The CEO of NuCor Steel was on Squawk Box this morning. He said actual unemployment is 13-15% if you calculate it the way they did prior to the 80s when they changed it (for obvious political reasons under Reagan/Bush). If we don’t hit double-digits it’s likely because the stats are not accurate. The reality is no one knows what is going to happen. I ask you one simple question to demonstrate the situation we are in: where is the money going to come from to drive growth if fewer people are employed and overall those who are employed (except for the top 5%) are making the same or less, and borrowing less (because the banks have stopped lending)? What is going to drive growth, much less enough growth to create jobs?

Statistics lie. And we all know who uses statistics. This recession will be like no other simply because of the fraud being committed around the world not just in the financial industry but others (see Satyam). It started with Enron and it won’t end for another decade or two until all the fraud shakes out. Keep your money under your mattress because there is no guarantee you’ll ever see it again if you invest it.

Payroll declines will soon match those of the 1981-82 recession, when U.S. joblessness last broke 10%. But a larger workforce and a healthier starting point are softening the blow

By James Cooper

The labor market hasn’t looked this gloomy since the dark days of the 1981-82 recession, one of the deepest downturns since the 1930s. At the recent pace of payroll declines, averaging more than 400,000 per month, job losses will surpass that slump’s 2.8 million drop in employment by February. What’s more, that recession lasted 16 months. The current slump, which began in December 2007, is almost certain to last longer. All this is raising serious questions about how high the unemployment rate will go this time. After all, joblessness peaked at 10.8% in the 1981-82 downturn, and weekly unemployment claims are already at levels not seen since then.

Are we headed for a double-digit jobless rate in 2009? Not unless this recession is deeper than even the most pessimistic forecasts for economic growth. Using a complex linkage between growth and unemployment developed by economist Arthur Okun in the early 1960s, economists at UBS (UBS) show that real gross domestic product would have to fall roughly 6% from peak to trough to yield a 10% unemployment rate by the end of 2009. That would imply a recession twice as deep as the 3% decline in GDP recorded in the 1981-82 downturn.

So why would a recession as steep as the one in 1981-82 result in a lower peak jobless rate in 2009? First of all, unemployment went into that recession at 7.5%, compared with 4.7% just before the current downturn. Productivity growth plays a key role in the relationship between growth and unemployment because it can influence the starting point for joblessness.

An increase in productivity growth over the past decade has enabled the economy to grow faster without igniting inflation. That allowed Federal Reserve policy to be more accommodative to growth, letting the jobless rate move lower without triggering inflation worries and tighter policy. Reflecting that lower starting point, the UBS economists note that a recession today as deep as the one in 1981-82 would imply a peak jobless rate of about 8.25%.

The rise in unemployment has picked up in recent months as businesses have reacted to the plunge in consumer spending. Until late summer, job losses had been mild because companies entered the recession having hired cautiously. Capital spending and inventory policies had also been conservative. Now the economy’s weakness has overwhelmed those moderating factors, forcing steeper cuts.

That means the most severe losses in payrolls will be happening now and in the months ahead as companies slash costs and try to cushion their bottom lines. Still, comparisons with the 1981-82 experience must be tempered by the growth of both payrolls and the labor force, which includes workers with jobs and those looking for jobs. For example, payroll losses totaling 2.8 million back then, a 3.1% decline, would be equivalent to a drop of 4.3 million jobs today. Through November, payroll losses totaled 1.9 million, and December data, due on Jan. 9, will most likely raise that number.

Layoffs, as illustrated by new claims for unemployment insurance, zoomed higher at the end of 2008, portending more big payroll declines and higher unemployment in coming months. December claims averaged 573,000 per week, a level not seen since the peak monthly rate of 667,000 in 1982. However, that comparison exaggerates the implication for the unemployment rate. Adjusted for the 42% growth in the labor force, claims would still be less than their peak after the 1990-91 recession, when the jobless rate topped out at 7.8%. Today’s equivalent of the 1982 apex in claims would be about 1 million per week.

The current recession could easily end up as deep as the 1981-82 downturn in terms of the fall in GDP. But given the massive policy efforts by the Federal Reserve, along with fiscal stimulus that may equal more than 2.5% of GDP in each of the next two years, a drop-off in growth big enough to push the jobless rate to 10% seems highly unlikely. Clearly, this is a bad recession. But not that bad.

Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012

Trend forecaster, renowned for being accurate in the past, says that America will cease to be a developed nation within 4 years, crisis will be “worse than the great depression”

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Technorati Tags: 1930s, 80s, Dark Days, Declines, Double Digits, Downturn, Fraud, James Cooper, Job Losses, Joblessness, Mattress, Nucor, Nucor Steel, Payroll, Reagan, Recession, Slump, Squawk Box, Unemployment Claims, Unemployment Rate, Workforce

We are in captivity and locked into society. You are living in an illusion of wealth…..

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
Thomas Jefferson, (Attributed)
3rd president of US (1743 - 1826)

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Technorati Tags: Banking Institutions, Captivity, Changing Climate, Chasing After The Wind, Economic Cycle, Entire System, Freight Train, Great Depression, Inflation And Deflation, Logic Dictates, Phenomenal Pace, Ponzi Scheme, Private Banks, Repercussions, Roaring 20, Standing Armies, Stock Market, Stronghold, Way Of Thinking, Woodrow Wilson

BEIJING, Jan. 8 (Xinhua) — An estimated 600,000 migrant workers have left China’s southern Guangdong Province due to unemployment in 2008 after the worldwide financial crisis hit the region, a government official said Thursday.

Guangdong Province Vice Governor Huang Yunlong revealed the statistics at a press conference after the country’s top economic planner released a long-term plan to develop the Pearl River Delta.

Guangdong is the forefront of the country’s reform and opening policy. Since 1978, the province’s annual gross domestic product (GDP) has increased by an average of 13.45 percent, 3.5 percentage points higher than the nation’s average. The Pearl River Delta in southern Guangdong is the country’s manufacturing and exporting center.

However, the financial crisis has brought Guangdong “the most difficult year after the 1998 Asian financial crisis”, Huang said.

“More than 143,000 migrant workers left Guangdong in the first half of 2008. By the end of last October, the number reached 500,000. The Guangdong statistics bureau estimated that a total of 600,000 migrant workers might have left the province last year,” he said.

Other major economic indicators in Guangdong, including GDP, importing and exporting, also slowed in 2008. Local fiscal revenue slowed down 9 percentage points over that of 2007.

Yet Huang insisted that Guangdong had a good ground for future development.

In 2008, Guangdong’s GDP grew 10.1 percent year-on-year, despite a slowed growth rate by 4.6 percentage points. The GDP per capita increased 8.7 percent.

Foreign trade industry, a driving force of the province’s economy, increased by 8.2 percent, of which exporting and importing grew by 5.6 percent and 10.1 percent, respectively. However, the total volume of importing and exporting slowed 12.1 percentage points over 2007.

According to the Guangdong Statistics Bureau, 100,600 companies were established in 2008, while 62,400 had been eliminated. The province now has more than 996,900 registered companies.

Meanwhile, Guangdong has been trying to improve conditions for migrant workers. In 2008, 10.55 million migrant workers joined medical insurance, 13.5 million are included in work injury insurance and 4.58 million joined unemployment insurance programs.

“These figures are all No. 1 in China in treating migrant workers,” Huang said.

China Cabinet urges local gov’ts to create job opportunities for migrant workers

BEIJING, Dec. 20 (Xinhua) — China’s State Council, the Cabinet, Saturday urged local governments to create job opportunities for the migrant workers who had been unemployed and returned to their home towns due to the impact of the global financial crisis.

In a circular distributed among provincial governments and ministry-level government bodies, the Cabinet said the migrant worker issue was a pressing and important task as it was related to the country’s economic and social development as migrant workers were under increasing unemployment pressure as the financial crisis had a negative impact on domestic enterprises.

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Technorati Tags: Asian Financial Crisis, Driving Force, Economic Engine, Economic Indicators, Economic Planner, Future Development, Gdp, Gdp Per Capita, Global Financial Crisis, Government Official, Gross Domestic Product, Guangdong Province, Migrant Workers, Pearl River, Pearl River Delta, Percentage Points, Statistics Bureau, Vice Governor, Worldwide Financial Crisis, Xinhua

Right now there is only one number in USA that the manipulators of power can’t (presently) get their hands on. That’s how much people will pay for a house in a free and open market.

For years Fannie and Freddie distorted that number (they were set up so people could afford to own homes, their effect was to radically increase the price of housing – figure that one out), but eventually that proved to be an unsustainable scam. Ask the Master Scammer Mr. Madoff, he knows, eventually every scam runs out of money.

Fannie and Freddie “temporarily” ran out of money, sure they were dressed up as instruments of the Free Market, maybe before 1987 when they changed the accounting rules for measuring inflation they were, but from that point they became instruments of crony capitalism that sucked all the blood out of America.

If CHANGE is really the objective then in Washington nothing changes, the words are the same, “FOLLOW THE MONEY”. And make sure it’s counted properly.

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