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Unemployed people search for jobs in an employment office in the southern Californian town of El Centro.
Just a heads-up: the Bureau of Labor Statistics will release preliminary employment numbers for October tomorrow morning. Typically, observers look to the ADP report for advance insight into what BLS might report. This is from the Wall Street Journal:
Hiring by private-sector employers remained modest last month. The ADP National Employment Report showed employers added 110,000 jobs in October, down slightly from the revised 116,000 jobs added in September.
For the past few months, the data has been kind of heavily doubted and debated before the BLS official stats emerge. The concern has been that expectations will be gravely disappointed. 100,000 new jobs added will suddenly become...zero!
However, the anxiety seems to have moderated. Initial jobless claims are starting to look like they're falling off, preparing move below 400,000 for a sustained period as GDP growth picks up. The upshot is that the economy isn't getting worse, but it isn't really poised to blast off, either.
This CNBC video features the musings of Barry James, who manages the James Golden Rainbow Fund, which "seeks to provide total return through a combination of growth and income and preservation of capital in declining markets." More to the point, Barry was asked to consider whether we're currently experiencing a replay of the 1970s, a decade that will be forever known for "Saturday Night Fever," the Bicentennial, punk rock...and stagflation, a scary economic phenomenon that combines low growth and high inflation.
We certainly have the low growth part right now, even though the third quarter 2011 data showed that U.S. GDP was 2.5 percent, much better than expected. The high inflation side, on the other hand, hasn't really materialized. Our current rate is 3.9 percent, just slightly above the historic average of 3.38 percent. And this is with the Federal Reserve pouring money into the economy.
The 17th Annual California State Fullerton Economic Forecast did not paint a pretty picture of the national of state economy for the next few years.
Economists Anil Puri and Mira Farka took the stage at the Hyatt Regency in Irvine this afternoon to deliver the 17th annual California State Fullerton Economic Forecast. At this point, given the state of the economy, no one expected the outlook to be good. The news that U.S. GDP growth picked up somewhat in the third quarter, to 2.5 percent, took some of the edge off. The theme of last year's presentation was "Recovery," so it made sense that the question asked this time around was "Where's my boom?"
Yeah, about that boom...
Much like the UCLA Anderson forecast, released in September, the Fullerton forecast — which provides a comprehensive picture of the national and Southern California regional economy — tackled the sluggish nature of the recovery from the 2008 Financial Crisis and subsequent Great Recession. What are economists at UCLA and Fullerton worried about? Well, not about finding a boom. More like avoiding a stall:
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Americans hold up 'I want to work' placards as they join a protest of several thousand people demanding jobs outside City Hall in Los Angeles on August 13, 2010. A Labor Department report showed 131,000 jobs were lost in July and the unemployment rate remained stuck at 9.5 percent.
Here's what we know: unemployment nationally is stuck at 9.1 percent; job "creation" is stuck at less than 100,000 per month; applications for unemployment benefits are stuck above 400,000 per month; and GDP growth is stuck below 3 percent.
And that's just four "stucks." Add in numerous other datapoints and you get a Big Stuck — the story of the American economy.
It's far worse in California, where we're stuck on everything that the nation is stuck on, but because of our thousands of unemployed construction workers have an jobless rate of 12 percent.
There are exactly two sets of ideas about how we can get out of this quagmire. On the right, the argument is to cut taxes, reduce government spending, and eliminate regulations that encumber business activity. On the left, the argument is to raise taxes on the wealthy while cutting them for the poor and middle-class, spend more on economic stimulus, and more rigorously regulate high-risk financial and business activity.
The UCLA Anderson Forecast is out for the third quarter of 2011 and through 2013. The story for the country as a whole is an "L" shaped recovery from the Great Recession — which basically feels like no recovery at all. For California, the story is the same — except that the eventual recovery will probably be even more sluggish.
The national economy is limping along at near-stall-speed: barely growing, with a prediction for 0.9 percent GDP growth through early 2012; and creating jobs at far to low a rate to lower the employment rate below it's current 9.1 percent. In fact, the Anderson Forecast is predicting unemployment will go up in the short term, to 9.5 percent, before falling to a still-mortifying 8.6 through 2013.
You look at those numbers say "Oh, man, what are we gonna do?" Then you look at the California outlook and you get really depressed. Our growth rate is at 0.7 percent, and our unemployment rate stays in double-digits until 2014. Plus, the state is beginning to split into two distinct economic geographies, with the coastal regions mounting a modest recovery while the inland regions go from stall to, potentially, stagnation.