"No justice, no peace!"
Federal judges will be getting long-overdue pay hikes as well as back pay for the six times they were denied scheduled raises. Two court decisions said Congress was wrong in denying raises to nearly 2,000 federal judges throughout the country in 1995, 1996, 1997, 1999, 2007 and 2010.
The Congressional Budget Office, in a letter to Sen. Patrick J. Leahy (D-Vermont), chairman of the Senate Judiciary Committee, cited court decisions that "Congress may not withhold automatic salary increases for certain judges and that it improperly did so on six separate occasions." Result: Judges will now receive pay hikes automatically, as well as back pay for increases they should have received.
The total cost of compensating the judges for lost pay and coming increases will be some $1.2 billion over the next ten years.
Comment: It's a truism that money buys justice. Wealthy folks can hire squadrons of lawyers, while others must rely on Legal Aid from volunteers or government-sponsored agencies. At the same time, judges regularly leave the bench to return to private practice; that's where the big money is.
As it is, federal district court judges this year get a salary of $199,100, and circuit court judges get $211,200. At the U.S. Supreme Court, associate justices draw a salary of $244,400, and the chief justice gets $255,500.
Prosecutors also have the resources of government to investigate and pursue suspects for years, if need be, before filing charges, and then spending more time and money as the case moves through the court system.
Major corporations and the wealthy can often outspend the state in marshalling and continuing their defense, but legal resources for others are severely limited or nonexistent.
The question then becomes this: Is justice distributed evenly and fairly among all groups -- economic, demographic, ethnic and racial -- in America?
Money talks, it has been said. And those with more money can talk longer and louder than those with less.
There's also a tendency among law enforcement officials to aim at easier targets to score points toward a perceived "quota" of sorts to build their reputation and show that they're doing their jobs well, by citing the number of convictions they have obtained. Moreover, there is less publicity over cases involving the unknown. In cases involving celebrities, major corporations, the wealthy and other public figures, prosecutors lose credibility when they lose a case.
Meanwhile, our resident cynic points out that five of the six times federal judges were denied scheduled pay hikes were during a Republican Administration, and the sixth was during a midterm election year with a Democrat in the White House.
"No justice, no peace!" the protestors chant. There's more to that than simply a demand for justice in individual cases. It applies to the whole of a just society, where all are created equal, and thus deserve equal treatment under law.
Sunday, September 28, 2014
Friday, September 26, 2014
Looking Good
Are we there yet?
We're getting close.
A few weeks ago, the economic diagnosticians said things would likely improve through the rest of the year. This time, they may be right. A new estimate of American output for the second quarter put the Gross Domestic Product increase at 4.6 percent, higher than the 4.2 percent in the earlier estimate, a major turnaround from the drop of 2.1 percent in the first quarter.
Why? People are spending, buying more stuff as business produces more. Officially, a statement from the Commerce Department's Bureau of Economic Analysis said the increases primarily reflected upturns in exports, inventories, state and local government spending, and housing.
So while folks who have jobs may be spending more, thus helping the economy, there are still many others who either don't have jobs or are falling behind as prices go up and their income levels are steady.
The good news, however, is that the American economy is on an upward trend. The not so good news is that much of the rest of the world is not.
Stay tuned.
We're getting close.
A few weeks ago, the economic diagnosticians said things would likely improve through the rest of the year. This time, they may be right. A new estimate of American output for the second quarter put the Gross Domestic Product increase at 4.6 percent, higher than the 4.2 percent in the earlier estimate, a major turnaround from the drop of 2.1 percent in the first quarter.
Why? People are spending, buying more stuff as business produces more. Officially, a statement from the Commerce Department's Bureau of Economic Analysis said the increases primarily reflected upturns in exports, inventories, state and local government spending, and housing.
So while folks who have jobs may be spending more, thus helping the economy, there are still many others who either don't have jobs or are falling behind as prices go up and their income levels are steady.
The good news, however, is that the American economy is on an upward trend. The not so good news is that much of the rest of the world is not.
Stay tuned.
Wednesday, September 24, 2014
Go Figure
College enrollment dropped last year by nearly half a million, the Census Bureau said, the second year in a row for a drop of this magnitude. Added together, some 930,000 students failed to move to higher education, larger than any college enrollment drop since before the Great Recession.
Meanwhile, another Census Bureau report said sales of single-family houses jumped by 18 percent in August, to a seasonally adjusted annual rate of 504,000.
And yet another Census report noted declines in tax revenues. Individual income tax revenue fell by nearly 6 percent in the second quarter, while corporate income tax dropped by 3 percent. The same report said sales tax revenue rose 5.6 percent.
Also, income and poverty levels were basically unchanged last year from the year before, still another Census report said.
No wonder so many people are confused. Is the economy getting better, or not?
