August 2010

Initial weekly unemployment claims for July 31, 2010

The financial headline buzz du jour is all about initial weekly unemployment claims, which increased by 19,000. Why the U.S. jobs crisis is suddenly alarming news, when we and many other economic blogs have been sounding the alarm for years, is anybody's guess. Last week we showed, initial unemployment claims are simply too high and have stayed that way for months. Another alarming sign is the Challenger & Gray Job Cut report. Announced layoffs rose 6% from last month, the 3rd month in a row announced layoffs increased.

So far this year, the government and non-profit sector has announced 105,969 job cuts, nearly triple the next largest job-cutting sector: the pharmaceutical industry, which has announced 37,010 job cuts, 30 percent fewer than at this point last year.

The Obama Administration is Training Offshore Foreign Workers to Take your Job

If this doesn't get your blood boiling then you're dead. The Obama administration is spending $36 million dollars to train foreign workers in foreign countries for skills needed to offshore outsource your job. I'm not making this up. $36 million dollars to educate foreign workers, when the U.S. unemployment rate is at crisis levels. Our government is paying for education, classes and training so foreigners can get the skills needed to do American jobs.

Despite President Obama's pledge to retain more hi-tech jobs in the U.S., a federal agency run by a hand-picked Obama appointee has launched a $36 million program to train workers, including 3,000 specialists in IT and related functions, in South Asia.

Following their training, the tech workers will be placed with outsourcing vendors in the region that provide offshore IT and business services to American companies looking to take advantage of the Asian subcontinent's low labor costs.

Under director Rajiv Shah, the United States Agency for International Development will partner with private outsourcers in Sri Lanka to teach workers there advanced IT skills like Enterprise Java (Java EE) programming, as well as skills in business process outsourcing and call center support. USAID will also help the trainees brush up on their English language proficiency.

USAID is contributing about $10 million to the effort, while its private partners are investing roughly $26 million.

Another dumb idea to avoid reducing work time: $5000 for an ounce of gold

This particularly dumb idea is from Paul Brodsky and Lee Quaintance of QB Partners.

They suggest: Rather than reducing hours of work, why not have Washington offer to buy gold at $5000 an ounce:

A coordinated global currency devaluation. The Fed, for example, tenders for private gold holdings at $5000/oz and maintains that bid/offer. As the Fed purchases gold, the gold flows to the asset side of its balance sheet. The Fed funds these gold purchases with newly-digitized money, which flows to banks in the form of net new deposits. This would be a discrete monetary inflation event (devaluation) and a simultaneous deleveraging.

Once the Fed acquires enough gold from the markets, a gold price peg for the US dollar is established. Would this be a gold standard? Yes, if that nominal exchange value is maintained in the open market by the Fed. No, if the Fed decides to periodically adjust that $5000/oz. level following the original exchange. (In fact, tinkering with the official gold price would be a pure example of a monetary agent conducting monetary policy.)

ADP Employment Report for July 2010 - 42,000 private sector jobs

The ADP national employment report shows 42,000 private sector jobs were created in July. Last month's numbers were revised from 13,000 to 19,000 for private sector jobs created.

July’s ADP Report estimates nonfarm private employment in the service-providing sector rose by 63,000. Employment in the goods-producing sector declined 21,000 during July while employment in the manufacturing sector decreased 6,000, the first decrease in six months.

Probably the worst bit of news from ADP is they see no evidence of acceleration in the number of jobs created each month. For the last six months employment has averaged 37,000 private sector jobs created each month.

This flatness, where unemployment statistics are staying at a local bottom, is also reflected in the initial weekly unemployment claims graph.

Nonfarm private employment in the service-providing sector rose by 63,000. Employment in the goods-producing sector declined 21,000 during July while employment in the manufacturing sector decreased 6,000, the first decrease in six months.

Personal Income & Outlays for June 2010

Personal Income and Outlays for June 2010 was released today. While overall income is flat, wages and salaries are down.

Private wage and salary disbursements decreased $5.2 billion in June, in contrast to an increase of $19.2 billion in May. Goods-producing industries' payrolls decreased $8.9 billion, in contrast to an increase of $10.4 billion; manufacturing payrolls decreased $6.0 billion, in contrast to an increase
of $7.8 billion. Services-producing industries' payrolls increased $3.7 billion, compared with an increase of $8.8 billion. Government wage and salary disbursements decreased $0.6 billion, in contrast to an increase of $7.0 billion. The decline in the number of temporary workers for Census 2010 subtracted $3.4 billion at an annual rate from federal civilian payrolls in June; the hiring of additional temporary workers had added $5.7 billion at an annual rate in May.

 

The American Dream Is A Fantasy

The Financial Times, through statistics and personal stories, paints a bleak assessment of America's future going forward. In Crisis in Middle Class America, we see a major financial press group, finally acknowledge what we've been trying to document since the start of this site, the U.S. middle class is being shuttered off, destroyed, deceased, no more.

Once upon a time this was called the American Dream. Nowadays it might be called America’s Fitful Reverie. Indeed, Mark spends large monthly sums renting a machine to treat his sleep apnea, which gives him insomnia. “If we lost our jobs, we would have about three weeks of savings to draw on before we hit the bone,” says Mark, who is sitting on his patio keeping an eye on the street and swigging from a bottle of Miller Lite. “We work day and night and try to save for our retirement. But we are never more than a pay check or two from the streets.”

That's right, Ozzie and Harriet now speak Chinese. The United States, through policies and legislation demanded by multinational corporations, has literally shipped our economy to India and China (and a few other places for good measure).

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