Weekly Jobless Claims Jump

The news today is as disappointing as it is grim.

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday's report.

As of the end of July, the job gap stood at 11.6 million jobs—an increase of 300,000 from the 11.3 million job gap at the end of June. Private employers reported a net gain of 71,000 jobs for July — far below the 200,000 it takes for the unemployment rate just to hold steady and keep pace with the growing work force. The public sector, too, remains troubled. So far this year, state and local governments wrestling with budget shortfalls have shed 169,000 jobs. And further losses are on the way — about 20,000 to 30,000 more job cuts a month expected over the rest of the year, despite $26 billion in Federal aid that was recently allocated by the Congress.

Let's hope that next jobless claim to be filed is that of Timothy "Welcome to the Recovery" Geithner.

MyDD Weekend Reader

Some longer reads for your perusal this weekend.

Obesity on the Rise
Nearly 2.5 million more US residents were obese in 2009 than in 2007, according to a new report from the Centers for Disease Control and Prevention. (pdf) In total, 72.5 million Americans are obese, or 26.7 percent of the population.

Obesity rates exceeded the 30 percent mark in nine states — Alabama, Arkansas, Kentucky, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and West Virginia — compared to only three states in 2007. In 2000 no state had a rate of 30 percent or more. In 1991, no state exceeded 20 percent. Mississippi remains the state with the highest level of obesity, 34 percent. It's a dubious honor the Magnolia state has held since 2004. The correlation of obesity with the poorest states is striking, the poorest five all have high rates of obesity: Mississippi, West Virginia, Arkansas, Oklahoma and Alabama.

Obesity rates varied according to several factors, including age and ethnicity. People who were 50 years old or older had higher obesity rates than those under 30. The highest rate was found in “non-Hispanic black women” (41.9 percent). Overall, “non-Hispanic blacks” had a rate of 36.8 percent, and Hispanics had a rate of 30.7 percent. Rates also fluctuated across education levels. People with college educations were the least likely to be obese — the rate among men in this category was 22.9 percent, and for women it was 19.8 percent. Colorado and surprisingly the District of Columbia were the least obese, each had rates of under 20 percent.

The CDC cautions that the obesity problem is likely even larger than these numbers suggest because the report is based on self-reported data from a 2009 Behavioral Risk Factor Surveillance System Survey (BRFSS) of 400,000 people conducted by phone.

“Obesity continues to be a major public health problem,” CDC Director Thomas Frieden said in the press release. “We need intensive, comprehensive and ongoing efforts to address obesity. If we don’t more people will get sick and die from obesity-related conditions such as heart disease, stroke, type 2 diabetes and certain types of cancer, some of the leading causes of death.”

And obesity is a costly proposition. The CDC estimates that the cost of being fat tops $150 billion a year from obesity-related illnesses. On average, obese people have $1,500 more in annual medical expenses.

Tariq Aziz Interview in The Guardian
In an interview with the British newspaper The Guardian, Tariq Aziz, the long time aide to Saddam Hussein who served in various capacities now serving a 15 year prison sentence, implores the Obama Administration not to leave "Iraq to the wolves." Aziz, an Iraqi Christian, talks of the deal he struck with the invading American force in 2003 in which he traded his freedom for his family's safety. While he does not complain about his confinement, he uses the interview to plead for the US to remain involved in Iraq.

Americans, by and large, confined Iraq to the rear view mirror long ago. To a degree, however, Colin Powell's Pottery Barn dictum still applies: we broke it, we own it. The bitter reality is that the country remains a mess with a fractious political climate. As Aziz notes, "when you make a mistake you need to correct a mistake, not leave Iraq to its death." It's sad for Iraq is not just an expensive military failure but a moral failure.

Iraq is only seen as stable and tranquil when compared to the situation pre-the-2007 surge but that's hardly the appropriate standard for comparison. While security and services such as water, electricity, health care and education have improved, longer-term prospects remain uncertain and Iraq remains a shadow of its former self. In the end, Iraq is likely to either go one of three paths:

  • A complete partition into a Kurdish north, a Shiite south and a rump Sunni state around Baghdad either as a loose confederation or as independent states.