It would seem that getting a job has a priority, since college enrollment faded. And buying a house is also a priority, since interest rates are relatively low and prices are likely to go up.
But if income levels are steady and tax revenues are going down, that could mean ...
Who knows what?
Go figure.
Meanwhile, another Census Bureau report said sales of single-family houses jumped by 18 percent in August, to a seasonally adjusted annual rate of 504,000.
And yet another Census report noted declines in tax revenues. Individual income tax revenue fell by nearly 6 percent in the second quarter, while corporate income tax dropped by 3 percent. The same report said sales tax revenue rose 5.6 percent.
Also, income and poverty levels were basically unchanged last year from the year before, still another Census report said.
No wonder so many people are confused. Is the economy getting better, or not?
It would seem that getting a job has a priority, since college enrollment faded. And buying a house is also a priority, since interest rates are relatively low and prices are likely to go up.
But if income levels are steady and tax revenues are going down, that could mean ...
Who knows what?
Go figure.
Friday, September 19, 2014
Stabilizing, Maybe?
It's time for a trickle-up theory of economic growth.
"The economy is making progress." -- Janet Yellen, chair, U.S. Federal Reserve
Global economic growth "is too weak, fragile and uneven." -- Christine Lagarde, managing director, International Monetary Fund.
As the national and the world economies struggle to gain some momentum, assisted by central banks and international lenders through monetary policies that try to induce lenders and borrowers to jump-start economic engines, the U.S. Congress wants a bigger role as overseer of what the Fed does, with regular audits of the Fed's monetary policy as well as any transactions "involving a foreign central bank, the government of a foreign country, or a nonprivate international financing organization." So says an analysis by the Congressional Budget Office of a House proposal to increase Congressional authority over what the Fed does.
The CBO report on H.R. 24, the Federal Reserve Transparency Act, said the bill would direct the Government Accountability Office (GAO) to audit the Fed Board of Governors, and the Fed's 12 district banks. Such audits are now banned, and repealing the prohibitions would not only call for audits with 12 months of enacting the bill, but would also bring on "future requests from Members of Congress for GAO to conduct additional oversight and analysis of the Federal Reserve System."
Cost: $5 billion over five years to hire staff and pay expenses for the audits, the CBO said. In addition, a loss of revenue that the Fed pays to the Treasury of as much as $7 million.
So even as the Fed sees some progress and warns that its future actions will be cautious, and international agencies such as the IMF and central banks in Europe push to keep money -- and consequently the economy -- flowing and growing, some in the U.S. Congress want to put their leash on the monetary watchdogs at the Fed. In short, politicians want to monitor the monitors.
Is this a good idea? Since its inception a hundred years ago, the Federal Reserve has been independent -- even secretive -- in its efforts to step in to boost the economy when needed, and to slow things down when business partying gets too raucous. Granted, they don't always succeed, but political oversight -- read interference -- by partisans who may be anxious to blame incumbents for economic malaise can be more dangerous.
Meanwhile, things may be getting a bit better. The Census Bureau reported that the poverty rate in America declined for the first time since 2006. A small change, statistically insignificant, the report admitted, along with a statistically insignificant change in median household income. But at least it's not getting worse. That, however, is small comfort to those in the middle and lower income groups whose income is stable even as those in the highest grouping see increases in their wealth.
And while the U.S. may have halted an economic decline, many other nations are still looking at a potential downward slide.
"The economy is making progress." -- Janet Yellen, chair, U.S. Federal Reserve
Global economic growth "is too weak, fragile and uneven." -- Christine Lagarde, managing director, International Monetary Fund.
As the national and the world economies struggle to gain some momentum, assisted by central banks and international lenders through monetary policies that try to induce lenders and borrowers to jump-start economic engines, the U.S. Congress wants a bigger role as overseer of what the Fed does, with regular audits of the Fed's monetary policy as well as any transactions "involving a foreign central bank, the government of a foreign country, or a nonprivate international financing organization." So says an analysis by the Congressional Budget Office of a House proposal to increase Congressional authority over what the Fed does.
The CBO report on H.R. 24, the Federal Reserve Transparency Act, said the bill would direct the Government Accountability Office (GAO) to audit the Fed Board of Governors, and the Fed's 12 district banks. Such audits are now banned, and repealing the prohibitions would not only call for audits with 12 months of enacting the bill, but would also bring on "future requests from Members of Congress for GAO to conduct additional oversight and analysis of the Federal Reserve System."
Cost: $5 billion over five years to hire staff and pay expenses for the audits, the CBO said. In addition, a loss of revenue that the Fed pays to the Treasury of as much as $7 million.
So even as the Fed sees some progress and warns that its future actions will be cautious, and international agencies such as the IMF and central banks in Europe push to keep money -- and consequently the economy -- flowing and growing, some in the U.S. Congress want to put their leash on the monetary watchdogs at the Fed. In short, politicians want to monitor the monitors.
