‘Fra-gee-lay,’ now made in America

As Ma Parker would know, the word is “fragile.” We’re talking about the economy, and two bits of news from the past 24 hours.

First, the “flash crash” on Wall Street yesterday afternoon. That’s when the Dow Jones Industrial Average, already down about 400 points for the day, shed another 600 points in just seven minutes, before regaining that ground in about 20 minutes (the Dow and other major stock indices still closed down sharply).

We now know that a significant chunk of the losses are probably attributable to trading glitches and the automated shutdowns used by some trading firms; we’ll learn more in the days to come.

At the time, however, pundits’ fingers were pointed straight to Greece, where fears of a public debt default have forced the government to slash spending and raise taxes, in turn provoking street protests that have led to three deaths so far. Investors are worried that Greece’s problems could spread elsewhere in Europe and, ultimately, to the U.S. and elsewhere.

What’s noteworthy here isn’t that the blame appears to have been misplaced — even though, let’s not forget, many of the early losses yesterday, which are now bleeding into today’s trading, probably were attributable to Greece’s problems. It’s that it seemed plausible on Thursday afternoon that a rocks-and-tear-gas exchange between protesters and police in faraway Athens could turn an already terrible day for the Dow into a 1,000-point catastrophe in mere minutes.

People are scared. They are grateful for bits of good news but seem to expect the bottom to fall out again at any moment. It’s that word, fragile.

That’s why the cheerful news that the private sector added 231,000 jobs in April, the best month in more than four years, is being received so cautiously.

It doesn’t take much work to see the fragility in the jobs numbers, and I’m not talking about the bump in the unemployment rate up to 9.9 percent from 9.7 percent in March. It is probably correct to chalk up that bump to an increase in people actively looking for work, which may reflect optimism on their part that jobs can be found. If so, that part is still good news.

I’m referring instead to the broader gauge of unemployment, which also tracks those who have given up job-hunting or who have settled for less or lower-paying work than they’d like to have. That “labor under-utilization” figure already included those workers who became less discouraged and have now resumed their job searches. And yet this figure, too, rose last month by 0.2 percentage points, to 17.1 percent. As Phil Izzo, an economics writer for The Wall Street Journal, writes:

Though the [labor under-utilization] rate is still 0.3 percentage point below its high of 17.4% in October, its continuing divergence from the official number [of 9.9 percent]…indicates the job market has a long way to go before growth in the economy translates into relief for workers.

(snip)

A [labor under-utilization] figure that converges toward the official rate could indicate improving confidence in the labor market and the overall economy. This month pushes convergence even further away.

This stagnation is, in part, a continuing vote of no-confidence in Washington’s pursuit of policies that add to, rather than subtract from, this lingering fragility. When markets have the sovereign-debt jitters, it doesn’t help to ramp up our borrowing from “too high” to “way too high.” When businesses are already unsure about their future prospects, it doesn’t help to add to the web of red tape they must sort through and comply with — such as this fun tax-reporting surprise tucked into ObamaCare. The cost of which, it emerges anew seemingly every day, is only getting higher and higher as we “find out what’s in the bill.”

Another stimulus, whether “Cash for Caulkers” or something larger, isn’t the answer. Employers will move forward when the president and Congress move out of their way.

43 comments Add your comment

arnold

May 7th, 2010
11:50 am

The stimulus plan is working. It will work better when the Republicans get out of the way.

Linda

May 7th, 2010
12:08 pm

7% of Americans believe that Elvis is still alive. Fewer than that (6%) believe the stimulus created any jobs, except for the seat of Senator Scott Brown.

scrappy

May 7th, 2010
12:20 pm

Props to you for using the every popular french term, Fra-gee-lay, in your headline!

Michael H. Smith

May 7th, 2010
12:21 pm

The stimulus plan is working for union members and GUB’MENT employees. For all others in unemployed America, it is a case of take a number and get in line until crony capitalism is served.

With Republitarians out of the way, the economy will work better once the Socialist Democrats enter the dustbin of politics.

All and all Kyle, concerns over Greece are well founded. Another debt ladened pork-barrel spending spree that rewards crony capitalism once again isn’t, as the vast majority in mainstream America well know.

