Real World

With all the hype on all sides of the political spectrum about stimulus and jobs, here is a short piece from a mid-size business owner (who actually manufactures something...) on why his business is not ready to hire, yet.

I think it's going to be awhile before those unemployment numbers start to decline. And remember, we are adding more people to the work force than jobs we are creating.

China First

I thought this article was a fantastic analysis on why China now dominates the world economy (in my opinion they are not a developing nation, they are fully developed) and how America's corporate leaders made China what it is today.

There is nothing wrong with buying American!

America's Lost Decade

When the last remnants of the Bush Administration and the incoming Obama started trying to fix the economic depression (oops, I mean debacle) economists talked about Japan's lost decade (meaning the 1990s) which there was an economic stabilization but no growth. These economists were warning our policy makers to not create a recovery where "no one wins."

But really, this past decade has already been a lost decade for Americans. Finally someone wrote about it here. And if you begin to examine the signs, or so-called "green shoots," where the Obama Administration is claiming there is a recovery, you will see it sure isn't impacting main street.

And this could be the political reaction.

When You Rely On Consumption

When you rely on consumption and people are not feeling too giddy about their futures...it's a recipe for a stagnant economy.

We're there, now! And the stock market finally realizes it.

Once Again, It's About Manufacturing!

Today, Boeing, once a local company here in the Pacific Northwest, announced that is was going to build a second line of "Dreamliner" planes in South Carolina rather than in Washington. Of course, as these things go, South Carolina gave Boeing huge tax incentives and other lures to get them to their state, including very management conducive anti-union laws.

Boeing's Dreamliner has been plagued with problems. It hasn't even had one test flight, which has been delayed now for over a year. Management, in an attempt to appease it's international customers, parsed out various components of the plane to dozens of different countries, and guess what, the parts don't fit!

As this is written, talk show hosts and call in "experts" are blaming Washington state's governor and the Machinist's union for failing to give up their right to strike, as a reason for Boeing beginning to decamp from Washington. It's extremely simplistic to do that.

In an age where union strength is all but gone, we have forgotten what we, each of us, whether white collar or blue collar, owe to unions. 5 day work week, holidays off, paid medical insurance, disability insurance, unemployment benefits, minimum wages, 8 hour work day, over time pay...giving up the right to strike essentially makes a union useless.

Rather, this is about global markets, stock incentives for management, squeezing every dime out of labor, and fickle governments bending over backwards for manufacturing jobs that normally, these days, are sent overseas.

It really is time that this country wake up and realize if we continue to lose these jobs we will dig ourselves deeper into this economic hole. Plus, keeping manufacturing jobs is sustainable. Isn't it better to buy and sell goods closer to home than waste so much carbon having them shipped all over the globe?

There has been a recent discussion in my neighborhood about a bike path that would cut through a vibrant industrial area. The local businesses are concerned about the safety, of bikes zipping through their driveways. And some of the complaints from bike advocates is that the businesses use some of the land for employee parking, so they resent the cars on what they think should be "their bike path." What gets lost in this polarized discussion is the need to keep these light industrial jobs within the city, that those employees probably have to drive to their jobs since they may not make enough to live in the chi-chi condos that are edging closer and closer to the industrial area. And that real estate development with the attendant ritzy boutiques is simply not sustainable (I walked into one boutique today advertising itself as selling basic "goods," where an Oxford cloth shirt was retailing for $180! Yikes!).

If we want to revive this economy we need to pay attention to manufacturing.

Are We In Recovery?

Last week John Bernanke, head of the Federal Reserve, spoke to bankers at a conference in Jackson Hole (wow, I bet my friends who are fly fishing guides on the Snake River got a little economic stimulus last week! Way to go guys!). At the conference Bernake stated, unequivocally, that our economy is now in recovery.

At the risk of hammering at this point a little too much, I keep wondering whether the recovery is for Wall Street or Main Street? And indeed, the business and economy reporter for the Seattle Times wrote a nice, short piece about jobs and recovery. Until the United States figures out how to create jobs, sufficient to employ the unemployed and sustain the job creation at a rate of 127,000 a month (to keep up with population growth) this so-called recovery isn't going to help those who are gazing at computer screens trying desperately to find jobs.

