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An optimist might tell you that this is the first inning of the recovery. We will return to the red trend line as the economy begins to strengthen. For what it is worth, I am not an optimist. I believe that the next major trend change in initial claims will be to the upside.
Please note that versions 32 through 34 of these posts are permanently missing. I took a break for a few weeks. Sorry about that! In my defense, not much has changed since I last posted.
Oh sure, there was a feigned attempt to revisit the red trend line in my absence. I guess there was that. Perhaps the red trend line attracted a few red herrings. Sigh.
It is also a literary device employed by writers that leads readers or characters towards a false conclusion, often used in mystery or detective fiction.
The job market sure is a mystery, a conundrum so to speak. It's almost like jobs are being automated and outsourced faster than we can think up new ones. Yeah, it's almost exactly like that. Go figure.
See Also:
Extreme Initial Claims Danger v.31 (Musical Tribute)
Source Data:
St. Louis Fed: Initial Claims
DOL: Initial Claims
16 comments:
Ever notice when one of our presidents is addressing an audience of the flagrantly overpaid, he always says something like: "The fact is that income inequality is real..."?
I've been reading about Denmark recently. It's not a technological power, or a financial center. Yet, it's the third wealthiest country in Europe (per capita GDP), is roughly the most equal country in Europe, has roughly the lowest unemployment rate, and has one of the highest ratios of employment to active population.
It seems to be an egalitarian country that is quite rich by European standards and very rich by the standards of the rest of the world.
AFAICT, people in the lower strata of employment in Denmark are not as far detached from their higher paid counter parts as we are here in America. And as a result, they remain happily employed in their current positions and are not quitting or seeking better jobs. Thus higher overall employment.
Didn't we have a similar scheme here in the 50's and 60's and 70's? You know, when CEO salaries were 40 times the rest of us and not 1040 times the rest of us.
Fritz_O,
How can a country truly be prosperous if the poor aren't continuously borrowing money exponentially from the rich? *sarcasm*
In all seriousness, Denmark sure has the land of the free beat in the income equality and intergenerational mobility department.
Mark,
That's a great find! And isn't it the truth?!
Some thoughts after linking to the page from whence the chart came...
Of the roughly five countries that exceed the US all but one of them (China) have are either extremely poor per capita GDP or they are enriched via the drug trade. And the fifth one, China, well, they've discovered illusory financial prosperity on a scale heretofore unknown.
I would argue though, that the rise in income inequality in those countries is similar to ours. It reflects something that happened to a very small group of people. It does not go through the whole distribution. It reflects, rather, the rise of a whole new class - very small and unbelievably rich.
And in our country it is easy to see from whence the new wealth came. It did not come from labor markets at all. Instead, it came from the capital market. Specifically, and in a very flamboyant way, in the late 1990's and the mid 2000's it came from Wall Street.
Ahoy, Mark, I thought this might interest you: " ... expected real equity return in the region of 3%–31⁄2% over 20–30 years. We are indeed living in a low-return world."
That refers to return including reinvestment of income but (as far as I can tell) excluding tax.
The source is the fascinating:
https://infocus.credit-suisse.com/data/_product_documents/_shop/382269/credit_suisse_global_investment_returns_yearbook_2013.pdf
Denmark has 5 million people and employs nearly half in government jobs. It also has a high number of two income households required due to the levelling taxation regime. Everyone having to work outside the home doesn't strike me as a optimal situation. It positions the home as an incidental thing, rather than the central thing.
America is certainly not doing things right, but the Scandi model of making everyone work outside the home and pay lots of taxes in exchange for getting part of it back in social welfare is not so great in the long run either. You get nailed on productivity and demographics too.
From wiki:
"Population: 5,580,413. Denmark has a labour force of about 2.9 million. Of the employed more than 38% (800,000 people) of the total workforce work in public sector jobs."
Aside from the .gov jobs, Denmark is essentially a "right to work" country. Or as I like to call it, "right to fire".
Also from wiki:
"The Danish taxation system is broad based, with a 25% VAT, in addition to excise taxes, income taxes and other fees. The overall tax burden (sum of all taxes, as a percentage of GDP) is estimated to be 46% in 2011."
I wonder how much longer the US can go without a VAT.
I don't know about "everyone" working but I guess you could make the case that 5.5M pop. minus 2.9M employed equals 2.6M pop. under the age of 16 or over the age of 64 or unemployed. I think their UE rate is around 7%.
My understanding of economics and the economy has been through the lens of the land market for about a decade now.
A prominent Georgist economist (well, the only Georgist economist perhaps) came up with the thesis that 'all taxes come out of rents'.
The scandinavian tax regimes are indeed high compared to ours -- high 40% of GDP compared to our high 20% --but since the masses buy housing on the bid from their disposable income, I think the thesis that our lower tax regime has just resulted in higher monthly rents and home prices should be delved into.
I'd love to research land pricing dynamics in the eurosocialist states. The only way to make housing affordable is to produce a glut of quality housing, and that's something that statists generally try to work at if not accomplish.
(The US has an oversupply of housing, but that's only counting all the shoddy and/or poorly located inventory)
http://www.youtube.com/user/GoSwedish
See the US land sector for what it is -- a colossal money siphon from workers to predatory capitalists -- is part of why I'm a pessimist on the US.
Our economy is screwed up because we're screwed up.
http://www.newrepublic.com/article/112395/wall-street-hedge-funds-buy-rental-properties
That's what I'm talking about.