The point is quickly approaching a critical mass where America may not be able to invest in growing our way out of our debts. Deficits must be addressed now and government must be cut not simply cut in the rate of growth but real painful cuts in reducing government’s size, scope and cost: Beginning with the entitlements and the Federal bureaucracy.

Kyle Wingfield

May 7th, 2010
12:26 pm

I thought it was Italian, scrappy :-)

Michael H. Smith

May 7th, 2010
12:37 pm

Oh, one other thing Kyle: Congratulations on passage of the Angel Investor’s tax credit. We may not get the entire loaf but we’ll not be walking away empty handed from this years session under the gold dome.

Ragnar Danneskjöld

May 7th, 2010
12:41 pm

Well argued. I would add only a note about the Congressional wisdom of “tax increases during a recession” except such a note would sound condescending and mocking. Washington has not suffered such general incompetence in its leaders – across the board – for at least 30 years.

CJ

May 7th, 2010
12:56 pm

This stagnation is, in part, a continuing vote of no-confidence in Washington’s pursuit of policies that add to, rather than subtract from, this lingering fragility.

Policies that add to, rather than subtract from, this lingering fragility. Unbelievable.

In the last 12 months of Bush’s term, our economy was losing anywhere from tens of thousands to hundreds of thousands of jobs every month. Job losses were increasing each month to the point that we lost nearly 800,000 jobs during his last month of office.

On the other hand, since Obama’s first weeks in office, the number of jobs lost per month have steadily declined for the first nine or ten months, and we’ve now actually reached a point were we’ve had job growth for four consecutive months and five of the last six months. If I may, first Obama and associates had to slow the boulder down, then they had to stop it, and now they’re slowly pushing the boulder back up the hill.

Yes, we need to replace the jobs lost during Bush’s last year in office. Yes, we need to replace the jobs lost during Obama’s first months in office. Yes, with Greece (among others) plus faux deficit hawks threatening our recovery with the same supply-side nonsense that got us into this mess in the first place, the recovery is fragile. But despite Kyle’s false assertions, the stagnation that he highlights is the inevitable result of hundreds of thousands of jobs lost over a 22 month period.

I know Kyle believes that Obama and Dems should be able to clean up after Bush’s reign destruction overnight, but then again, realism isn’t exactly his strength.

retiredds

May 7th, 2010
1:03 pm

With revisions on Friday, April was the fourth consecutive month that the economy added workers (a revised 230,000 jobs were added in March, instead of 162,000), the job market still has a long way to go before it can be counted on to provide a base for a sustained economic recovery. More than 15.3 million were unemployed last month.

Besides March, February was revised from a loss of 14,000 jobs to a gain of 39,000. With a January gain of 14,000, the cumulative increase came to 573,000 jobs in four months.

Private employers added 231,000 jobs in April. The federal government also added, including 66,000 temporary positions for the 2010 Census.

Despite the increase in jobs, the unemployment rate rose, mostly because the government said 195,000 workers re-entered the labor force after giving up on job hunting during the recession. When jobless people do not look for work, they are not counted in the official unemployment rate.

Kyle, I would suggest that you look at the four-month picture. This is the Republicans worst nightmare, that the economy is going to improve, some say it could be dramatic, over the next six months. The Repubs problem is that they have been more obstructionist than constructivist and lots of people know that. It takes awhile for the US economy to turn, but turning it is. The massive damage done by the prior administration will not be cured overnight, and the architects of the economy’s demise, the same Repubs who keep yelling (”look at the unemployment rate, where are the jobs?”) Well, folks the jobs are coming, but the Repubs wish the growing economy would wait until after November because they are counting on that unrest for their gain.

the truth

May 7th, 2010
1:49 pm

Maybe when the unemployment rate pops over 10% we can all celebrate and keep telling ourselves things are getting better. When it hits 11% we can all declare a national holiday.

Kyle Wingfield

May 7th, 2010
1:50 pm

CJ, we don’t disagree about the starting point, but how to proceed. I realize President Obama likes some counterfactuals (e.g., “jobs saved”) and not others, but I happen to believe that the country would be in better shape if he hadn’t spent a year confusing and alarming employers with the health-care debate, not to mention cap & trade, card check, etc. You cannot expect employers to add jobs while you are creating that kind of uncertainty about their business and employment costs.

retiredds: Rooting for a bad economy is a terrible place to be politically, and Republicans better be prepared to debate the economy amid a recovery. At the same time, people don’t vote based on official statistics — they vote based on what they see around them. I pointed out the broader UE rate figure as one explanation for why people don’t see the same kind of recovery they’re being told about.