The promise of green jobs is going to take many many years. Throwing money at industries like the failed banking system hasn't helped, since they have not been on a hiring binge as they figure out how to increase interest rates on credit cards, over-draft fees, and pay huge bonuses and lobbying salaries.

Looking at what remains of our manufacturing sector is also sad. Boeing continues to threaten both local governments and its unions that it will pull jobs away from areas like Western Washington and send them overseas or to the south where they can bust the union, unless Boeing receives even more tax credits and a no strike clause in its union contracts. At least in Washington, small businesses that actually have to pay taxes and consumers who are hammered with one of the highest sales taxes in the nation, are already subsidizing the highly paid executives at Boeing and Microsoft. But they want to squeeze out even more, while the state has to cut and ax people off of Medicaid and other social safety net programs.

Something is very structurally wrong with our economy and unless we correct the course rather than band-aid it, we'll be talking about these unemployment numbers over and over during the next 12 months.

So, just whose recovery is this?

The Good, The Bad, The Ugly in Unemployment Numbers

There was good news today. While many economists predicted the unemployment number would rise to double digits today, they in fact went down a bit, from 9.5% to 9.4%. Statistically, the margin of error makes them the same, but that doesn't stop everyone from celebrating and headlines trumpeting the end to the recession (depression) is near!

The bad news is, of course, unemployment is still high and is probably going to remain high regardless whether the mucket-mucks say the depression (see, I said it) is over.

And the ugly news is in reality, this 9.4% is only measuring people who are actively looking for jobs, not people who have been unemployed for over the 15 week measuring mark. My suspicion is if we could figure out how to measure all the unemployed but want to find work people in this country, well, that figure would certainly be double digits and also scare the crap out of most politicians. So, like how we measure inflation (taking out food and fuel from the equation, which as we all know from last summer can be and are highly volatile) the government is essentially controlling information to "make us feel better."

The reality is that we have to be creating over 125,000 jobs a month in this country just to employ the people coming into the market. Right now, we have close to 7.88 million people unemployed. There are guesses that the real unemployment rate is over 16% and rising.

If you believe that the American economy is a function of confidence, the numbers released today, the President's comments, and Wall Street's closing are all intended to bolster your sense that the economy is getting back into shape. But dig deeper. Don't let the bally-hooing out of New York and Washington fool you. Numbers can and do deceive. They are intended to do that. It's good, it's bad, and believe me, it's really ugly.

Further SIgns Green Shoots Are Whithering

The news in the construction industry is not good. Here in the Seattle area, defaults in construction loans are at an all time high.

We have a long way to go before we really begin to see progress. And is it only me that missed the fact that less than 30% of the economic stimulus money would be "on the streets" this year? Whatever happened to "shovel ready?"

Meanwhile, large manufacturing industries, such as Boeing, are threatening politicians who are indirectly hammering unions about strikes. The implication is if the machinist union agrees to a no strike clause in their contract, Boeing may consider staying in the Puget Sound region (or keeping their much maligned "Dreamliner" assembly plants in this region). This after Washington State gave Boeing enormous tax incentives to keep the assembly plants here in Washington. It seems we have forgotten that middle class blue collar jobs are an important, no vital, component of a healthy regional economy.

We have a long way to go to pull out of this economic debacle.

Oops, Can't Find Those Green Shoots

It appears the green shoots of economic recovery might be withering a bit. Today's announcement of job losses for June is sobering, much less the percentage that isn't receiving wide coverage, that well over 16% of Americans are unemployed. That means, the 9.5% plus another 6% or so who are chronically unemployed, not just on unemployment. Yikes. It think that is something like 3 out of every 10 Americans are without employment.

These are not good numbers. I think recession doesn't quite describe what we are in right now. We have not seen these numbers since 1948, when the deployment after World War II reeked havoc on the economy. And in fact, the numbers are even worse since it doesn't appear there is any job creation despite the stimulus spending (do you think really the money is going to help states and municipalities fill in their budget deficits? Nah...).

Hold on, though, these numbers will probably get a little worse.