Category Archive for: MoneyWatch [Return to Main]

Friday, March 05, 2010

Unemployment Unchanged

The employment report is essentially unchanged from last month with unemployment holding steady at 9.7%. Here are some discussions of the report.

There is a lot of optimism about this report due to the fact that it appears that the rate of deterioration in labor markets is slowing and perhaps even about to turn the corner. But I find it hard to be upbeat about an economy that is moving sideways, especially when the broad measure of unemployment increased, and hours worked fell.

It's good to see that the administration recognizes this. Brad DeLong:

Christy Romer:
Statement on the Employment Situation in February: [A]n unemployment rate of 9.7 percent is unacceptably high and we need to achieve robust employment growth in order to recover from the terrible job losses that began over two years ago.  That is why it is essential that Congress pass additional responsible measures to promote job creation.  It is also vital that we continue to support those struggling with unemployment...
Such as? What responsible measures?

The biggest and easiest would be another $300 billion in aid to states for the remainder of fiscal 2010 and 2011 to keep state and local services from suffering additional cuts and to shave perhaps 1.5 percentage points off the unemployment rate. Senators, however, are opposed to it: if they give money to governors, governors use them to cut ribbons and then run against senators to try to take their jbos. It would, however, be the right thing to do.

I expect Congress will implment a few token employment measures they can brag about in reeloection speeches, but I don't expect anything anywhere near the amount needed to be enacted. [Also posted at MoneyWatch.]

Thursday, March 04, 2010

New Claims for Unemployment Insurance Fall Slightly

I have a discussion of today's release of data on claims for unemployment insurance at MoneyWatch:

New Claims for Unemployment Insurance Fall Slightly

Many are hailing this report as good news, but I have a different view of what the numbers say.

Tuesday, March 02, 2010

Why Senator Kyl is Wrong to Say that Unemployment Compensation Can't Create Jobs

At MoneyWatch, I explain why Senator Kyl is wrong when he asserts that unemployment compensation cannot create jobs:

Unemployment Compensation has Broad Based Benefits

[And don't forget about The Importance of Automatic Stabilizers such as unemployment compensation.]

Thursday, February 25, 2010

Initial Weekly Claims for Unemployment Insurance Increase to 496,000

In a recent MoneyWatch post I said:

The release last Thursday of initial weekly claims for unemployment insurance showing 473,000 claims, an increase of 31,000 over the 442,000 claims the previous week, hasn't received nearly enough attention. Claims have been essentially moving sideways for several weeks now, and they are still far above the break even point at approximately 400,000 claims per week. The economy will continue losing jobs so long as initial claims stay above 400,000 per week. ...
Claims will be released on Thursday of this week, and I'll be keeping a closer eye on them than usual. If they continue to move sideways, it's time to worry.

I'd be less worried if it looked like a meaningful job creation package was about to emerge from Congress, but the proposals under discussion don't do nearly enough, and what little that has been proposed isn't happening as fast as needed. ... And while it's good that health care reform is coming back onto the front burner, that means that a job creation bill is unlikely to be the main priority for Congress in the near future.

Update: Maybe they were listening. If this bill does eventually pass, it will still be far, far short of what is needed, and much later than needed, but it's something. A meager something, but something nonetheless.

Here is Calculated Risk on today's release:

The DOL reports on weekly unemployment insurance claims:
In the week ending Feb. 20, the advance figure for seasonally adjusted initial claims was 496,000, an increase of 22,000 from the previous week's revised figure of 474,000. The 4-week moving average was 473,750, an increase of 6,000 from the previous week's revised average of 467,750. ...

Click on graph for larger image in new window.
This graph shows the 4-week moving average of weekly claims since 1971. ...

The current level of 496,000 (and 4-week average of 473,750) are very high and suggest continuing job losses in February. This is the highest level since last November.

Action from Congress to stimulate jobs has been woefully inadequate. Voters will be right to blame politicians for failing to address this problem. Policymakers certainly had plenty of warning it was coming, but they chose to put their heads in the sand and ignore it, or to avoid the difficult politics of job creation policies by cherry picking the data in a way that convinced them that recovery was just around the corner.

[Also posted at MoneyWatch.]

Health Care Reform: The Obama Compromise Proposal and the Likely Republican Response

I posted this at MoneyWatch:

Health Care Reform: The Obama Compromise Proposal and the Likely Republican Response, by Mark Thoma: A discussion of the options for health care reform Democrats have before them, and the counter-proposals that Republicans are likely to offer. Many Republicans will oppose reform with little motivation beyond handing Democrats a loss, but some will be willing to offer their own ideas as counter-proposals to the administration's reform plan. Are the counter-proposals worth pursuing?

Monday, February 22, 2010

Health Care is Important, But Don't Forget the Unemployed

At MoneyWatch, I argue that unless Congress can learn to walk and chew gum at the same time, which it's unlikely to do, a side effect of the renewed attention to health care reform may be less job creation and higher unemployment:

Update: Maybe they were listening. If this bill does eventually pass, it will still be far, far short of what is needed, and much later than needed, but it's something. A meager something, but something nonetheless.