Churchill's MOM

May 7th, 2010
1:57 pm

Ragnar Danneskjöld 12:41 pm

A few weeks ago your boy, Saxby, was asked if he would give up his earmarks to offset the cost of additional unemployment payments. His response was that earmarks were the cause of deficits. I guess he was referring to his lobbyist income.

Jefferson

May 7th, 2010
2:02 pm

You belly achers are humerous.

Will

May 7th, 2010
2:11 pm

Republican newspaper writers know that jobs reports like the one out today will hurt the republican party in November, hence the desperate need to spin this report in a negative manner.

If forced to choose between a recovering economy and republican politicians getting elected this fall, republican newspaper writers would rather see republican politicians elected.

TehranDawg

May 7th, 2010
2:12 pm

Didn’t know a card check bill had been introduced. I heard Hannity & Co saying Obama was going to push for it. But that was only the day after the man was elected.

CJ

May 7th, 2010
2:19 pm

To the extent that employers are “alarmed”, it’s not because of anything Obama has done. For that, Kyle, you should look in the mirror. Such fear isn’t a side effect of columns like yours; its the objective.

artatlarge

May 7th, 2010
2:26 pm

wingfield, at least you are consistent.
Now, again, and still, you claim that government is hampering businesses. But, what happened when Incurious George Bush took the government “out of the way of business”? Deregulation, flow of wealth to the wealthiest, and an economic crash that we are only now beginning to pull out of.
Your right-wing mantra of “government bad, business good” has led to the likes of the Upper Big Branch mine explosion, the BP well disaster, and taxpayer money being used to pay billions of dollars in bonuses to the very people who nearly ruined our economy.
When will you realize that you are cheering for the very disasters named above, and clamoring for more of them? Unfettered Business has shown its ugly face…unlimited hubris, greed, environmental disaster, death for dollars, and the flow of wealth to the already-wealthy, the decline of the middle class, and a widening income-gap that will eventually have us looking like Mexico.
I’m just glad that President Obama is proving capable of cleaning up the kinds of messes that result from the very ideas you keep pushing, in the face of economic, environmental, and personal disaster.
And you claim that President Obama spent a year confusing and alarming employers with HCR…you are a shill and a liar. It is the Republicans that spent that time spreading outright lies and fanning the flames of ignorance and fear.
I doubt that you will ever be anything but a poster-boy for the very ideas and hypocrisies that have hurt this country since Incurious George was handed the election by his daddy’s Supreme Court picks.

Linda

May 7th, 2010
2:29 pm

My husband & I are employers & we’re alarmed because of everything Obama has done & still plans to do. There’s no way to estimate employee costs this year or in the future.

Dave

May 7th, 2010
2:44 pm

Higher unemplyment (especially in the public sector) and higher taxes on the way….

Goodbye, stimulus. Hello, state budget cuts

Dave

May 7th, 2010
2:50 pm

“And you claim that President Obama spent a year confusing and alarming employers with HCR…you are a shill and a liar. It is the Republicans that spent that time spreading outright lies and fanning the flames of ignorance and fear.”

I dunno, seems like the Republicans were right one some parts and it was the Dems who were lying (or maybe just ignorant)

Report: Health Care Reform Will Increase Costs

“But the analysis also found that the law falls short of the president’s twin goal of controlling runaway costs, raising projected spending by about 1 percent over 10 years. That increase could get bigger, however, since the report also warned that Medicare cuts in the law may be unrealistic and unsustainable, forcing lawmakers to roll them back.”

Documents reveal AT&T, Verizon, others, thought about dropping employer-sponsored benefits

“Internal documents recently reviewed by Fortune, originally requested by Congress, show what the bill’s critics predicted, and what its champions dreaded: many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government.

That would dismantle the employer-based system that has reigned since World War II. It would also seem to contradict President Obama’s statements that Americans who like their current plans could keep them. And as we’ll see, it would hugely magnify the projected costs for the bill, which controls deficits only by assuming that America’s employers would remain the backbone of the nation’s health care system.”