Is this a good idea? Since its inception a hundred years ago, the Federal Reserve has been independent -- even secretive -- in its efforts to step in to boost the economy when needed, and to slow things down when business partying gets too raucous. Granted, they don't always succeed, but political oversight -- read interference -- by partisans who may be anxious to blame incumbents for economic malaise can be more dangerous.
Meanwhile, things may be getting a bit better. The Census Bureau reported that the poverty rate in America declined for the first time since 2006. A small change, statistically insignificant, the report admitted, along with a statistically insignificant change in median household income. But at least it's not getting worse. That, however, is small comfort to those in the middle and lower income groups whose income is stable even as those in the highest grouping see increases in their wealth.
And while the U.S. may have halted an economic decline, many other nations are still looking at a potential downward slide.
Violence and Football
"It's not whether you win or lose; it's how you play the game." -- Grantland Rice.
"Winning isn't everything. It's the only thing." -- Vince Lombardi
Football is an inherently violent business, so it's no surprise that at its most violent level, its employees -- also known as "players" -- take that violence with them to their private lives. Result: These gladiators are quick to react to provocation, even from those they supposedly care about and claim they love.
One of the most recent news stories shows a video clip of a footballer punching and knocking unconscious his fiancee. And at first, the consequence of his action was minimal as the league executives denied knowing about it. Until, that is, more video became public.
When sport becomes a business, profit kills sportsmanship. The National Football League (NFL) in America is a business, not a sport.
Moreover, it may well be that the popularity of football, with all its violence, is a reflection of American culture. Boxing is still popular, as is hockey, with fistfights on the ice common among the most successful teams. Computer games -- the more violent the better -- also reflect a cultural preference for violence. Hollywood indulges this taste through vivid special effects that become more vivid and violent with each year.
In addition to all this, there is the issue of gun violence. The National Rifle Association insists that the Constitution guarantees the right of every individual to have a firearm, but they conveniently ignore the opening phrase of the Second Amendment basing that right on the need for a "well regulated militia" to ensure the security of a free state.
Nowhere in the Constitution is there mention of unregulated, individual "rights" to have a personal arsenal.
"Winning isn't everything. It's the only thing." -- Vince Lombardi
Football is an inherently violent business, so it's no surprise that at its most violent level, its employees -- also known as "players" -- take that violence with them to their private lives. Result: These gladiators are quick to react to provocation, even from those they supposedly care about and claim they love.
One of the most recent news stories shows a video clip of a footballer punching and knocking unconscious his fiancee. And at first, the consequence of his action was minimal as the league executives denied knowing about it. Until, that is, more video became public.
When sport becomes a business, profit kills sportsmanship. The National Football League (NFL) in America is a business, not a sport.
Moreover, it may well be that the popularity of football, with all its violence, is a reflection of American culture. Boxing is still popular, as is hockey, with fistfights on the ice common among the most successful teams. Computer games -- the more violent the better -- also reflect a cultural preference for violence. Hollywood indulges this taste through vivid special effects that become more vivid and violent with each year.
In addition to all this, there is the issue of gun violence. The National Rifle Association insists that the Constitution guarantees the right of every individual to have a firearm, but they conveniently ignore the opening phrase of the Second Amendment basing that right on the need for a "well regulated militia" to ensure the security of a free state.
Nowhere in the Constitution is there mention of unregulated, individual "rights" to have a personal arsenal.
Friday, September 12, 2014
Inequality Brings Change
Inequality brings change, whether it be political, economic, or for civil rights.
Mercantilism is a short-sighted focus on gaining more wealth at the expense of others, often through a colonial relationship. In this mindset, the dominant country collects resources or basic materials from the colony, manufactures finished goods and sells them back to the colony at a profit.
Part of the strategy is to prohibit the colony from manufacturing anything, or of selling raw materials to anyone else. Taking that a step further, the dominant country requires that all transport to and from the colony be done by dominant country shippers.
So while home country merchants, manufacturers and shippers benefit from this arrangement, there soon comes a point where the colony is dry of resources and has no ability to purchase finished goods from either its parent or any other source.
This ever-widening gap between the haves and the have-nots inevitably brings about a change in the relationship.
Mercantilism thus creates a wealth gap. (Perhaps another word for mercantilism would be "greed.") It was a similar mercantilistic wealth gap that brought about American independence nearly 250 years ago. And in the late 19th Century and early 20th Century in America, a wealth gap helped foster the growth of labor unions to ensure reasonable wages and working conditions. Related to that was the Progressive political movement for social reform, from which evolved such things as government-sponsored pension plans (Social Security), unemployment compensation, and legal rights for labor unions.
