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Us Unemployment Up To 9.7%

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The national unemployment rate rose to 9.7 percent -- the highest level since June 1983 -- as the U.S. economy shed 216,000 jobs in August, the government announced on Friday morning. That's up from 9.4 percent in July.

By a broader measure that includes forced part-timers and people who'd like to work but aren't looking, the national unemployment rate reached 16.8 percent -- up a staggering 6 percent from this time last year.

The pace of job cuts has steadily slowed since the beginning of the year, when monthly losses exceeded 700,000 in January.

The total number of unemployed is 14.9 million, roughly double the number at the start of the recession in December 2007.

The number of long-term unemployed, those out of work 27 weeks or longer, edged up only slightly in August, from 4.96 million to 4.98 million. At the end of the year, nearly 1.5 million of those people will exhaust their extended unemployment insurance unless the government takes action to further extend their benefits.

And the picture isn't so great for people who are working, either. A report released this morning by the Economic Policy Institute concludes that many workers who have not lost their jobs during the recession have nevertheless taken a hit as a result of sluggish wage growth, reduced hours and involuntary furloughs. Private sector wages have grown at a rate of 1.3 percent over the last six months, less than half as fast as wage growth during 2007 and the first six months of 2008.

"It's an implosion of wage growth far beyond what you would expect" in an ordinary recession, said EPI's Larry Mishel, co-author of the report, in a conference call with reporters. Average wages rose 6 cents in August, according to the Department of Labor.

Other economic indicators this week brought better news. Retail sales fell 2 percent in August from a year earlier, the smallest drop since September 2008. And the Washington Post on Monday reported positive signs in the Men's Underwear Index, the metric reportedly favored by former Federal Reserve Chairman Alan Greenspan. (The MUI outlook was less positive in April.)

Asked for his thoughts on the MUI, Mishel scoffed. "If Alan Greenspan were so wise, we wouldn't be in this mess," he said.

http://www.huffingtonpost.com/2009/09/04/u...e_n_277218.html

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Guest BoomBoomCrash

Take a look at the balance sheets of any companies outside the financial sector and most are doing well through the recession (benefiting from the stimulus injected into the economy). Despite this most companies have enacted pay freezes, pay cuts and redundancies.

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Take a look at the balance sheets of any companies outside the financial sector and most are doing well through the recession (benefiting from the stimulus injected into the economy). Despite this most companies have enacted pay freezes, pay cuts and redundancies.

So all that stuff i keep seeing on the news about poor retail sales, shops closing etc etc is just propaganda?

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Guest BoomBoomCrash
So all that stuff i keep seeing on the news about poor retail sales, shops closing etc etc is just propaganda?

Yes, a lot of it is. There are many companies pushing for staff pay cuts that are making profits in line with previous years.

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Yes, a lot of it is. There are many companies pushing for staff pay cuts that are making profits in line with previous years.

What the corporate earnings picture going forward. People who have lost their jobs or taken a pay cut can't buy more good and services unless they have access to credit. Worse, even if lending criteria were eased borrowers have less income to service their loans meaning they either borrow less or default more quickly.

The harsh truth is that the debt is still out there.It has not been written off just shuffled onto government balance sheets where it will remain as a huge dead weight on the economy going forward.

At the moment what you are seeing is not growth but economic cannibalism. QE is like cutting off your leg and then announcing to the world that you have found a huge new supply of food. Alkthough you might eat more you will still have lost weight and you wont ever walk again.

On edit - These charts from Denningers site reveal the underlying issue

http://market-ticker.denninger.net/archive...-Economics.html

Basically economic growth has come to depend on pulling forward demand against future earnings. Since these are now declining then the debt burden is actually getting even less sustainable. This will eventually mean more defaults.

How are companies going to make profits long term in this environment ? If they don't cut wages or fire employees they get screwed by their competitors who do follow this course. Alternatively, if they do follow the same strategy they are essentially just setting up conditions that will doom them to oblivion a few years down the road.

Edited by up2nogood

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At the moment what you are seeing is not growth but economic cannibalism. QE is like cutting off your leg and then announcing to the world that you have found a huge new supply of food.

One of the best ways I've seen of describing what our leaders have done. You could extend the analogy further by saying that one you've eaten your leg, you are in worse shape to go look for food when you are hungry again...which is exactly what will happen once our government starts paying back the debt.

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It's the wageless recovery.

Considering the entire system requires continual growth we are in deep trouble especially when you consider that perpetual growth is impossible and to recover from where we are we need above trend growth now for several years.

Even worse I can't see how they can get debt led expansion going again which has been the driver in world economic growth.

Those companies that are still making big profits who much of that has been achieved through one off cuts in costs like sacking employees. How can they maintain profits in the long run if the sales don't return?

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On edit - These charts from Denningers site reveal the underlying issue

http://market-ticker.denninger.net/archive...-Economics.html

Basically economic growth has come to depend on pulling forward demand against future earnings. Since these are now declining then the debt burden is actually getting even less sustainable. This will eventually mean more defaults.

How are companies going to make profits long term in this environment ? If they don't cut wages or fire employees they get screwed by their competitors who do follow this course. Alternatively, if they do follow the same strategy they are essentially just setting up conditions that will doom them to oblivion a few years down the road.

Yes, he's exactly right.

Many solid looking companies are killing the golden goose, destroying customer service and staff moral. Throw government spending cuts and tax increases into the mix (both are needed) and everything will far apart pretty damn quick.

House prices will be as big a concern as they were exactly 70 years ago.

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Did anyone spot the hole in the unemployment rate? It was 9.4% in July and 9.7% in August. That's a gain of 0.3%. Now, unemployment is calculated on the working population, about 50% of the total, or 150 million in the US. A gain of 0.3% would therefore be 450,000. But the article mentions something like 216,000 (if that's not exact, it's because I don't have the original in front of me).

Is it because the unemployment figures for July were revised upwards? They're doing this increasingly now because they're using models and adjustments. Looks to me like they're deliberately destroying MoM bad-news feedback by delaying results. 450K is 450K - it's up from the 250K reported for 2Q and getting back to the 650K MoM reported at the start of the year.

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Yes, a lot of it is. There are many companies pushing for staff pay cuts that are making profits in line with previous years.

People are being laid off because the amount employees can create for a company is going down. Wage drops follow.

Edited by Stars

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Did anyone spot the hole in the unemployment rate? It was 9.4% in July and 9.7% in August. That's a gain of 0.3%. Now, unemployment is calculated on the working population, about 50% of the total, or 150 million in the US. A gain of 0.3% would therefore be 450,000. But the article mentions something like 216,000 (if that's not exact, it's because I don't have the original in front of me).

Is it because the unemployment figures for July were revised upwards? They're doing this increasingly now because they're using models and adjustments. Looks to me like they're deliberately destroying MoM bad-news feedback by delaying results. 450K is 450K - it's up from the 250K reported for 2Q and getting back to the 650K MoM reported at the start of the year.

We are having a clueless recovery.

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