Thursday, February 18, 2010

Europe’s Sovereign Debt Problem

At my blog at CBS MoneyWatch:

Europe’s Sovereign Debt Problem: Causes and Solutions, by Mark Thoma

Monday, January 25, 2010

The Importance of Automatic Stabilizers

Given the importance of automatic stabilizers, why hasn't more attention been focused on how well our present set of automatic stabilizers has fared in this recession, and how we might do better?:

The Importance of Automatic Stabilizers, by Mark Thoma

Tuesday, January 12, 2010

The Fed's Record Earnings

At MoneyWatch:

Should We be Impressed with the Fed's $45 Billion in Earnings for 2009?

Monday, January 04, 2010

Did the Fed Cause the Recession?

At MoneyWatch:

Did the Fed Cause the Recession?, by Mark Thoma: I have been more defensive of the Fed's actions both before and after the crisis started than most, and I want to talk about why recent criticism of Bernanke and the Fed for their failure to use regulatory intervention to stop the housing bubble is correct, but perhaps directed at the wrong target. ...[...continue reading...]...

Friday, December 18, 2009

The Fed Can Help, But Fiscal Policy Is The Key To Job Creation

At CBS MoneyWatch, why I haven't joined the loud calls for the Fed to engage in quantitative easing as a means of creating jobs:

The Fed Can Help, But Fiscal Policy Is The Key To Job Creation, by Mark Thoma: There are many people currently criticizing the Fed for worrying too much about inflation and not enough about employment. They want the Fed to use quantitative easing - the purchase of financial assets when interest rates are already at zero - as a means of stimulating the economy and creating jobs. I think it's a mistake ...[...continue reading...]...

Tuesday, December 08, 2009

The Relationship Between Budget Deficits, Fed Independence, and Inflation

At MoneyWatch, some of the pressures the Fed might come under in the future if the government debt continues to rise, and the important role that Fed independence plays in making sure that the debt is not inflated away:

Budget Deficits, Fed Independence, and Inflation, by Mark Thoma: I have been critical of both Alan Greenspan and Ben Bernanke for giving recommendations concerning fiscal policy during their testimony before congress. In Greenspan's case, it was his comments about tax cuts that I found problematic, while for Bernanke it was his comments on entitlements.
But monetary and fiscal policy are connected, and the Fed chair should talk about the impact that a growing debt level might have monetary policy. That is, while I don't think the Fed chair should give advice on the specifics of fiscal policy, the chair should make clear how fiscal policy choices will affect or constrain monetary policy. ...[...continue...]...

Friday, November 20, 2009

What’s Wrong With the Dodd Proposal to Restructure the Fed

At MoneyWatch:

What’s Wrong With the Dodd Proposal to Restructure the Fed, by Mark Thoma: A proposal from Senate Banking Committee Chairman Christopher Dodd changes the selection process for key positions within the Federal Reserve system. Unfortunately, this proposal makes the selection process worse, not better. If this proposal is passed into law, it would further concentrate power within the Federal reserve system and politicize the selection process, both of which are the opposite of the where reform should take the system. ...[...continue reading...]...

Wednesday, November 18, 2009

Housing Starts Fall

I just posted this at MoneyWatch:

Housing starts fell unexpectedly last month. The Census report gives the details:

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 529,000. This is 10.6 percent (±8.7%) below the revised September estimate of 592,000 and is 30.7 percent (±8.3%) below the October 2008 rate of 763,000.

Single-family housing starts in October were at a rate of 476,000; this is 6.8 percent (±7.5%)* below the revised September figure of 511,000. The October rate for units in buildings with five units or more was 48,000.

This graph shows the recent trend in housing starts:

Housing Starts

As the graph shows, starts bottomed several months ago, and have been "moving sideways" ever since. What is causing housing starts to move sideways rather than recover? Calculated Risk, one of the best sites for analysis of the housing industry, gives this explanation (which I agree with):

Total housing starts were at ... the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Starts had rebounded to 590 thousand in June, and have move sideways (or down) for five months.

Single-family starts were at 476 thousand (SAAR) in October... Just like for total starts, single-family starts have been at this level for five months.

As he notes, an important piece of the puzzle is that the percentage of vacant units has been climbing and is now at a record level (see this report):

It is very unlikely that there will be a strong rebound in housing starts with a record number of vacant housing units.

The vacancy rate has continued to climb even after housing starts fell off a cliff. Initially this was because of a significant number of completions. Also some hidden inventory (like some 2nd homes) have become available for sale or for rent, and lately some households have probably doubled up because of tough economic times.

It appears that ... starts are now moving sideways - and will probably stay near this level until the excess existing home inventory is reduced.

This raises the question of whether the overall economy will echo this pattern of falling backwards after apparent improvement, i.e. of moving sideways for a period of time. This is something I don't think we can or should rule out as we think about the appropriate economic policies that we should have in place to help the economy recover from the recession.

Monday, November 16, 2009

How to Prevent the Next Financial Crisis

At MoneyWatch:

How to Prevent the Next Financial Crisis, by Mark Thoma

Friday, November 13, 2009

Why We Need an Individual Mandate for Health Insurance

At MoneyWatch:

Why We Need an Individual Mandate for Health Insurance, by Mark Thoma