Friday, February 06, 2009

Layoffs ... Micro and Macro

Now with fine, stimululated Add On ... now including the fine chart above, from Calculated Risk.

While theatrical animation still employs many and the work situation hasn't declined precipitously (unlike other segment of the U.S. of A.), television staffing at many local studios remains spotty. Nick has a goodly number of projects, but other studios? Not so much.

TAG records show that 2,506 people are employed by contract studios, but of course those stats wouldn't reflect the 150 employees of Imagi who are recently unemployed.

Imagi's staff is still on layoff, the company still floundering. Word reaches us that some employees have been asked to come into work on Monday and will be paid, but misinformation is rampant. Some employees wonder if the studio will reopen.

Meanwhile, unemployment nationwide is grim and getting grimmer ...

• Total job losses since the recession started in December 2007: 3.6 million;

• Over the past 12 months, the number of unemployed persons has increased by 4.1 million;

• Losses over the last three months: 1.8 million (Jan = 598, Dec = 577k, Nov = 597k);

• Unemployment rate for full-time workers spiked to 8%;

• For the first time since records began in 1939, there were three consecutive months of 500k + job losses;

• Job losses were broad based, with the diffusion index down to an all-time low of 25.3%;

• Household survey showed a record 1.24 million job plunge (Since data began in 1950)

• The calendar year 2008 saw 3 Million Job Losses;

• The employment-population ratio fell to 60.5%, down from 62.7% at the beginning of the recession, — the lowest rate since 1986.

• Unemployment rate: 16-year high (1992);

• January’s payroll drop of 598,000: most since December 1974;

• Payroll Revisions for 2008 were 400,000 more than initially announced;

• The 3.5 million job loss since January 2008 is the largest 12-month decline since the government started compiling those figures in 1939;

• U-6 Marginally attached and involuntary part-time workers: 13.9% last month — up almost five percent;

• The employment-to-population ratio was the lowest since 1986.

Happily, it looks like a stimulus bill is near at hand. Unhappily, it will probably need to be larger than it is.

Add On: Short Stimulus Tutorial.

There's a lot of hot air wafting through Congress right now as left and right battle over what kind of "Stimulus Package" provides the best stimulus. The GOP argues that tax cuts will do the trick; the Dems feel that direct government spending is the way to go.

First, let's hear from left-leaning Nobel economist Paul Krugman on where we are:

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high.

The more conservative Mark Zandi agrees the stimulus by the government must be large, but he's not as adament as Krugman regarding the size and spending/taxing breakdown:

The stimulus must be large, approximately $750 billion, equal to a little less than 5% of GDP ... The mix of tax cuts and spending boosts ... should be designed to provde both quick relief and a substantial boost to the struggling economy ...

Of course, Zandi wrote his piece a month ago, and the economy has continued to deteriorate. So what packs a bigger punch? Tax cuts or government spending. This Moody's chart -- also from Zandi -- is instructive.

Fiscal Bang For the Buck

One-year $ change in real GDP per dollar ($) reduction in federal tax revenue or increase in spending.

Tax Cuts

Non-refundable lump sum tax rebate: $1.02

Refundable Lump sum Tax Rebate: $1.26

Spending Increase

Extend Unemployment Insurance Benefits: $1.64

Temporarily Increase Food Stamps: $1.73

Increase Infrastructure Spending: $1.59

Me, I come down on the side of spending, because that's what is going to lift us out of this fetid trench and get us back on a growth track ... get people back to work. The data is pretty compelling. When you get two high-powered economists -- one a liberal and one an advisor to John McCain's recent presidential campaign -- in agreement about the stats, how could it be otherwise?


Anonymous said...

25 Things about Unemployment...

Anonymous said...

The "official" unemployment number drives me crazy. Does anybody in their right mind actually believe that unemployment is at a single digit rate? What exactly does that number represent? Is it the number of people collecting benefits, or more than just that?

On CNN I heard my worst nightmare with regard to that phony statistic; some conservative economist actually said, "It's not so bad, there is over 90% employment!" ?????????!!!!!

Anonymous said...

