February Unemployment Sets New Record At 697,000
By Justin Gardner | Related entries in Economy, Jobs
And given the trend of these numbers being revised upwards, February’s numbers will most likely be over 700,000 by next month.
As I’ve said before, it’s getting worse and there are no signs that it’s going to get any better any time soon.
ADP said on Wednesday that private employers cut 697,000 jobs in February versus a revised 614,000 jobs lost in January. The January job cuts were originally reported at 522,000.It was the biggest job loss since the report’s launch in 2001 and showed the misery of declining employment spreading broadly and evenly throughout the economy. [...]
Economists had expected 610,000 private-sector job cuts in February, according to the median of 23 forecasts in a Reuters poll.
Something everybody has to realize…our entire economy is structured on the idea that people spend money. I know that may sound obvious to most of you, but when consumers aren’t spending money and the economy is shedding more jobs every single month, there’s one institution that can be the spender of last resort.
So the question then is: how many jobs must we lose and how close do we have to get to 1M jobs lost per month before people get that only the government has the power to pull us out of this thing and get the pump primed again?
Yes, yes, I know you think we should be fiscally responsible, but did you ever think that this is the fiscally responsible path? Because, whether you want to admit it or not, this is shaping up to be the worst financial crisis in our nation’s history. Thankfully we have a lot of safety nets so people aren’t out on the street, but you can’t expect that to keep going forever. At some point our entitlement programs will start to get crushed under the weight of record unemployment and underemployment, and we’ll still have to spend money we don’t have on making sure people aren’t out on the streets. Why not spend money now on getting the economy moving again instead of taking the “fingers crossed” approach?
To me it’s an obvious choice, and while I understand many of you have much different economic principles than I do, you also have to accept the reality that we aren’t going to let 15% of our population slip into economically devastating circumstances. Because that would be FAR more costly in the long run.
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March 4th, 2009 at 3:23 pm
So we just do “something” even if we have no idea if it’s going to work, or maybe make the situation worse ?
That’s the problem with governing in a crisis, you usually don’t know what the heck to do (I’m convinced that’s what’s going on with Obama and, especially, Geithner) so you tend to overcompensate.
The bill for all this spending is going to come due and when it does its likely to wipe out whatever growth may have occurred in the meantime.
March 4th, 2009 at 4:03 pm
The truth is everyone knows some form of Government intervention is necessary here. The question is the scope and the focus of that “something”
That’s what “fiscally responsible” means. Spending your money wisely. So the question isn’t should we spent money its do we need to spend this much money.
Nothing said in this post (or any of Justin’s posts for that matter) has made that case.
March 4th, 2009 at 8:10 pm
Because if we undergo the sacrifices now to re-align our economy properly, we will be able to bottom out with less unemployment and less poverty – as well as climb out more quickly – than we would later on if we print and borrow money to try to re-inflate a phony bubble economy right now.
Spending money we don’t have on makework jobs that don’t produce wealth, or on massive bailouts of failed business models, or on expanding government beaurocracies, is the “fingers crossed” approach.
March 4th, 2009 at 10:18 pm
Doug,
Do you know what doing nothing will do? I doubt it. I really doubt it. Are you willing to abandon major parts of the welfare reform law of 1996 if it turns out that the economic downturn will produce such a long term amount of unemployment that it will wipe out that five year limit for how long people can receive benefits? Republicans (and maybe some Blue Dogs) would oppose any extension or expansion of the safety net based on past performance. Would it be acceptable if they filibustered to achieve that goal? What human cost is acceptable for the sake of ideology? That is what a desire to do nothing when the results of both “actions” are unknown comes down to, after all.
March 5th, 2009 at 8:38 am
100% echo Tom.
Justin’s repeated contentions amount to insisting that the correct strategy is “ready, fire, aim.” Absent from these contentions is any explanation of how our nation ultimately pays for all this spending and who will bail out the US government if it finds itself unable to sustain such levels of spending, which it will if this goes on for more than another year or so. Where among all these posts is the concern for America defaulting on its obligations or setting off runaway inflation?
Jim,I missed the part where folks like let’s say Doug and I have recommended doing nothing. Please do us the favor of refraining from crafting arguments that counter those of a nonexistent straw-poster.
Why the hell is it beyond the pale to ask our elected leaders to act both boldly _and_ judiciously? Why the hell ought ordinary Americans refrain from looking askance at bills filled with spending on the pet projects of individual congressfolk?
That’s a good place to start Justin. Here’s the thing: going forward our economy will HAVE TO be structured on what the people are spending. People are spending, but they are spending less, and they are prioritizing. They are recalculating the boundary between need and want. There will be a new equilibrium that will be established at some point, and we’ll all be stuck in the new world of what is possible based on THAT equilibrium and what we can build sustainably into the future on THAT new foundation.