  • A strongman emerges to bend the country to his will. Perhaps the Dawa-led State of Law coalition of Nouri al Malaki will manage to consolidate its power bringing order through the establishment of hard-line Dawaist state that effectively replaces the former Sunni/Christian Arab nationalist Baathist state for a Shiite state aligned with Iran. Then again the possibility of a return by the Baathists cannot be discounted. 

  • The current political impasse continues. Despite the country's Election Commission confirming that Iyad Allawi, a Shiite former premier, was the March 7 election's narrow victor, Iraq's political parties are still arguing over which of them has the right to try to form a government. At the heart of this potentially damaging impasse is the rivalry between Allawi and incumbent Prime Minister Nuri al Maliki. Allawi's Iraqiya coalition narrowly beat the Shiite bloc formed from a merger between al Maliki's Shiite-led State of Law party and the Iran-friendly Iraqi National Alliance into second place in the election, but the prime minister is continuing to fight for a second term in charge.

Iraq remains as George Washington University Professor Mark Lynch describes it: "Iraq is a political house of cards. There are so many unresolved issues and the risk of this house of cards collapsing is really quite high."

Though we are again declaring Iraq to be a "mission accomplished," we will continue to have 50,000 troops there indefinitely amidst a situation that can be best described as controlled chaos. The likelihood that Iraq could again descend into an outright sectarian civil war cannot be discounted though in the near-term Iraq will probably limp from crisis to crisis.

Beyond the 50,000 troops ostensibly there to advise and assist their Iraqi counterparts, the US plans to maintain 5,000 diplomats and civilian advisers working with the Iraqi government and nonprofit groups. To protect our vice regal cadre of bureaucrats, the State Department plans on hiring as many 7,000 contract security personnel to provide protection as the U.S. military departs.

Nor is the money hole that is Iraq plugged. The State Department has put in a request for more than $800 million to start a police mentoring and training program with 350 advisers.

For those interested in reading more on the current political situation in Iraq, Joost Hitlermann's piece Iraq: The Impasse in the New York Review of Books is strongly recommended.

The Job Gap
The Hamilton Project of the Brookings Institution has a monthly series looking at the developing "job gap." This month, Michael Greenstone and Adam Looney have a post titled The Long Road Back to Full Employment: How the Great Recession Compares to Previous U.S. Recessions. After analyzing yesterday's tepid employment numbers, they find that the job gap stands at 11.6 million jobs—an increase of 300,000 from last month’s 11.3 million job gap.

The U.S. economy will need more robust growth to close this gap. If future job creation reaches about 208,000 jobs per month, the average monthly job creation for the best year for job creation in the 2000s, it will take almost 140 months (about 11.5 years) to reach pre-recession employment levels. In a more optimistic scenario with 321,000 jobs created per month, the average monthly job creation for the best year in the 1990s, it will take 59 months (almost 5 years).

July Jobs Report: Unemployment Unchanged, Anemic Job Growth

The Bureau of Labor Statistics reported its July Employment data.

Total nonfarm payroll employment declined by 131,000 in July, and the unemployment rate was unchanged at 9.5 percent, the U.S. Bureau of Labor Statistics reported today. Federal government employment fell, as 143,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment edged up by 71,000.

Both the number of unemployed persons, at 14.6 million, and the unemployment rate, at 9.5 percent, were unchanged in July.

Among the major worker groups, the unemployment rate for adult men (9.7 percent), adult women (7.9 percent), teenagers (26.1 percent), whites (8.6 percent), blacks (15.6 percent), and Hispanics (12.1 percent) showed little or no change in July. The jobless rate for Asians was 8.2 percent, not seasonally adjusted.