Its actually 92.4% employment if you go by the daily statistics. which isn't comforting to the 7.6% that can really use a job. I'm amazed at how fast the stats have jumped in the last month!

Steve Hulett said...

Going by U-6, it's 86.1% employment, 13.9% unemployment.

We're moving toward the stats of 1982, whem unemployment was 10%.

By way of reference, 10% unemployment is what the U.S. had in 1941, at the time of the Disney strike.


Anonymous said...

A couple of things Steve.

Unfortunately, I think the fact the average american doesn't know history is going to be our undoing in this whole mess.

Instead of listening to modern day economists, why not study the works of two of the best economists who have have ever lived (both Nobel prize winners). Friedrich Hayek and Milton Friedman are rolling in their graves over this New New Deal we call a stimulus package. They literally wrote books about what is happening to us right now, how, and why it happens. The debt we are leaving our children with this government spending is deplorable and will ruin the country. Republicans and Democrats are both wrong on this one. Government should just get out of the way.

Also, the government doesn't figure economic statistics the same way they did in 1982, and definitely not the way they did in 1929. GDP, CPI, and unemployment is figured completely different. This guy takes the current government stats and calculates unemployment to actually be around 17% based on how they used to measure it.

Instead of logging on and getting the news from CNN everyday for answers... Why not dig into the past, and learn from our mistakes?

Steve Hulett said...

The limits of Hayek and Friedman have recently been on bright display. If you buy into the magic of unregulated markets, you run into problems when human capacity for robust greed takes over.

The difficulty -- which your link touches on -- is that we had a "shadow banking system" which was pretty much unregulated, got heavily leveraged, and crashed, taking the economy with it.

Even Alan Greenspan now admits the errors of his Friedmanesque market philosophy. But I guess it comes down to which Nobel Prize winner a person chooses to worship.

It's really pretty simple. When the private sector has now will or capacity to spend (like now), the government needs to step up and spend money to pump up demand.

And your link above is right on the money. That 18% is quite close to the U-6 metric.

Anonymous said...

I agree with you in regards to the banking system. In fact, we were never meant to have a central central economic planning. Our banking system is a private corporation accountable to no one. It is one of the 10 planks of communism, which no one seems to talk about.

However, I disagree that Hayek and Friedman have been proven wrong. Alan Greenspan abandoned all of his early Austrian economic ideals once he became Fed chairman. His lowering of interest rates and easy money after 911 is one of the prime causes for this mess (which is completely Keynesian). I submit that the United States hasn't had a true free market since 1913 (when the Fed was created).

Also, the free market is actually trying to work if the government would let it. Why are we pumping money into banks and organizations who have proven they can't handle the responsibility? That is the whole point. Businesses and individuals should be allowed to fail.

No one is arguing that we shouldn't have laws for fraud or malpratice. The problem is that the agencies we put into place to regulate these markets are completely inept (at best) and completely corrupt (at worst). Instead, let the market be free. Allow institutions to fail, and prosecute them when they break the law. But don't let the government come in a make things worse.

Anonymous said...

Sure wouldn't it be nice if we could start over or rollback to a better time and fix the system.
Unfortunately you have to work with what you have now and try and stop the bleeding before things get worse.
If you think things are bad now just go ahead and see what happens if too many of the banks do go under and the freemarket is allowed to correct itself.
I'm guessing the only people that are saying that are pretty safe financially and don't have to worry about their mortgage or finding a job. Or, at least, think so.

Anonymous said...

"Sure wouldn't it be nice if we could start over or rollback to a better time and fix the system."

But that is just it, some people actually are trying to fix the system and roll it back. If we all can agree that our banking system and Federal Reserve is the problem and is the cause of all this...then we should be doing everything we can to take this opportunity to fix it. Instead they are actually now giving MORE POWER to the Fed to manage this economy.

We have a couple of people in the government trying to help us. But beyond these 2 guys...I fear we are up a creek.

Dennis Kucinich:

Ron Paul:

We can fix our system...but we have to rid ourselves of the source of the problem. Spending band aids will not solve this mess.

Steve Hulett said...

