On top of last week’s bad news on unemployment, with 85,000 more jobs lost in December, today’s initial claims for unemployment insurance benefits report was 444,000, an increase of 11,000 from the previous week’s revised figure of 433,000
The “rule of thumb” break-even point for this number is said to be 425,000. This means as many people are hired as laid off in a given week. (Even now new people get hired in our vast economy — somewhere.) So the conventional wisdom is that when this number is 425,000 it is break-even and the economy is not losing or gaining jobs.
BUT what happens when the economy is not only laying people off, but also is not hiring at the usual rate? Then 425,000 layoffs isn’t going to be breakeven, and this is what appears to be our situation now. Calculated Risk, BLS: Near Record Low Job Openings in November,
Openings near a series low can’t be a positive sign. Separations [layoffs] have declined sharply, but hiring has not picked up. This also suggests that eventually (possibly when the March 2010 benchmark revision is announced in Feb 2011), the November net change in employment will be revised down.
Whether or not 425,000 people are still being hired every week this week 444,000 people were laid off, so we are clearly still losing jobs.
Government is the only positive force in the economy right now. President Obama’s “stimulus” saved or created about 2 million jobs. Imagine where we would be without the stimulus. It would not just be worse by 2 million jobs, it is possible the panic that was happening might have continued or even increased. And imagine if we didn’t have the FDIC insuring people’s bank accounts. Every bank would have failed, and people who didn’t get their money out in time would be flat broke. And imagine if we didn’t have unemployment benefits, COBRA subsidies for the unemployed, Food Stamps, etc. Just imagine.
But what we don’t have is a clear path out of this, triggering the rest of the economy to perform for us again. (and never mind doing so in a way that is sustainable, environmentally sound, healthy, etc.) We have government assistance until the economy gets better but we do not have a clear government plan to make the economy get better. We still have this failed conservative “free market” thinking standing in the way of We, the People working together to get things going again. This used to be called “industrial policy.” Of course, not having an industrial policy is an industrial policy — a really, really bad one — especially when almost every competing country does have policies they are acting on.
China, for example, has very strong government policies for promoting Chinese companies and industries. And as a result China’s economy is said to be strongly recovering, even as our own continues to stagnate. China’s policies include holding their currency artificially low and otherwise subsidizing companies to gain market share at the expense of the rest of the world.
But a policy to help our economy doesn’t have to be at the expense of others. It can be a policy to help bring workers in other countries up to our standards, so they can become customers for our own products and services. This lifts the economy in our country as well as for our trading partners (not competitors). We can apply tariffs at the border on products that are made by people who are not fairly paid, or who are not allowed to organize unions, or who are not allowed to vote for government officials who would protect their safety, wages, environment, etc.
So let’s start thinking about how our government can work with us to help us, instead of this weird, failed conservative “everyone on your own” free-market approach that led to collapse, please.