Wealth gaps help to foment change, in many countries through various means. Some for political independence, some for economic independence, some peacefully through evolution and some violently through revolution.
Put another way, whoever has the most gold at the end, wins. But that does him no good if he has no food.
Mercantilism is a short-sighted focus on gaining more wealth at the expense of others, often through a colonial relationship. In this mindset, the dominant country collects resources or basic materials from the colony, manufactures finished goods and sells them back to the colony at a profit.
Part of the strategy is to prohibit the colony from manufacturing anything, or of selling raw materials to anyone else. Taking that a step further, the dominant country requires that all transport to and from the colony be done by dominant country shippers.
So while home country merchants, manufacturers and shippers benefit from this arrangement, there soon comes a point where the colony is dry of resources and has no ability to purchase finished goods from either its parent or any other source.
This ever-widening gap between the haves and the have-nots inevitably brings about a change in the relationship.
Mercantilism thus creates a wealth gap. (Perhaps another word for mercantilism would be "greed.") It was a similar mercantilistic wealth gap that brought about American independence nearly 250 years ago. And in the late 19th Century and early 20th Century in America, a wealth gap helped foster the growth of labor unions to ensure reasonable wages and working conditions. Related to that was the Progressive political movement for social reform, from which evolved such things as government-sponsored pension plans (Social Security), unemployment compensation, and legal rights for labor unions.
Wealth gaps help to foment change, in many countries through various means. Some for political independence, some for economic independence, some peacefully through evolution and some violently through revolution.
Put another way, whoever has the most gold at the end, wins. But that does him no good if he has no food.
Responsibility
To say, "The Devil made me do it" is to clear you of any blame.
To say, "I am nothing without God" is to deny you any credit.
You are responsible for your actions and behavior, whether good or ill.
To say, "I am nothing without God" is to deny you any credit.
You are responsible for your actions and behavior, whether good or ill.
Tuesday, September 9, 2014
Scotland the Brave
Be careful what you wish for. You may get it.
Political independence without monetary independence can be dangerous. Examples: Spain, Greece, Italy, Ireland. As things stand now, the United Kingdom essentially has both.
Membership in the EU enables free trade, but the UK still has political independence and monetary independence. Members in the euro zone have political independence, but do not have full control over monetary policy. As it is, Germany pushes austerity as a means to "resolve" economic issues for other countries (easy for them to say, since Germany is prospering). As I have written before, austerity may be OK for a family or a firm, but on a national level it doesn't work. In fact, it's destructive.
In general, I believe the concept of a unified Europe -- the European Union -- is a good one, and a free trade union is a good start. However, establishing monetary union before political union has brought many conflicts with it.
On this side of the pond, the 13 colonies formed a political union in 1776, but even so, it took some 80 years for that to solidify. The Articles of Confederation weren't strong enough to hold the "free and independent" states together, and it took a Civil War to establish the federal government's authority under the Constitution of 1789. Even so, it was even later that full control of the monetary system really was fixed to the federal level. The Federal Reserve, for example, was not set up until 1914. Previous attempts to have a central bank failed.
So, should Scotland secede? It has always been a separate nation, even as it was united under one monarch. But to resume political independence while retaining monetary union, with the Bank of England regulating monetary policy, can be economically hazardous. Better that the Bank of Scotland take on the full duties of a central bank. Joining the European Union as a new, independent nation member, would only transfer monetary policy control to Brussels and the European Central Bank, as well as having to deal with pressure from Berlin.
Similar issues would arise for other smaller peoples considering independence in Europe, such as the Basques. Likewise, Puerto Rico must consider these potential problems with an independence movement.
In a federal setup with political as well as monetary union, such as the U.S., the state of Florida, for example, can -- and has --- looked to Washington for bailout help in times of crisis, e.g. high unemployment and benefits claims, housing crashes, bank failures, etc.
Likewise, Scotland can now look to London for help in dealing with financial crises. With independence, they would have to go it alone.
Independence is never an easy path, whether for a person or a nation. The Scots have a long and proud history of contributing to the world, such as bagpipes, whisky, and golf, not to mention the economic ideas of Adam Smith and the political and philosophical influence of David Hume.
So if national independence is what the Scots want, I say go for it. But there will be ruts and bumps along the road.
Political independence without monetary independence can be dangerous. Examples: Spain, Greece, Italy, Ireland. As things stand now, the United Kingdom essentially has both.
Membership in the EU enables free trade, but the UK still has political independence and monetary independence. Members in the euro zone have political independence, but do not have full control over monetary policy. As it is, Germany pushes austerity as a means to "resolve" economic issues for other countries (easy for them to say, since Germany is prospering). As I have written before, austerity may be OK for a family or a firm, but on a national level it doesn't work. In fact, it's destructive.