I disagree that Hayek and Friedman have been proven wrong. Alan Greenspan abandoned all of his early Austrian economic ideals once he became Fed chairman. His lowering of interest rates and easy money after 911 is one of the prime causes for this mess (which is completely Keynesian).

Ah, okay. You're a libertarian, got it.

Well, we won't be getting rid of the Federal Reserve System, and we won't be going back on the gold of silver standard, so the Paul remedy is out.

I happen to be a Keynesian, but that might be because I read too much and my best friend has a PhD in economics and ... ah ... corrupts me.

But to the point: There is no political party in the House or Senate that entertains getting rid of the Fed, or going back on the gold standard.

So your remedies, whether they are viable or not (I think not, but that's me) aren't going to get enacted.

Anonymous said...

Well, unfortunately if you ask people graduating with degrees in economics...9 out of 10 have no idea how the Federal Reserve even works. So, I wouldn't say having a PHD or MBA exactly makes someone an expert. In fact, most of Wall Street is made up of those guys...and we see how well that turned out.

No, I would rather listen to most of the founding fathers (Jefferson, Madison, et al), or past presidents (Jackson, Lincoln). They wrote and spoke about this system we have and what would happen if we allow a central bank to direct our monetary policies.

Just spend an hour and read Andrew Jackson's farewell address...ponder why it sounds like he is talking about our situation today.

At it's core, it really comes down to a difference in ideology. Whether you are responsible for yourself, or the government should take care of you. At the end of the day we will likely not agree. But 5 years from now, I think we will know who was right and who was wrong.

Anonymous said...

Ultimately you've got to dance with the girl you brought and not keep hoping Marilyn Monroe will rise from her grave ask you to dance.

Dreaming about what should've been and could've been does no good. You have to fix what's there now. While tearing down a building and starting from scratch sounds great it's not always realistic.

Anonymous said...

Right, but debt and easy money got us into this...and yet we are trying to create more debt and easy money to get us out of it?

That's like pouring gasoline on a fire, and still thinking it will put it out.

It simply defies logic.

Steve Hulett said...

Actually,what got us into this was an unregulated banking system made up of investment banks and hedge funds that could leverage toxic assets as much as they wanted.

Goldman Sachs, Lehman and the rest were given free reign, the rating services labeled subprime mortgages AAA, and now we have a financial system that is bankrupt.

As for the founding fathers? Alexander Hamilton pushed for a national bank, and got it. Andrew Jackson killed it, but when you talk about "the wisdom of the founding fathers," you sort of have to stipulate what national parents you're talking about.

Because a lot of them/thos Fathers WANTED a strong central bank and goverment. That's why, after all, they ditched the Articles of Confederation for the Constitution.

But you go right on advocating the elimination of the Fed and going back to a gold-backed currency. It's fine exercise.

In the meantime, go read about the Panic of 1907. It was a lot like what we're going through now, and a big part of the reason we now have the Federal Reserve System.


Anonymous said...

I know all about the Panic of 1907. And it was JP Morgan who stepped in to "save the day" by bailing out his buddy bankers.

And after he did that he proceeded to go down to Jekyl Island with several other private banking insiders, draft a bill to establish a Federal Reserve, which sounds like a public entity, but is really a privately held for-profit institution. He would get a corrupt Congress and a naive President named Woodrow Wilson to make it law (the 16th Amendment).

The privately-owned Federal Reserve would print up money at practically NO COST, and would charge the American people interest for use of the money. To pay these private bankers, a national income tax would be imposed.

The Federal Reserve that was put in place to prevent depressions would create boom-bust cycles by controlling both money supply and available credit. Buying and selling, shorting and going long at the optimal times, these insider traitors would amass an immense amount of wealth at the honest taxpayers' expense, until eventually in 2008 the system began to break down.... yeah, that's what came of the Panic of 1907.

You are right. Our corrupt congress may never rid us of this Federal Reserve system. But you and I will continue to watch our personal wealth, and national wealth erode from this fleecing of America. The same people who run Lehmans, Goldman Sachs, Citi, etc also own the Federal Reserve. Government and corporations are a revolving door.

Look it up.

Anonymous said...

I'd go for a three month moratorium on income tax...

We pay too much tax!


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