While the overall unemployment rate remained unchanged, private sector job growth was anemic and fell short of the consensus number of 90,000 jobs forecasted by economists. Furthermore, the 71,000 private sector jobs created fell far short of the 127,000 new jobs required monthly just to keep up with population growth. In short, the US economy is falling farther behind in its capacity to provide employment.

The BLS also dramatically revised its number for June down to a loss of 221,000 jobs. The agency originally reported that 125,000 jobs were lost in June. Private sector hiring in June, originally reported at 83,000, was revised downward to 31,000. The US economy has shed 7.7 million jobs since the recession started in December 2007.


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Quick Hits

A roundup of other stories and interesting reads.

The Senate gave final approval late Wednesday evening to legislation providing added unemployment benefits through November to millions of Americans who have been out of work for six months or more by 59 to 39 margin. The House is expected to pass the measure tomorrow. The complete story in the New York Times.

A multimedia presentation produced by Latoya Egwuekwe: The Geography of a Recession.

Jim Hightower on Grinning Bankers.

The teen unemployment rate in June was at 25.7 percent—about three times the national rate of 9.5 percent—and up from last year's rate of 24.3 percent: Unemployed Teens.

Cash-hungry states eye online retail for tax revenue. The story in the Los Angeles Times.

Ta-Nehisi Coates of The Atlantic offers his take on the Shirley Sherrod case and the response of the Obama Administration in a post entitled Lacking All Conviction while Matt Yglesias of Think Progress on JournoList faux scandal writes that "at some point conservatives need to ask themselves about the larger meaning of this kind of conduct—and Andrew Breitbart’s—for their movement. Beyond the ethics of lying and smear one’s opponents, I would think conservatives would worry about the fact that a large portion of conservative media is dedicated to lying to conservatives. They regard their audience as marks to be misled and exploited, not as customers to be served with useful information." Somehow I don't think we arrived at that point.

A Mea Culpa on US Unemployment

Yup, the June unemployment numbers are out, the numbers are bleak and it is all my fault. Having attempted to re-enter the world of the employed earlier this year and having found zero reception, I stopped looking for work. The unemployment number dipped in June not because more jobs were added but rather because 652,000 Americans including myself abandoned the labour market this month. That, in a nutshell, is what is going on in the US labour market.

First, an overview from the New York Times:

The United States added just 83,000 private-sector jobs in June, a dishearteningly low number that could add to the growing number of economists who warn that the economic recovery has slowed to the point that it cannot generate enough job growth.

Over all, the nation lost 125,000 jobs, according to the monthly snapshot of the job market released by the Labor Department on Friday. Most of the lost jobs came as temporary workers hired by the federal government for the 2010 Census exited their jobs. The unemployment rate, based on a different survey, declined to 9.5 percent in June from the previous 9.7 percent. This decline came only because the nation’s labor force shrank by 652,000 jobs, as many people stopped looking for work.

Just as last month’s government job report appeared deceptively robust, swollen by 411,000 workers hired by the federal government to help with the Census, so the June report appears deceptively anemic, as the government shed many of those same temporary Census workers.

And signs of strength could be spotted. Although quite weak by historic standards, the 83,000 private-sector jobs created in June more than doubled the count in May. And in the first six months of last year, the nation lost 3.7 million private-sector jobs; during the first six months of this year it gained 590,000. Manufacturing continued a modest revival, as manufacturers added 9,000 jobs after hiring 32,000 in May. Amusement, gambling and recreation businesses added 28,000, as one might expect coming into the summer.

The unemployment rate declined two tenths of one percent not because more jobs were added but rather because people stopped beating their heads against the wall and stopped looking for work. Just for the record adding 83,000 jobs falls far short of the number required to just keep running in place. The economy needs about 130,000 to 150,000 jobs just to keep pace with new workers entering the market. Given that over 15 million are unemployed with another 12 million underemployed - technically the category I fall into - the situation is indeed dire. So while the official unemployment rate is now 9.5 percent, the broader U6 rate that includes marginalized workers is 16.5 percent.

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