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Monday, January 12, 2009

More Thoughts on Unemployment

Most economists ridicule the idea that what we're experiencing now could ever become anything like the Great Depression. And, says Reuters, they all point to the same statistic: 25% of Americans were out of work in the worst of the 1930s and we're nowhere near that level of disaster.
But the definition of joblessness has changed since then. Since 1994, the official rate is what the BLS has called U3. It now stands at a
16-year high of 7.2%.
But the BLS provides an alternative measure of unemployment, which rarely gets mentioned. That particular measure is labeled U6, which the BLS categorizes as "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers."
So what's U6 currently? As of Friday, it's 13.5%, which is a 0.9% rise over last month. Last year at this time it was 8.7%.Nobel prize-winning economists says that U6 measures far more accurately than U3, and is closer to the historical measure than U3. The good news is U6 is not at 25%. However, the nation lost 524,000 jobs in December. And job losses in November were huge, too.
And that’s starting to
scare some of the smart people

“These numbers, back to back, of more than a half million a month suggest that the U.S. economy is in a freefall,” said Nariman Behravesh, chief economist at IHS Global Insight. “It’s scary, and it indicates that unless something is done and done quickly to turn this economy around, we’re looking at an awful situation this year.”
Also …
“This is unprecedented,” said Mark Zandi, chief economist of Moody’s “It’s coast to coast. It’s everywhere. There’s really no refuge in this job market. There’s no safe place.”Here are some charts of interest …

But all is not lost. The Canadian dollar seems to be holding up well, as are some other currencies.

It sure looks like the Canadian dollar could be poised to break out to the upside. How can this be when the global economy seems to be spiraling deeper into recession?

That disconnect is something I'll be exploring in future issues.


Saudi to cut output below OPEC target: Reuters
Top exporter Saudi Arabia plans to cut oil output by up to 300,000 barrels per day below its agreed OPEC target – a pro-active step to prop up a collapsing market, industry sources said on Sunday.
OPEC's most influential member has lowered supply this month to 8 million bpd, meeting its target under OPEC's pact to reduce overall production by a record amount from Jan. 1.
“We've been told Saudi Arabia will cut to about 7.7 million in February,” said a senior oil executive. “They want to prevent a huge stock build up and a further decline in the oil price.”

Exposing the Myth of Clean Coal Power
The "clean coal" campaign was always more PR than reality — currently there's no economical way to capture and sequester carbon emissions from coal, and many experts doubt there ever will be. But now the idea of clean coal might be truly dead, buried beneath the 1.1 billion gallons of water mixed with toxic coal ash that on Dec. 22 burst through a dike next to the Kingston coal plant in the Tennessee Valley and blanketed several hundred acres of land, destroying nearby houses. The accident — which released 100 times more waste than the Exxon Valdez disaster — has polluted the waterways of Harriman, Tenn., with potentially dangerous levels of toxic metals like arsenic and mercury, and left much of the town uninhabitable.

U.S. Consumers Keep Autos Longer, Shun Showrooms as Cuts in Payrolls Mount
Drivers rattled by the worst U.S. labor market since World War II are hanging on to old autos longer instead of buying new models, threatening to crimp sales again in 2009 after demand plummeted to a 16-year low.

India Industrial Output Gains 2.4%, Rebounding From First Drop in 15 Years India’s industrial production unexpectedly rose in November, after declining in the previous month for the first time in 15 years amid a global recession.

Oil Drops Below $40 on Speculation Slump in Demand Will Outpace OPEC Cuts Crude oil fell below $40 in New York on concern production cuts by the Organization of Petroleum Exporting Countries will fail to counter a slump in demand.


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