Dave

May 7th, 2010
2:56 pm

From the AP story:

“Friday’s report showed that all told, 15.3 million people were out of work in April.

Counting people who have given up looking for work and part-timers who would prefer to be working full time, the so-called underemployment rate rose to 17.1 in April. That’s close to the record high of 17.4 percent in October and shows just how difficult it is for jobseekers to find work.

Another grim statistic: The number of people out of work six months or longer reached 6.7 million in April, a new high. These people made up 45.9 percent of all unemployed people, also a record high.

Hiring isn’t expected to be robust enough anytime soon to lower the unemployment rate much. Economists think it will remain above 9 percent by the November midterm elections. ”

I dunno, but I’m pretty sure this info would have led off the story if Bush were still on office. Just sayin.

Chris Broe

May 7th, 2010
3:07 pm

Greek Crisis and Jobama

Considering that the scalping, which the Grecian economic formula inflicted on our nest eggs, is still fresh in our hair, it helps to reflect that ever since America deloused itself in the 2008 elections, Jobama has headed the country in the right direction by combing through the available remedies and applying the right ones. Our president is the right man at the right time. He is a leader. He’s the best leader we’ve had since Reagan. All that the flat-earthers in the Bush Choir have done for 18 months is to obstruct the affairs of our state and deny the gravity of the situation that Bush left the country in.

The Tea Party thinks that Reagan’s roles in Hollywood B westerns and war movies speaks for their stand on the gun control. No wonder Reagan himself thought that “Hellcats of the Navy” was a documentary. Poor Reagan. I don’t recall a sadder second termer.

Fortunately for America, Conservatism is dead and buried on the same ash heap which form the putrid remnants of all lost causes. Of course the same people who brought us voodoo economics portray our president as a voodoo witchdoctor. The Tea Party should be proud of their one track mind.

Market advice: Stay cautious my fine friends. The Leahman Brothers disaster took a while for the shock waves to knock out the banks and the leveraged economy. Europe is experiencing the same lack of faith in banks that we experienced, and they’re even more leveraged. I like the comparison to the “Tower of Babel”. How can all those countries agree when nobody speaks the same language. Europe needs a Greek to Hobo dictionary.

The 300 Greek Spartans standing against attack is another good analogy. Today’s Greeks just passed very spartan measures against a tax. (Sorry). The riots in Greece are unnerving enough without the loss of confidence in our global institutions.

One thing the Greek people have accomplished is that they are now the poster children for entitlements (usurping wall street.).

ANd now, as we understand exactly what the Grecian’s behavior was that caused this new crisis, and we compare that to our own entitlements, then it’s not too difficult to extrapolate a double dip recession and a W shaped stock market.

Stay cautious.

Ragnar Danneskjöld

May 7th, 2010
3:09 pm

Good afternoon Mom, @ 1:57, while you and I would agree that Sen Chambliss is simply a worthless eastern-establishment RINO, you and I would disagree on the merits of electing a leftist democrat in his place. Perhaps you thought/think ObamaCare meritorious, or perhaps you are a just terrible chess player. I see little virtue in declaring “the perfect” the enemy of “the marginally tolerable” in this particular case.

retiredds

May 7th, 2010
3:10 pm

Kyle, even in light of my comments above, if I were out of work for a year or more, and working hard to find work, but no prospects in sight there is no doubt any talk, including mine, about future improvements in the economy hold very little value. I for one am very happy to see the private sector numbers because, along with the government hiring, if the private sector begins to come onstream that that person looking for work may not have to wait too long (and that is a relative term I realize).

@@

May 7th, 2010
3:37 pm

The reaction on Wall Street was, indeed, telling. I’ve always referred to Mother Earth as the “Big Blue Ball”…nowadays it’s more like an egg with a very thin shell. The weight on the world is ominous.

The problem with Obama is he speaks to the moment or says what he “thinks” needs to be said at the moment. There’s no thought involved, jes wordts. Well…as the moments pass, things change and not always for the better. It’s then when he goes for the clarifications, for which he’s become so well known. Problem is they’re no more clear than his previous moments of “clarity”.