In general, I believe the concept of a unified Europe -- the European Union -- is a good one, and a free trade union is a good start. However, establishing monetary union before political union has brought many conflicts with it.
On this side of the pond, the 13 colonies formed a political union in 1776, but even so, it took some 80 years for that to solidify. The Articles of Confederation weren't strong enough to hold the "free and independent" states together, and it took a Civil War to establish the federal government's authority under the Constitution of 1789. Even so, it was even later that full control of the monetary system really was fixed to the federal level. The Federal Reserve, for example, was not set up until 1914. Previous attempts to have a central bank failed.
So, should Scotland secede? It has always been a separate nation, even as it was united under one monarch. But to resume political independence while retaining monetary union, with the Bank of England regulating monetary policy, can be economically hazardous. Better that the Bank of Scotland take on the full duties of a central bank. Joining the European Union as a new, independent nation member, would only transfer monetary policy control to Brussels and the European Central Bank, as well as having to deal with pressure from Berlin.
Similar issues would arise for other smaller peoples considering independence in Europe, such as the Basques. Likewise, Puerto Rico must consider these potential problems with an independence movement.
In a federal setup with political as well as monetary union, such as the U.S., the state of Florida, for example, can -- and has --- looked to Washington for bailout help in times of crisis, e.g. high unemployment and benefits claims, housing crashes, bank failures, etc.
Likewise, Scotland can now look to London for help in dealing with financial crises. With independence, they would have to go it alone.
Independence is never an easy path, whether for a person or a nation. The Scots have a long and proud history of contributing to the world, such as bagpipes, whisky, and golf, not to mention the economic ideas of Adam Smith and the political and philosophical influence of David Hume.
So if national independence is what the Scots want, I say go for it. But there will be ruts and bumps along the road.
Monday, September 8, 2014
New Gilded Age
We're seeing a New Gilded Age as the income gap widens.
News items:
* On Manhattan's Upper East Side, townhouse mansions built in the 1890s are selling for as much as $40 million and being renovated to their original single-family uses.
* Lower income families are seeing declines as the wealthy gain in prosperity.
* Education debt has increased, even as college graduates struggle to find jobs.
A new report from the Federal Reserve documents the income slide for families in the lowest 20 percent bracket, while those in the top 20 percent show increases in net worth.
The Fed study, done every three years, shows that family incomes, adjusted for inflation, "moved in different directions between 2010 and 2013."
"Families at the bottom of the income distribution saw continued substantial decline in average real incomes between 2010 and 2013, continuing the trend observed" in earlier surveys, the Fed report said.
Moreover, "Only families at the very top of the income distribution saw widespread income gains" over the course of the three-year span. Overall, median income -- the point in the middle -- fell 5 percent, from $49,000 to $46,700. the Fed reported, while the average -- reached by totalling all incomes and dividing by the number of families -- increased by 4 percent, from $84,100 to $87,200. This happens whenever those at the top have wider gains than those at the bottom. And the gap widens when the number for those at the top goes up when the number for those at the bottom goes down.
Simplistic example: In the series 1,2,3,4,5, the median is 3 and the average (arithmetic mean) is also 3. However, in the series 1,2,3,7,9, the median is still three but the mean is higher -- 4.4.
It's the same with an income distribution survey, especially when the number for those at the bottom goes down, but for those at the top it goes up.
The Fed survey showed that income for the 10 percent at the top of the scale rose by 10 percent, "barely budged" for families in the middle, and dropped sharply for families in the lowest 10 percent group.
So without throwing too many more numbers at you, it comes down to this: The economy may be improving (then again, it may not be), and those who have are getting more, but for the rest of us, it's still a struggle.
It was true 120 years ago, when the Manhattan mansions were built, and it's true again today, and the latest report from the Federal Reserve Board provides more evidence that the inequality gap described in detail by Thomas Piketty in his book, "Capital in the 21st Century" does indeed exist and it's getting wider.
Here's another thought to consider: When will the Republican Progressives and trust-busters that were led by the likes of Theodore Roosevelt and William Howard Taft be coming back?
News items:
* On Manhattan's Upper East Side, townhouse mansions built in the 1890s are selling for as much as $40 million and being renovated to their original single-family uses.
* Lower income families are seeing declines as the wealthy gain in prosperity.
* Education debt has increased, even as college graduates struggle to find jobs.
A new report from the Federal Reserve documents the income slide for families in the lowest 20 percent bracket, while those in the top 20 percent show increases in net worth.
The Fed study, done every three years, shows that family incomes, adjusted for inflation, "moved in different directions between 2010 and 2013."
"Families at the bottom of the income distribution saw continued substantial decline in average real incomes between 2010 and 2013, continuing the trend observed" in earlier surveys, the Fed report said.