Think “own a car for 10 years.” Think “go to a commuter college while working and living at home.” Think “no cable TV.” Think “this old TV is still good.” Then start looking around at all the other stuff that is still good. Think ” I have a budget now, and sticking to it is not optional.” And so on and so on.
March 5th, 2009 at 1:23 pm
What would constitute judicious action, KK? How do you know that it is judicious where Obama’s plans aren’t? Do you really think that this recession/depression can be accurately compared to any other post WWII event? I don’t.
Add to your list of things to think permanent high unemployment and underemployment because that system will just not produce enough jobs that pay a living wage. What then? No ideological BS about how it just can’t work out that way. What if it does? What adaptations will political conservatives find acceptable in the face of that reality?
March 5th, 2009 at 3:00 pm
Jim, I am unsure what your referents are when you say “it” and “that” in your post above.
I would argue that the current $410 spending bill full of earmarks fails the judiciousness test on its face. Obama promised he’d go through the budget line by line and make cuts, and he said he’d push for a stop to earmarks. He said spending would reflect only important national priorities. That sounded good to me.
I’m not throwing him under the bus. I have patience and these are difficult circumstances. But I’m watching and waiting. And I’m prepared to grade based on the expectation he himself described. That’s as fair as it gets.
Libraries for old senators and pig odor research are not important national priorities. They are local favoritism, pork spread round widely.
Current levels of gross gov’t overspending are simply not sustainable over the long term without serious additional adverse consequences. Only fools would ignore this. By pointing it out I don’t become an advocate for doing nothing. Excuse me for questioning the efficacy of tossing around borrowed money as fast as we can print it. Sin in haste, repent at leisure, right JIm?
Don’t know what you mean by “that system.” Seems to me no one has an answer to the question of what system produces enough jobs at “living wages.” I’m simply suggesting that wise folk will tighten their belts until the downturn phases into equilibrium and the economy begins to grow again. Going forward I fully expect the financial markets will be more highly regulated, and that credit will be hard to come by for risky borrowers. That just makes sense. I am mystified why you find this controversial or vexing.
March 5th, 2009 at 8:42 pm
By “it” I was referring to whatever actions you would propose as a substitute for the Obama administration’s stimulus package, which was what I understood you to be criticizing as being injudicious. I was referring to any system that met the qualifications you cited for a sustainable ongoing economy.
I do not find the scenario you paint particularly vexing. I just believe that if this is how things play out things will be much harder for the lower income levels of our society and that the number of permanently unemployed people who cannot find a job because the jobs just don’t exist will increase. If this happens what I would like to see is some honest acknowledgment of it by “fiscal conservatives” and for an honest attempt to be made to solve the problems that would lead to. But all too often when I hear these scenarios discussed it is accompanied by no more than a simplistic statement that people will have to adjust or “buckle down” or “just work harder”. Somehow it is never mentioned that just maybe we are heading towards creating a system where those words are empty platitudes for part of our population.
March 6th, 2009 at 3:40 am
Look, I understand the whole “only the government is powerful enough to get everything going again” argument. Really, I do, because for a long time, I agreed with it. It SOUNDS like it makes perfect sense. But I believe in evidence even more than I believe in compelling arguments, and the evidence just doesn’t back that statement up.
Take a look at this. The Great Depression of 1920. That’s right, 1920.
That link isn’t anything close to ALL of the evidence, of course. I’m not that easily swayed; I just happen to find that link very, very interesting, because it shines light on something that hardly anyone learns in school. But the more I’ve looked into the history of economics, from other American situations to Japan’s stagflation to an analysis of just where the Obama administration got its numbers for its budget forecasts, the more I’ve come to the conclusion that Obama is wrong about this one. And it’s going to make things worse, not better.
March 7th, 2009 at 2:31 am
Sorry, Rick. The situation post WWI has way too many differences from now to be a viable comparison. Some numbers I found…
“The end of World War i caused the federal budget to decline from $18.5 billion in 1919 to $6.4 billion in 1920. Although this decline in budgetary stimulus required an increase in investment and spending by the private sector, Congress raised taxes on individuals and corporations, while the Federal Reserve Bank restricted credit by raising its discount rate for member banks from 4.75 percent to 7 percent by 1920. Unemployment rose from 4.0 percent in 1919 to 11.9 percent in 1921, but subsided to 7.6 percent in 1922 and 3.2 percent in 1923.”
Somehow it doesn’t seem that it really resembles our current situation at all no matter what some blogger might claim.
March 8th, 2009 at 12:18 am
Justin Gardner said: “Something everybody has to realize…our entire economy is structured on the idea that people spend money. I know that may sound obvious to most of you. . . .”
Um, it is NOT obvious to me, certainly. In REALITY, our entire economy is structured on the idea that people need to PRODUCE something that other people want to buy.
When you start your article with a premise that is incorrect, the rest of your argument becomes irrelevant, and not worth the time it would take to respond to it.
So I guess my work here is done! Better luck next time.