fired ONCE! it seems completely normal to me that the rate of job losses INEVITABLY slows even if the economic picture doesn't improve

[RPY]

I ask, how can a person in business make sound judgments on false or screwed data?
What is it that they don't get about the importance of getting the 'facts' correct? Especially in the current environment.
They manipulated the statistics to a point that no one knows what to believe. So, as a consequence people are hesitant to make decisions that might improve their situation.
So, as the old saying goes; "when first you practice to deceive, what a tangle web you weave."
The positive spin in the media as become obvious to most. The people have come to conclusion that somehow they are being lied to most of the time.
It would be funny if the possible consequences were not so tragic.

It as gotten to the point that it raises this question. How can you tell that the government is lying? They report a statistic.
And in the meantime, the world outside of Washington D.C., and Wall street, is in serious trouble.

[Matt]

Remember, the normal new jobless claims are around 350K. It was around 490k and we have new college grads this month entering the workforce.

The jobs are slowly coming back but I mean a lot of the job listings ask for 5-10 years of experience in a specific area, sometimes minimum of 4 years. Makes you wonder if they are serious about these jobs.

I don't know who to beleive anymore on TV, the dollar is deflating which makes no sense because we printed so much money in he last year and haven't raised the interest rates to reign in that money , I know this I don't trust those academics in Washington right now because most of them have NO Real world Business Experience. Its like a kid like me becoming the CEO of GE.

[Mark G.]

Don't forget the BLS productivity numbers. They do not counter the effects of importing parts for final assembly in the US or US corp. outsourcing of labor to foreign nations as they fire US workers. The additional productivity gains aren't valid.

[kevinearick]

The foreclosure crisis continues unabated, for so long that it doesn’t make the news headlines any longer, like it’s an accepted reality, out-staged by the latest bailout of capital, the healthcare bill.

Tax receipts will continue to decline, social demand will continue climb, and environmental degradation will accelerate, leading to WWIII on its current trajectory. Can you really do worse than creating $500 Trillion in unfunded liabilities, globally? Congress just did. I wouldn’t be depending on the young people to supply my retirement income stream.

People who never worked a real job in their lives are running the Fed, and its “constituents” are expecting it to create real jobs. Good luck with that. Finance is a symptom; breeding patterns are the biological articulation to the economy, and agency is determined to breed weak counter-parties.

I leave you with this:

Unprotected labor is currently getting 15% return on the economy, down from 65% after WWII. That number must be increased to 51%; wages can be tripled, or asset prices can be halved with an interest rate of around 4%, or a combination of the two. Government growth hides itself within inflation, which is why agency hates deflation, and always seeks to run a dc motor, a one-way street, despite the obvious flaws in design.

Regardless, a quantum, not incremental, improvement in the economic motor is required. Transportation and agency expenditures, between producer and consumer, must be transferred back to labor, where they came from over the last 35 years.

Is agency going to put a gun to everyone’s head to avoid what must be done? Obviously yes, which is why self-sufficient communities producing a surplus have the only out, from the lopsided contract, and why others, who depend on agency, are stuck in automated liquidation mode (there is no such thing as a contract between unequal parties; a significantly greater power will always abuse its position).

And most caught in the wash cycle are hoping that the old demographic ponzi economy can somehow be restarted, instead of getting out. The majority has never participated in a real economy.

Who is going to do the work that must be done, the people who punch a keyboard and have everything delivered, while they play video games, or the people who never bothered to learn how to program the time on their electronics, because there was always someone there to do it for them?

The economy of ordering up an economic slave from halfway around the world has run its course. Several billion people are watching on computers, and they are increasingly discarding the American Enterprise System. The planet did not create a human pool of talent without some expectation of putting it to work.

The American Enterprise System became synonymous with corruption, globally, from first-hand experience by its subject counter-parties, because planetary expectations went way up once humanity passed the demographic turning point, toward smaller succeeding generations. This is a far cry from the former value of liberty, which initially induced participation.

The curve changed, and the proprietors continued on, with increasing speed as they lost their bearings. Rather than admit error, learning, they continue unabated, knowing, followed by everyone who “thinks” that knowledge is power, because they repeat it in their head 100 times a day, just as they were told.

The public education system outlawed independent thinking a long time ago, replacing it with “ follow after me …”.

It’s time to take the training wheels off, and the majority of Americans have been riding downhill, on grass, with the training wheels their entire lives. Learning to ride uphill, on gravel, with no training wheels makes for better riders, but there is a place for everyone. The performance bar is really pretty low if you think.

We have reached the tipping point; if you want to continue …

To do:

1. Simplify any one, or any part, of the current nonsensical approach to mathematics, biology, chemistry, or physics. They are all the same subject, looked at from different perspectives, which you will see once you simplify them;

2. Take any job that will continue into the next economy, electrician and nurse are good ones, and build an open certification prototype that will deliver better practitioners than the current political certification system;

3. Build an independent communication prototype node that bypasses the Internet physical infrastructure; and

4. Design a gamma pump circuit.

These are the minimum requirements. Work alone, or work with others. Publish, or don’t publish. Once you complete these tasks, you will see that the kernel programmers have already installed the temporary bridge, and have nearly completed the one to follow.

There is plenty of work for everyone that wishes to scale up the economy, but entry is not free, and money, other people’s debt, will not unlock the door. Being able to read doesn’t open it either. Capital will follow you, and the politicians will jump in front of the parade.

Or don’t. The choice is yours. You now see the alternative quite clearly.

[Michael Panzner]

Kid Dynamite: I hadn't thought about that, but good point. Thanks.

[roger]

Kid Dynamite: Good reminder,how careful we must be in
reading data and charts.
The best comments are usually short,to the point and in plain English, thanks