Conspiracy?

It is kind of interesting times we live in. 

Last year, as covid-19 hit, there were many who stated various so-called conspiracy theories: 

The virus was man made. 

Vaccine passports were going to be a thing. 

The stimulus checks and plus up of unemployment benefits were going to create a labor shortage once the economy started showing signs of recovery. 

Opposing Forces

If we are extremely lucky these two pieces of news will be able to coexist.

Jobless claims dip:

Fewer Americans filed for their first week of unemployment benefits last week, marking continued – but still slow – improvement in the job market.

About 390,000 people filed for initial unemployment benefits in the week ending Nov. 5, the Labor Department said Thursday.  The number of claims fell 10,000 from the revised 400,000 in the prior week, and is now at the lowest level since April 2.

…

“The passing of some of economic weakness is starting to show in a better labor market,” said Michael Gapen, senior U.S. economist at Barclays Capital.

The four-week moving average if initial claims, used to smooth out volatility, is teetering exactly at 400,000. While not an exact science, that number serves as a rough estimate for economists, who say claims below 400,000 could mean job growth has finally become strong enough to start bringing the unemployment rate down.

In a report last week, the government said the unemployment rate dipped to 9% in October, down from 9.1% the month before. (Source: Yahoo News)

Home foreclosures increases:

The number of foreclosures climbed in October, as mortgage lenders started to work through the paperwork that had delayed new filings for much of last year.

…
 

RealtyTrac said one in every 563 U.S. home had either a default notice, a scheduled auction or a bank repossession filing during the month.

“The October foreclosure numbers continue to show strong signs that foreclosure activity is coming out of the rain delay we’ve been in for the past year as lenders corrected foreclosure paperwork and processing problems,” said James Saccacio, RealtyTrac’s CEO. (Source: Yahoo News)

Considering that our economy is pretty much based on a health housing market, I am concerned these two numbers (declining unemployment and increasing foreclosures) are going to struggle against one another.  As long as unemployment stays high, people just aren’t going to buy homes. As long as people don’t buy homes because of fears the housing market still hasn’t reached bottom unemployment is going to have a difficult time recovering.

The final paragraph of the linked article on foreclosures says it best:

The best hopes for stopping foreclosures is an improvement in the overall economy, especially in the battered real estate and labor markets. But with so many foreclosed homes weighing on the market, and with unemployment still at 9% and consumer confidence low, even mortgage rates near record lows aren’t enough to fix the problem caused by the bursting of the housing bubble. (Source: Yahoo News)

Jobless Claims Rise "Unexpectantly"

During our supposed period of recovery we continue to see news that just doesn’t support the contention that our economy is in fact recovering. The most recent news is jobless claims which rose unexpectedly (of course) last week by 9,000.

Initial claims for state unemployment benefits climbed by 9,000 to 439,000, the Labor Department said on Thursday.  Economist had expected claims to come in at 415,000.

The claims report, which covers the survey period for the government’s closely watched data on non-farm payrolls for June, came a day after the Federal Reserve gave a downbeat assessment of the economy.

Economic Recovery Still Dragging

A couple of stories about are economy.

First, the job news and economic recovery is not so good. Jobless claims are up again and the economy grew at a very anemic rate of 1.8% last quarter.

Second, the foreclosures are a HUGE drag on the economy. Some cities are seeing home values depressed as much as 50% due to the amount of foreclosures and short sales on the market. Until this issue has been fixed, our economic grow will be muted.

Weekend Links (I Know, A Little Late)

LOCAL:

1. Wear and tear may have caused 737 hole. The National Transportation Safety Board investigators say they have found that the rivet holes appear to be too big and misshapen from the 737 that tore open last month.

2. Housing market still struggling. Foreclosures, persistent high unemployment, and just overall uncertainty in the housing market continues to drive down home values. Seattle saw a January decrease of 1.9% which has dropped home prices below June 2004 values.

3. The Sierra Club, stick to the Wilderness. In what could be considered a changing paradigm, the Sierra Club is teaming with Seattle Mayor Mike McGinn to fight the waterfront tunnel as a replacement for the crumbling Alaskan Way Viaduct. Over the past several months McGinn has stated his primary reason for vetoing the City Council’s recommendations for the tunnel build was his concerns over cost overruns.  Turns out this former state director of the Sierra Club might have other reasons beyond costs for vetoing the tunnel.

Bush Tax Cuts

Well, it looks like Obama has finally caved to the demands of the American people. It’s about dang time. For a little while, it looked like he was going to go against the will of Americans once again, like he did with Health Care, Stimulus, and Wall Street bailouts. And now that the compromise has been reached, the progressives are up in arms. Facts just don’t seem to get through to these people, or at least they don’t care about the facts. Economic prosperity has almost always followed big tax breaks. We had growing economies after the Kennedy, Reagan, and Bush tax cuts. And hard times follows tax increases. If you look at the trend of the Great Depression you should note the country was coming out of the troubles and then FDR passed what was then the largest tax increase and our economic trend plummeted. Taking money away from the people who spend it is not the path to economic growth. The government cannot spend money as efficiently as individuals. When you and I spend money, we have the ability to stretch the dollar further and across a wider scope. The government is utterly inefficient at spending money so it doesn’t go as far and doesn’t have the same impact as an individual spending the money.

On the downside (sort of) is the extension of the unemployment benefits.  As someone who is currently unemployed, but not receving benefits, I sort of understand why these are being extended. But I can't overcome this feeling that we are forcing people to look for work. I have too many anecdotal stories about people getting benefits and either not looking for work or working under the table. This bothers me a great deal.  BTW: I don't receive any benefits because my military retirement check is too big. My expenses have barely changed, but my income has been reduced by almost two-thirds.  I am about ready to go work at McDonalds just to have some additional income.