Moreover, "Only families at the very top of the income distribution saw widespread income gains" over the course of the three-year span. Overall, median income -- the point in the middle -- fell 5 percent, from $49,000 to $46,700. the Fed reported, while the average -- reached by totalling all incomes and dividing by the number of families -- increased by 4 percent, from $84,100 to $87,200. This happens whenever those at the top have wider gains than those at the bottom. And the gap widens when the number for those at the top goes up when the number for those at the bottom goes down.
Simplistic example: In the series 1,2,3,4,5, the median is 3 and the average (arithmetic mean) is also 3. However, in the series 1,2,3,7,9, the median is still three but the mean is higher -- 4.4.
It's the same with an income distribution survey, especially when the number for those at the bottom goes down, but for those at the top it goes up.
The Fed survey showed that income for the 10 percent at the top of the scale rose by 10 percent, "barely budged" for families in the middle, and dropped sharply for families in the lowest 10 percent group.
So without throwing too many more numbers at you, it comes down to this: The economy may be improving (then again, it may not be), and those who have are getting more, but for the rest of us, it's still a struggle.
It was true 120 years ago, when the Manhattan mansions were built, and it's true again today, and the latest report from the Federal Reserve Board provides more evidence that the inequality gap described in detail by Thomas Piketty in his book, "Capital in the 21st Century" does indeed exist and it's getting wider.
Here's another thought to consider: When will the Republican Progressives and trust-busters that were led by the likes of Theodore Roosevelt and William Howard Taft be coming back?
Saturday, September 6, 2014
Jobs Update
One day, as I sat musing, sad and lonely and without a friend, a voice came to me from out of the gloom, saying, "Cheer up, things could be worse."
So I cheered up, and sure enough, things got worse.
Companies are hiring, but the pace of new jobs created has slackened, according to monthly statistics from the U.S. Bureau of Labor Statistics. Part of that, of course, could be the normal August slide, which the number crunchers try to account for by calculating a "seasonally adjusted annual rate." There are also the built-in hazards of telephone surveys. The sample may be too small, especially during vacation months or holiday periods when people are not home.
Nonetheless, surveys are useful, especially over time. In this case, a change over a single month may have little meaning, but when a trend is set over a six-month period, that's something to pay attention to.
In general, looking at one aspect of an economy -- whether regional, national or international group -- can often be misleading.Far better to take a wider view over a longer time period to form a good analysis.
That said, here are some of the latest numbers, released by the BLS on Friday, two days after the ER posting on "The New Normal" unemployment rate.
In the U.S., the jobless rate has been holding at just above 6 percent for months. The number for August was 6.1 percent, just a tick down from the 6.2 percent the month before, even as the nation's employers have been steadily hiring. Even so, the number of unemployed persons, at 9.6 million, "changed little," the BLS said.
Overall, the nation added 142,000 jobs in August, down from an average monthly gain of 212,000 over the past year. However, the labor force participation rate, which many economists consider a better indicator of employment health, changed little -- 62.8 percent -- "essentially unchanged since April." the BLS said.
Looking for signs of an improving economy? Look harder. The BLS reported no change in manufacturing, retail trade changed very little (down by 8,000 jobs), and employment in other major industries, including mining, wholesale trade, transportation and warehousing, information, financial activities, and government, all showed little change.
The areas of professional and business services, however, as well as leisure and hospitality, plus construction, all showed gains.
Otherwise, the length of the workweek, as well as overtime, showed no change, and average hourly earnings for all employees on private nonfarm payrolls rose by just 6 cents, to $24.53.
So are things getting better? For some, maybe. The number of longterm unemployed -- those jobless for at least six months -- dropped by 192,000 to a total of 3.0 million, according to the BLS report. However, it's still true that these folks account for nearly a third of all those unemployed.
Meanwhile, the good news for management is that productivity went up by 2.3 percent, and unit labor costs declined by 0.1 percent in the second quarter, the BLS reported.
And overall, personal income increased in July by 0.2 percent, even as personal expenditures fell 0.1 percent, the Census Bureau reported.
So it seem that those who have jobs are a tad more productive, and making a touch more money, but they're being more careful about their spending. All of which means that while things may not be getting worse, they're very slow in getting better.
And while it's true that many years ago, the so-called "full employment" level was when the unemployment rate was 4 percent, it's also true that many years ago, a gallon of gas cost 12 cents, a pack of cigarettes cost 35 cents, and the federal minimum wage was 50 cents an hour.
That was then. It ain't many years ago no more.
So I cheered up, and sure enough, things got worse.
Companies are hiring, but the pace of new jobs created has slackened, according to monthly statistics from the U.S. Bureau of Labor Statistics. Part of that, of course, could be the normal August slide, which the number crunchers try to account for by calculating a "seasonally adjusted annual rate." There are also the built-in hazards of telephone surveys. The sample may be too small, especially during vacation months or holiday periods when people are not home.