The guy really does test my patience and logic.

joan1

May 7th, 2010
3:40 pm

Wouldn’t it be great if we had elected representatives who actually had the best interests of the country, rather than their re-elections, as their primary objective? What we see are legislators living high, giving themselves raises, raising the debt cap, and what about this is supposed to give anyone confidence? Where is an honest man or woman who can afford to run for office?

Linda

May 7th, 2010
3:44 pm

Let’s spend a trillion dollars to stimulate the economy. We’ll borrow it from China since they sent us bad sheet rock & poison baby food. Tell the folks it’ll keep unemployment under 8%.

Next let’s raise the minimum wage so the poor folks will make more money & vote for us.

Even though 85% of the folks have health care insurance & 95% of them like it, let’s destroy the private health care insurance industry. Play to the folks’ soft side & make them feel sorry for the few people who don’t have insurance although most of them can afford it. Convince the folks it’s free, costs will go down, & stuff. Don’t tell them each state will have to come up with trillions to pay for Medicaid & that we’re taxing employers, employees, health insurers, drug companies, health device manufacturers & that every darn thing is going thru the roof. We’ll have national health care soon. Throw in mandatory breast-feeding & sick leave.

Let’s get that climate bill passed so that energy prices will “skyrocket” for every person, business & structure in America.

What China won’t loan us, let’s push treasury bills. Banks will invest in them before they loan to businesses, but let’s keep that quiet.

Put card check on the list so we can keep the union vote.

Let’s bail out every big corporation we can, nationalizing them in way we can, allowing them to continue their bonuses, but tell the folks they are evil & keep them from knowing how much they contribute to us.

Let’s raise every expenditure on the budget except NASA & then freeze it except for cutting a dollar here & there.

Let’s let all the tax cuts expire except for the 50% of the folks who don’t pay taxes. Give them subsidies. That’ll keep us in power another 60 years.

Let’s appoint a committee to tell us after the elections that the only way we can reduce the deficit is to keep spending, borrowing & printing money while raising taxes & adding a 20% VAT tax.

Let’s bail out all these homeowners who couldn’t afford to purchase houses in the first place & add even more by giving them a tax credit (down payment). Give everybody a tube of caulk.

Let’s extend unemployment benefits to 2 or 3 years. We need every vote we can get.

Let’s keep the borders open & give amnesty to everybody in the US & don’t forget to add these new millions of voters to health care.

Finally, let’s help bail out Greece with that donation of billions to the IMF.

Intown

May 7th, 2010
3:54 pm

Kyle Wingfield — free-market theorist to the end no matter what the facts are.

Employers are only looking for one thing on health care reform, financial reform, economic stimulus and carbon cap&trade — regulatory certainty. That’s why the market responded favorably to health care reform passing. That’s why it will respond favorably to other successful reform efforts.

Saul Good

May 7th, 2010
3:57 pm

Like Clinton did…Obama is slowly and surely digging us out of the hole he was handed….yet this one was full of bricks, and all the rest of the crap the last administration left behind with the “WORST” economic disaster since the depression.

Those Bush tax cuts kick in yet?

oldtimer

May 7th, 2010
4:09 pm

I think we as a nation ought to look at Europe’s problems. There will be a train wreck coming with our mounting debt. I, for one had $46,000 less income and paid more taxes.

JF McNamara

May 7th, 2010
4:17 pm

Kyle wrote:

“CJ, we don’t disagree about the starting point, but how to proceed. I realize President Obama likes some counterfactuals (e.g., “jobs saved”) and not others, but I happen to believe that the country would be in better shape if he hadn’t spent a year confusing and alarming employers with the health-care debate, not to mention cap & trade, card check, etc. You cannot expect employers to add jobs while you are creating that kind of uncertainty about their business and employment costs.”

Doesn’t the fact that they did add jobs call B.S. on your argument? If they were that afraid, especially given the already poor economy, they just would’ve stood pat. I know we could grow more, but how much more could we have reasonably grown given the business environment? There’s not way you can prove Obama jawboning had any effect on anything, so I feel free to disagree.

Linda,

If you’re scared to hire employees for your business to meet the needs of your customers, you don’t need to be in business. Hire them, and if Obama does enact legislation that destroys your business, then let them go. You’re buying into media generated fear and panic and everybody else is moving on creating value. You should too.

