Article 43


Sunday, December 05, 2010

Jobs Outlook Is Worse Than People Think


December 3, 2010

At the rate the US economy is recovering, it will take 28 years to get back to where we were in December 2007 if something doesn’t change, David Stockman, former federal budget director under President Reagan, told CNBC Friday.

"When we look below the surface and the job outlook and the trend that we’ve been in, it’s a lot worse then people think,” Stockman said.

“The jobs that they count every month and people get excited about are really part-time jobs,” he said.

Now that we are in the “new normal,” it’s important to rebucket the data the Labor Department releases on the big picture of the 130 million jobs in the economy, Stockman said.

Take the middle class, Stockman said, which is at the heart of the economy about 54 million jobs. This is everything you can think of in terms of bread-winner jobs. The annual median wage is $50,000.

“If we are going to have recovery, it has to happen here,” he said, adding, “we lost 7 million jobs in two-year downturn in the ‘Great Recession.”

In order to achieve true middle class job growth, Stockman believes the US needs to become more competitive in the global marketplace and regain some of the manufacturing production jobs lost.

“A big chunk of that 54 million jobs is construction. We overbuilt the economy for twenty or thirty years with the housing boom. Now we have huge overhang,” Stockman said.

For the first time in history, the number of government jobs, which have been evergreen growth for the last 50 years and make up about 11 million jobs, is shrinking, Stockman said, adding, “over the last year we’ve lost 100,000 jobs.”

“Governments are brokeחCalifornia, Illionis, New Jersey and the federal government is not far behind,” he said.

After appearing on CNBC, Stockman said in a follow-up interview that the following moves could help solve the dismissal economic picture in the US:

# Raise revenue across the entire population by a large magnitude to pay our (government’s) bills; probably a half trillion dollars a year.

# Social Security and Medicare: Cut benefits for better-off retirees by $100 billion a year through a means test for retirement entitlements.

# Reduce defense spending by at least 20 percent from planned levels (by 2015), which is projected at about $800 billion.

# Cut domestic discretionary spending by $100 billionחtransportation, national parks service, education, farm subsidies, business subsidies (such as ethanol plants).

Stockman believes these solutions will be feasible if a “big breakdown” in the bond market occurs, which he believes will happen and will be forced on the US, as in the case of the PIIGS.

“You can not issue debt indefinitely and get away with it,” he said.



There is propaganda, and there are facts. For anyone seeking just one concise, definitive and completely true (as in fact-, not hope- based) explanation of what has happened to the American economy in the past 2 years, we suggest this presentation by former OMB director David Stockman, whose 10 minute appearance on the CNBC’s strategy session left the hosts with absolutely nothing to retort. Among his observations: the government sector for the first time in history is shrinking: “the reason is that governments are broke… we are going to have to cut back government employment.” And it gets scarier: “if you take core government plus the middle class economy (65 million jobs), that’s the breadwinning economy, if we take some numbers - how many jobs in the “core economy” in November - zero; how many jobs since last December: net zero; how many jobs since the bottom of the recession in June 2009: still a million behind from when the recession ended.” As to whether the economy can grow without employment growth: “I can’t imagine how it can because employment growth generates income growth which is the basis for spending and saving ultimately and we are not getting income growth out of the middle class.” And the stunner: the job “growth” has come almost exclusively from the part-time economy (two-thirds). Why is this a major problem: “there is 35 million jobs in that sector, with an average wage of $20,000 a year: that is not a breadwinning job, you can’t support a family on that, you can’t save on that. Those jobs will not generate income that will become self-feeding into spending.” As for the biggest condemnation, it is reserved to what Zero Hedge has been claiming for two years now is a completely broken market: “I can’t explain the market… I don’t know what it is pricing today, I don’t think the market discounts anything anymore, it is purely a daytraders’ market that is trading off the Fed, trading off the headlines. One day it is manic, the next day it is depressive, and we can’t draw any conclusions.” And scene.

Watch the video HERE.


Posted by Elvis on 12/05/10 •
Section Dying America • Section Next Recession, Next Depression
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