Nonetheless, surveys are useful, especially over time. In this case, a change over a single month may have little meaning, but when a trend is set over a six-month period, that's something to pay attention to.
In general, looking at one aspect of an economy -- whether regional, national or international group -- can often be misleading.Far better to take a wider view over a longer time period to form a good analysis.
That said, here are some of the latest numbers, released by the BLS on Friday, two days after the ER posting on "The New Normal" unemployment rate.
In the U.S., the jobless rate has been holding at just above 6 percent for months. The number for August was 6.1 percent, just a tick down from the 6.2 percent the month before, even as the nation's employers have been steadily hiring. Even so, the number of unemployed persons, at 9.6 million, "changed little," the BLS said.
Overall, the nation added 142,000 jobs in August, down from an average monthly gain of 212,000 over the past year. However, the labor force participation rate, which many economists consider a better indicator of employment health, changed little -- 62.8 percent -- "essentially unchanged since April." the BLS said.
Looking for signs of an improving economy? Look harder. The BLS reported no change in manufacturing, retail trade changed very little (down by 8,000 jobs), and employment in other major industries, including mining, wholesale trade, transportation and warehousing, information, financial activities, and government, all showed little change.
The areas of professional and business services, however, as well as leisure and hospitality, plus construction, all showed gains.
Otherwise, the length of the workweek, as well as overtime, showed no change, and average hourly earnings for all employees on private nonfarm payrolls rose by just 6 cents, to $24.53.
So are things getting better? For some, maybe. The number of longterm unemployed -- those jobless for at least six months -- dropped by 192,000 to a total of 3.0 million, according to the BLS report. However, it's still true that these folks account for nearly a third of all those unemployed.
Meanwhile, the good news for management is that productivity went up by 2.3 percent, and unit labor costs declined by 0.1 percent in the second quarter, the BLS reported.
And overall, personal income increased in July by 0.2 percent, even as personal expenditures fell 0.1 percent, the Census Bureau reported.
So it seem that those who have jobs are a tad more productive, and making a touch more money, but they're being more careful about their spending. All of which means that while things may not be getting worse, they're very slow in getting better.
And while it's true that many years ago, the so-called "full employment" level was when the unemployment rate was 4 percent, it's also true that many years ago, a gallon of gas cost 12 cents, a pack of cigarettes cost 35 cents, and the federal minimum wage was 50 cents an hour.
That was then. It ain't many years ago no more.
Wednesday, September 3, 2014
The New Normal
A 6 percent unemployment rate now equals full employment. But that's no consolation if you're one of the 6 percent.
Economists have long debated what is an "acceptable" unemployment rate. That is, what constitutes full employment of the workforce, considering there will always be some who are between jobs, or students who are looking for their first job, mothers (or fathers) who are returning to the workforce as their children mature, those in the military (who are not counted as part of the civilian workforce), those in prison, and others.
Zero unemployment is not possible, since that would mean everyone would be assigned a job slot and would not be able to refuse or quit. And a high unemployment rate is a symptom of economic problems. Most would agree that 10 percent is too high, and is a clear indicator of economic recession. (During the Great Depression of the 1930s, unemployment in America was as high as 25 percent, and in some parts of the world today it's in the same range.)
So the question remains: What is the "natural" rate of unemployment, meaning what portion of the workforce out of a job is an acceptable measure of "full employment" of those available for work and actively seeking work?
There was a time when 7 percent was considered an acceptable indicator that full employment had been reached. Currently, the nationwide U.S. unemployment rate is just above 6 percent, roughly the same level as before the Great Recession began in 2007, according to an analysis by the Congressional Budget Office.
In some areas, the unemployment rate is as low as 4 percent or less, but this results from a strong demand for workers in a booming industry, and that can bring high wages in the short term until the boom slows or more workers move to the region.
It's important to remember that the unemployment rate is calculated through a telephone survey, asking 1/ who is out of work, 2/ who is available for work, and 3/ who is actively seeking work. If all of the above, that person is counted as unemployed.
However, the labor force participation rate -- the number of workers with jobs -- is still down from before the Great Recession, "well below what the CBO estimates would be achieved if the demand for workers was currently stronger," the CBO reported, and the share of part-time workers who would rather be working full-time "is significantly higher than it was before the recession, and the rate of long-term unemployment is still about a percentage point above" the average before the recession.
The Bureau of Labor Statistics, meanwhile, reported that companies have been hiring, adding thousands of jobs to their payrolls every month, or an estimated 1.5 million from January through July of this year.
Is that contradictory? Not really, since the number of job-seekers may be increasing faster than the rate of new hires.
