24/7 Wall St.

There were two speeches by senior members of the US government about unemployment yesterday. The one that received the most attention was Federal Reserve chief Ben Bernanke’s talk at the Economic Club of New York. Investors and economists had anticipated the event for weeks. They shouldn’t have bothered. Bernanke said that the economy would have a positive limp next year, but that there is no reason to think that the recovery will have enough power to rebuild the jobs market. In his words, “The best thing we can say about the labor market right now is that it may be getting worse more slowly.” That may not last for much longer if improved access to credit, an increase in exports, and a miraculous reversal in consumer spending patterns do not all happen soon. Bernanke has to be a cheerleader, at least to the extent that it will not make him look foolish. His comments about the modesty of the recovery gave the sense that he was writing his own epitaph. The Fed and the government stimulus package have not been able to offset the severity of the downturn. Read More »

Swine flu vaccinations have been slow to get to those who want to be treated. The Centers for Disease Control and Prevention says that about 22 million American have contracted the disease and of those almost 4,000 have died.  The number of people who have had to go to hospitals because if the illness is less than 100,000.

It is remarkable that more thsn  7% of Americans have the flu or have had it, and the effects on the medical system and economy have been nonexistent. The death rate from the disease appears to be lower than the seasonal flu. There have been very few reports that companies have had to close large facilities or that earnings may be undermined by the spread of the H1N1 virus. Read More »

Some experts raised the issue of how long the recovery can last as unemployment went over 10% last week and the total number of people out of jobs or looking for full-time work topped 17% of the able-bodied population. It is a very reasonable question. The term “double dip” recession is still thrown around daily by economic pessimists. Their optimistic counterparts believe that American exports will pick up because of less expensive domestic labor, a weak dollar, and the recovery of consumer spending in large developing nations like China. Businesses will begin to restock inventories because they are at historic lows and the firms, especially retailers, cannot be caught short on supplies if there is a surge in customer buying, for whatever reason. But, the most impressive argument for better GDP numbers near-term is that the federal government has bought them with its $787 billion spending package. Read More »

The $787 billion economic stimulus package is meant to save or create 3.5 million jobs. That goal may be much less important than it was when the package was first approved by Congress. Unemployment will go over 10% later this year and could average that though 2010. The stimulus package cannot come even close to plugging that hole.

The Administration is fond of putting out reports and making statements about how well the $787 billion investment is working. It is now clear that some of that was based on false data. Read More »