Standard and Poor's finally did it. They downgraded the credit rating of the United States from AAA to AA+. There are serious questions about the reliability of S&P. The White House pointed out that there is a $2 trillion error in the calculations used for the downgrade. Ths is of interest since the two other agencies failed to change the AAA status of the US. (See S&P downgrades U.S.)
Jack Tapper of ABC News reported late this afternoon:
"A third official says that S&P made a "serious mistake" in its analysis, "based on flawed math and assumptions," so the Obama administration is pushing back. But even though "S&P has acknowledged its numbers are wrong, it's unclear what they're going to do.," the official said.
"S&P's numbers were off by "roughly $2 trillion," the official said.
Fitch and Moody's reaffirmed the AAA US rating earlier in the week.
In addition to the question raised about a mathematical error, there are substantial reasons to doubt S&P for any credit rating, let alone the sovereign debt of the United States This material is from an article on April 25, 2011. It is highly relevant to the situation at hand.
The July unemployment report is yet another disappointment, with not enough jobs to keep up with population growth. The jobs situation has been dismal for 43 months or over three and a half years. Yet those thinking Economic Armageddon Redux was suddenly upon us, literally crashing the BLS server to get the news, were sorely mistaken.
Earlier we reviewed the July 2011 BLS employment ratios. While not the Armageddon Wall Street was expecting, it's clear the job crisis has not dissipated. Both June and May new jobs numbers were revised upward, but not enough.
The change in total nonfarm payroll employment for May was revised from +25,000 to +53,000, and the change for June was revised from +18,000 to +46,000.
Let's drill down deeper into the numbers to show just how badly America needs good jobs.
There are 13,931,000 people officially unemployed, and if one takes the alternative measure of unemployment, it's 24.7 million.
The July 2011 monthly unemployment figures show the official unemployment rate decreased to 9.1% and the total jobs gained were 117,000. Total private jobs came in at 154,000 with government jobs dropping -37,000.
Wall Street exits, stage right, from the United States economy. The Dow closed 513 points down today and is down over 1,200 points since July 21. Both the Nasdaq and the S&P. This is the worst one day drop since October 2008, otherwise known as the great financial Armageddon.
Only three of the 500 stocks in the Standard & Poor's 500 index had gains. Oil fell by 6 percent. The yield on the two-year Treasury note hit a record low as investors sought out relatively stable investments.
All three major stock indexes are down 10 percent or more from their previous highs, a drop-off that is considered to be a market correction. A drop of 20 percent or more signifies the start of a bear market, an extended period of stock declines.
The number of people on food stamps in the United States exploded in May 2011.
There were 312,240,000 people in the United States, mid May. 45,753,078 of them were on food stamps. That's 14.7% of all Americans on food stamps. The average monthly amount? $133.80.
I reviewed the candidates for IMF head on May 23, "Old Europe" backs French finance minister Lagarde for IMF head. The traditional choice of a European to head IMF was challenged by candidates from Mexico and Asia. The United States ultimately tilted toward the French finance minister who is now in office.
The article noted that there was a controversial case pending in French court regarding Lagarde's actions as finance minister. She made a favorable ruling in a matter regarding a close friend and ally of French President Nicholas Sarkozy. It appeared that her actions resulted in an award viewed as excessive for the Sarkozy ally. The loser in that matter appealed to a French court. At the time, it was known that:
"A three judge panel of the Court of Justice for the Republic will recommend for or against further investigation by mid June. A yes on investigating Lagarde would end her chances for the IMF position.."Economic Populist, May 23
The decision was delayed and the US-European alliance pushed the nomination through. Today, the Guardian had this headline:
Challenger, Gray and Christmas show layoffs at a 16 month high in their latest layoff tracker report. They also noted this is the third monthly increase.
A sudden and unexpected burst in private-sector downsizing pushed the number of announced job cuts to a 16-month high of 66,414 in July.
ADP, a private organization, released their private payrolls jobs report. This month ADP is reporting a gain of 114,000 private sector jobs in July 2011. June was revised down to 145,000, in stark contrast to the BLS reported 57,000 private sector jobs. Below are the reported private sector jobs from ADP.
The ISM Non-manufacturing report for July 2011 shows the overall index decreased to 52.7%, -0.6 points lower than June's 53.3% and the same level as February 2010. This report is also referred to as the services index, or service sector index. The services sector is slowing down.
Standard and Poor's finally did it. They downgraded the credit rating of the United States from AAA to AA+. There are serious questions about the reliability of S&P. The White House pointed out that there is a $2 trillion error in the calculations used for the downgrade. Ths is of interest since the two other agencies failed to change the AAA status of the US. (
I reviewed the candidates for IMF head on May 23,
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