Separately, the Federal Reserve Board, in its latest Beige Book report on the national economy, noted that economic recovery is still happening, albeit slowly. Maybe that's a good thing. Slow growth may be better than a binge-and-bust pattern.
However, there's always a but. And here it comes. Banks are sitting on hoards of cash, and borrowing rates are low. But there are few takers, even at rates close to zero. Across the pond, the European Central Bank's policy of charging banks a fee to let them park their excess cash for a short time doesn't seem to be working. In effect, interest rates went below zero.
That should be an incentive for lenders to put more money to work, by making more loans to businesses and consumers, thus stimulating the economy. The Federal Reserve and the Bank of England also have kept interest rates close to zero as part of a strategy to encourage lending.
At the same time, low savings rates for bank customers should be an incentive for them to buy more stuff, but that's not happening either. After all, there's no point to saving if the interest rate is only 1 percent or less and prices are rising at the rate of 2 percent. That means you're losing by not spending.
Moreover, it would seem that Americans are doing just that. The U.S. Bureau of Economic Analysis reported that despite a marginal rise in income in July, spending fell. Here are the numbers: Disposable personal income increased $17.7 billion, or 0.1 percent, while expenditure decreased by $13.6 billion, or 0.1 percent.
So we're still waiting for the recovery party to start, as families and firms watch closely for good news. On the whole, however, this new normal may be a good way to avoid an economic hangover from too much binge spending.
Economists have long debated what is an "acceptable" unemployment rate. That is, what constitutes full employment of the workforce, considering there will always be some who are between jobs, or students who are looking for their first job, mothers (or fathers) who are returning to the workforce as their children mature, those in the military (who are not counted as part of the civilian workforce), those in prison, and others.
Zero unemployment is not possible, since that would mean everyone would be assigned a job slot and would not be able to refuse or quit. And a high unemployment rate is a symptom of economic problems. Most would agree that 10 percent is too high, and is a clear indicator of economic recession. (During the Great Depression of the 1930s, unemployment in America was as high as 25 percent, and in some parts of the world today it's in the same range.)
So the question remains: What is the "natural" rate of unemployment, meaning what portion of the workforce out of a job is an acceptable measure of "full employment" of those available for work and actively seeking work?
There was a time when 7 percent was considered an acceptable indicator that full employment had been reached. Currently, the nationwide U.S. unemployment rate is just above 6 percent, roughly the same level as before the Great Recession began in 2007, according to an analysis by the Congressional Budget Office.
In some areas, the unemployment rate is as low as 4 percent or less, but this results from a strong demand for workers in a booming industry, and that can bring high wages in the short term until the boom slows or more workers move to the region.
It's important to remember that the unemployment rate is calculated through a telephone survey, asking 1/ who is out of work, 2/ who is available for work, and 3/ who is actively seeking work. If all of the above, that person is counted as unemployed.
However, the labor force participation rate -- the number of workers with jobs -- is still down from before the Great Recession, "well below what the CBO estimates would be achieved if the demand for workers was currently stronger," the CBO reported, and the share of part-time workers who would rather be working full-time "is significantly higher than it was before the recession, and the rate of long-term unemployment is still about a percentage point above" the average before the recession.
The Bureau of Labor Statistics, meanwhile, reported that companies have been hiring, adding thousands of jobs to their payrolls every month, or an estimated 1.5 million from January through July of this year.
Is that contradictory? Not really, since the number of job-seekers may be increasing faster than the rate of new hires.
Separately, the Federal Reserve Board, in its latest Beige Book report on the national economy, noted that economic recovery is still happening, albeit slowly. Maybe that's a good thing. Slow growth may be better than a binge-and-bust pattern.
However, there's always a but. And here it comes. Banks are sitting on hoards of cash, and borrowing rates are low. But there are few takers, even at rates close to zero. Across the pond, the European Central Bank's policy of charging banks a fee to let them park their excess cash for a short time doesn't seem to be working. In effect, interest rates went below zero.
That should be an incentive for lenders to put more money to work, by making more loans to businesses and consumers, thus stimulating the economy. The Federal Reserve and the Bank of England also have kept interest rates close to zero as part of a strategy to encourage lending.
At the same time, low savings rates for bank customers should be an incentive for them to buy more stuff, but that's not happening either. After all, there's no point to saving if the interest rate is only 1 percent or less and prices are rising at the rate of 2 percent. That means you're losing by not spending.
Moreover, it would seem that Americans are doing just that. The U.S. Bureau of Economic Analysis reported that despite a marginal rise in income in July, spending fell. Here are the numbers: Disposable personal income increased $17.7 billion, or 0.1 percent, while expenditure decreased by $13.6 billion, or 0.1 percent.
So we're still waiting for the recovery party to start, as families and firms watch closely for good news. On the whole, however, this new normal may be a good way to avoid an economic hangover from too much binge spending.
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