Port O' John

May 7th, 2010
4:46 pm

Kyle and the GOP don’t want the economy to improve — they seize on all bad news as proof that Obama has failed. Its old news now but even the SEC porno-gate was dropped on Obama’s lap as if he let it happen — but most of the porn watching happened on Bush’s watch starting in 2006 (and continued through until early this year when the SEC OIG caught them).

The reality is the guys that got caught were not political appointees at all — so neither Bush or Obama are really at fault, but that does not stop the wingnuts from blaming Obama.

Keep hoping for an economic disaster Kyle, I’ll keep hoping you are disappointed. There are lots of Americans who can use the jobs more than the GOP needs a campaign issue.

Linda

May 7th, 2010
4:49 pm

JF@4:17, I’ve run my own business without interruption & successfully for 32 years & my husband has run his own businesses most of his adult years. As long as the economy & my market is unstable & my business projection is negative, I can not offer job security to a new emloyee. I don’t need people to meet current client needs. I need people to grow & growth is not on the horizon. In all good conscience, I would not hire & then fire an employee based on the “hope & change” I’ve personally witnessed from this adm.

somewhereinga

May 7th, 2010
4:51 pm

Linda: You’ve rehashed Rush’s talking points very well. He’d be soooo proud of you! He won’t even have to take another pill.

Linda

May 7th, 2010
5:03 pm

Only idiots would accuse the GOP of hoping that the economy does not improve. Only idiots would fall into the trap of calling corporations & Wall St. evil. Only idiots would bank on CD’s & treasury bill &/or the fed. govt.’s Ponzi schemes of Social Security & Medicare for their retirement years.
Almost every person who has an IRA, a 401K or pension plan is invested in corporations & Wall St., which includes the unions & state employees, including teachers. Every state taxpayer will suffer if corporations, Wall St. & the economy continue to suffer.
Every taxpayer is invested in the portion of the economy that idiots are calling greedy & evil.

Linda

May 7th, 2010
5:06 pm

somewhere@4:51, Must be a coincidence. I don’t listen to the radio, but I’ll take your word. You should know. Do you also have a CB?

Michael H. Smith

May 7th, 2010
5:17 pm

Rush is probably using your material again, Linda.

The man has no shame. :lol:

Kyle Wingfield

May 7th, 2010
5:33 pm

Actually, JF, I would agree with much of what Intown said about regulatory certainty, except that I would point out that the *regulatory* uncertainty over the past 16 months was created by the Obama agenda that I outlined above. It didn’t have to exist in the first place. So, I think it adds to my argument that the gains could have come more quickly if not for the uncertainty — some of which, I’d add, remains.

Linda

May 7th, 2010
6:13 pm

Michael@5:17, I am so honored! Do you think it’s possible that Rush gets his climate change info from the Farmer’s Almanac & the Weather Channel, his statistics from ESPN & the Food Network & his current events from the Salvation Army Thrift Store & the beauty/barber school/salon like I do?
My material is not private & I hope to be of service.

cherinlish

May 8th, 2010
1:37 am

You could receive as much as $3,000 for installing energy-efficient doors, windows and insulation, find a qualified company http://ow.ly/1HXcE

Saul Good

May 8th, 2010
9:01 pm

btw….Linda…the “85%” of people who you say have health insurance….well about 40% of that number you stated are ALREADY enrolled in “government health care”….it’s called medicare and medicaid…. nice spin though

Saul Good

May 8th, 2010
9:24 pm

and I forgot Linda…let’s spend a TRILLION $ over in Iraq in 5 years WITHOUT raising taxes to pay for it… you know…let’s spend it “over there” instead of spending it “over here”… (just like fighting the terrorists right)?

the ONLY way out of the “almost” depression caused by the last administration is by SPENDING…just like what took place during the last depression and ended it…be it the new deal or WWII…it took MASSIVE spending and back HIGH TAXES on the wealthy to end the depression. Every single economist will tell you that. The “tax cuts” put in place by Bush created HOW many jobs by the end of his administration? ((((echo))))… oh, that’s right…nobody hired ANYONE…we lost more jobs then any previous administration in history!

David S

May 10th, 2010
1:24 pm

The US debt problem is actually worse than that of Greece, and the collapse will be far worse. Everyone in government is just lying to us again about the damage their policies over the last 100 years have caused. Hang on folks, its going to be a bumpy night.