Housing has long been a way the bourgeoisie could get into the landlording game of tapping money for nothing from the workers.
Now this overt rent-seeking escalating to the highest tranches of organized capitalism, LOL.
Before I discovered Georgism I wasn't equipped to understand what has been going on. But now I think I do, and it's not a pretty picture.
And the land dynamic is only a third or less of our problems! Trade imbalance @ ~$500B/yr is $400/month per household of money leaving our economy.
Health sector rents, another $300/mo per-capita rent-take . . .
To replace these money taps, we get :
http://research.stlouisfed.org/fred2/graph/?g=fv3
This is a very important graph to understand -- real per-worker systemic debt load (2012 dollars).
It's how we got to where we are now.
Yet almost nobody gets it. The debate might tangentially approach this reality, but never addresses it.
The key thing is the two massive spikes -- the 1980s good times and the 2000s good times.
"It was worse than a crime, it was a blunder."
Troy,
"That's what I'm talking about."
That link made me want to throw up on my keyboard.
This:
By picking up blighted property caused by the foreclosure wave, investors could theoretically help the market, as well as the communities, heal. “It breaks my heart what the subprime crisis did to neighborhoods,” said former FDIC Chairman Sheila Bair. “We do need buyers to come into the neighborhoods and commit capital to their revitalization.”
Once a shill, always a shill.
The name of the game on Wall Street is to see how many of another player's chips they can stack on their pile. No one on Wall Street wants anyone on Main Street to recieve any chips unless by doing so Wall Street would also get a thousand-fold more for themselves.
In even simpler language, on Wall Street no one ever does anything for anybody else without expecting to gain everything in return.
A Shill like Bair may say that investors are doing something to improve communities or the economy - and she may even believe it - but don't you believe it.
In the final analysis, Wall Street's non-altruistic subCONscious mind will automatically regulate their winner-(or loser)-take-all actions.
Well, historically our hypertrophic financial sector has also pulled our train to some extent.
The 19th century was the story of the exploration of the power of private capital to create wealth.
China, Inc is now following this path, as Japan Inc trod in their golden period of growth.
The confusion in the discussion is not having an adequately precise definition of wealth and wealth creation.
Merely profiting from the ownership of land and physical capital is not wealth creation, it's predatory capitalistic ownership -- AKA rentierism -- AKA getting something for nothing.
Somebody buying a single family house to rent out has, in the global analysis, only outbid his future renter(s) for that capital asset. To the extent no physical wealth was actually created, preserved, or refurbished, no actual wealth creation has occurred in the acquisition.
Real estate has historically been a decent inflation hedge -- the same exact units my parents were renting for $300-400/mo in the late 1970s is now renting for $1200 - $1600 30+ years later, about $300/mo over the rate of inflation.
The recent "subprime" collapse was simply a pump & dump operation, an order of magnitude greater than the S&L inside job of the 1980s.
What a corrupt economy. I don't know which is worse, the factotums in DC knew what was going on 2002-2005, or didn't.
"The 19th century was the story of the exploration of the power of private capital to create wealth."
The robber barons of the 1890s and 1900s were just as crooked as today's pack of predatory banking CEOs and made just as much money on the backs of everyone else. The big difference is the railroad bubble took 25 years to play out and during which the capacity of railroad tracks doubled the demand. The teleCON/dotCON over-expansion bubble/bust happened in just 4 years and produced 20 times more capacity than was needed. The housing bubble/bust blew off in about the same time and there are still empty houses and strip malls everywhere 5 years later (until Wall Street solves that problem for us, and creates a new one.)
Another difference between the boom and bust eras is that in the past, companies merged and acquired other companies with combinations of cash, debt, and stock. But starting in the late 1990's, the currency of choice was stock. Stock that is often exaggerated by illicit accounting leading to overvaluation and by booking profit on fake capacity, power, or electricity trades (Enron) without any real source for repayment.
"To the extent no physical wealth was actually created, preserved, or refurbished, no actual wealth creation has occurred in the acquisition."
Predatory capitalists would argue that wealth is being created. For themselves and the 1%'s who invest through hedge funds, a la Romney. And judging by the last election, there are 49% of the voting public that buys into this. And that doesn't include all the CONservatives who stayed home due to the overwhelming puke factor of both candidates.
dearieme,
We are indeed living in a low-return world.
Thanks for the link! I have concerns the returns may be even less. Sigh.
Troy,
Our economy is screwed up because we're screwed up.
I think the same could be said of politics. Our political system is screwed up because we're screwed up.
Fritz_O,
A Shill like Bair may say that investors are doing something to improve communities or the economy - and she may even believe it - but don't you believe it.
I often wonder how much Ben "There Is No Housing Bubble to Go Bust" Bernanke believes what he says.
Troy,
I don't know which is worse, the factotums in DC knew what was going on 2002-2005, or didn't.
Indeed!
Fritz_O,
Stock that is often exaggerated by illicit accounting leading to overvaluation and by booking profit on fake capacity, power, or electricity trades (Enron) without any real source for repayment.
My former company resembles that remark.
THE fraud that time forgot...
Hmmm, that article covers half the story, the part about illicit accounting. The other half would be how the the executives had escaped with the dough by siphoning off $$$$ from stock and option sales.
The other thing that caught my attention was the haircut that stock and convertible bond holders got stuck with. Too bad they weren't the Wall Street banks who loaned Cendant money. They took haircuts too, but probably $0.40 on the dollar for the loans as opposed to pennies on the dollar for the bonds.
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