U.S. Creates No Jobs In August: Zero, Nothing

WASHINGTON — The struggling US economy added no jobs in August, a far worse reading than expected, official data showed Friday.
The Labor Department said the unemployment rate remained unchanged at 9.1 percent for a second month amid the zero job growth.
After a series of weak economic data, analysts had lowered their expectations for job growth, with the average estimate at net 70,000 in August.
That would be well below the 100,000 seen as necessary to support a steady unemployment rate, according to Briefing.com economists.
Employment in the private sector, which has been the main engine for jobs growth as revenue-strapped governments shed workers, "changed little" in most major industries, the Labor Department said.
The unchanged jobless rate was expected.

Should President Obama Resign From His Office?

Douglass MacKinnon -  As our economy continues to self-destruct; U.S. credit is shockingly downgraded; home prices remain at historic lows; unemployment rises; small businesses continue to close their doors; public-employee-bloated cities, towns, states and employers continue to default; race riots flare, Mexican drug cartels cross our sovereign border at will to establish ultraviolent operations; test scores for public school children continue to plummet; the health care system falls under the control of a failed socialist model; terrorism rises, and the world outside our borders spirals into deeper and more dangerous chaos, a serious and very legitimate question needs to be asked:
In the best interests of our nation and the American people, should President Obama resign his office?
Supporters of the president will be offended by the very question and more than likely fire the usual "racist" accusations my way. But it's a question that at least needs to be debated.
Even if Obama loses the election in November 2012, he will still remain in office until Jan. 20, 2013. If, as many people now believe, Obama is in way over his head and dramatically ill-equipped to handle the critical responsibilities of his office, then it seems logical to assume he can still do quite a bit more damage to our nation from now until then.
As to why he is so far over his head and so unqualified to be president, one of his strongest supporters just outlined the answer in a lengthy article for the liberal (and Obama-defending) New York Times.
In the piece, Drew Westen, a committed liberal, articulated his hopes and disappointments of Obama. By doing so, he (in a Nixon-going-to-China moment) pinpointed exactly why the Obama administration has been such an unmitigated disaster.
"Those of us who were bewitched by his eloquence on the campaign trail chose to ignore some disquieting aspects of his biography," Weston wrote, noting that Obama:
Had accomplished very little before he ran for president, having never run a business or a state.
Had a singularly unremarkable career as a law professor, publishing nothing in 12 years at the University of Chicago other than an autobiography.
Had, before joining the U.S. Senate, voted "present" (instead of "yea" or "nay") 130 times, sometimes dodging difficult issues.
Bingo! This is an incredibly important moment and revelation. While conservatives have been making this exact same point for years, now that a liberal is saying it in the most powerful liberal publication in the nation, maybe others will not only start to pay attention, but give these "disquieting aspects of his biography" the scrutiny they deserve.
In one paragraph, Westen has pulled back the curtain to reveal a man so far out of his element as to be a true threat to the well-being of our nation.
This is not a game. This is not a TV show or a horror movie we can turn off. This is the United States of America coming off the rails and cascading toward true anarchy because in large part, our president, as outlined by a liberal in the liberal bible, "accomplished very little before he ran for president" ... had "never run a business or state" ... "had a singularly unremarkable career as a law professor" ... and is well-known for "dodging difficult issues."
Honestly, if more Americans knew of these indisputable facts, it's hard to see how Barack Obama could be elected mayor of a small town in Alaska, let alone president of the United States. And yet . .. here we are.
Since liberals and liberal publications are now starting to admit that the president may not be up to the job, maybe one of them can then offer up a scenario to get us out of this mess. Something like: have Joe Biden resign, have Obama appoint a competent and vetted vice president, and then have President Obama resign.
Liberals could do all that while finally conceding that real-world experience does matter and that Obama brought none to the White House. Hence, the train wreck.

Twenty Percent Of American Men Don't Work? Where's The American Outrage

FORTUNE -- Has anyone in Washington noticed that 20% of American men are not working? That's right. One out of five men in this country are collecting unemployment, in prison, on disability, operating in the underground economy, or getting by on the paychecks of wives or girlfriends or parents. The equivalent number in 1970, according to the McKinsey Global Institute, was 7%.
Both political parties have proven their talent in ginning up outrage over the federal budget, whether it's spiraling spending or millionaires collecting tax breaks on private jets. So today a tiresome, and dangerous, debt drama unfolds in real time, freezing leaders in both parties in their respective partisan corners. Are these same leaders capable of confronting the fearsome fact that 4.3 million Americans have been jobless not just for months--but going on years? We are in danger of losing a generation of work-habituated Americans, especially men--and lawmakers can't see their way past November, 2012.
This is a conversation that goes beyond a stubbornly high 9.2% unemployment rate and last week's unnerving news that company layoffs are ticking up again. While we all know there is a job shortage, employers are increasingly talking about a "talent shortage" -- they can't find qualified workers even for the jobs that are available. "We found that 30% of companies surveyed had openings for six months or longer, and can't find the right person," says Susan Lund, research director for the McKinsey Global Institute.
With slack demand, companies can afford to be pickier about who they hire -- and commonly steal away already-employed workers rather than dip into a riskier pool of people who have been out of work for months or years. "As long as there is slow demand, [they say] 'I can delay hiring and when I do hire a person it's the perfect person,'" says Jeff Joerres, president and CEO of ManpowerGroup.
Google (GOOG) has anywhere from 1,500 to 2,500 jobs open at any given time that take months and months to fill, says Laszlo Bock, the company's senior vice president of people operations. And it's not just computer and engineering skills that companies need. Frits van Paasschen, CEO of the Starwood (HOT) hotel chain, says "we have a whole set of jobs"—like international tax accountant—"where we can't find" qualified applicants. Joerres says the No. 1 need for companies right now is sales person: Someone skilled not only in personal relations but also able to master the details of an integrated supply chain.
All three executives spoke at an Atlantic magazine-sponsored jobs forum last week that exposed a stark disconnect between the jobs that are available—and the increasingly rusty skill-sets of those who are unemployed, especially for long periods of time. People have "no idea what skills they should have to find a job," says Bock.
That's a place where businesses have to start stepping up to the plate. It's true that McKinsey reports an expansion of training programs. And there are companies like Delta partnering with a state university to produce airline-ready managers and associations like the Manufacturing Institute working with community colleges on certificate programs. But Joerres says a lot of companies don't offer training for prospective employees because—with slack consumer demand and weak job market—they don't have to. "If they don't have to, they aren't going to," he says.
The longer a worker is unemployed, the farther he or she falls behind in sellable skills in a fast-paced global economy. But there is an even more fundamental question behind the rise in long-term employed rates: Are our public policies contributing to the rise of millions of Americans who lose the habit of work?
Whether you believe (as some economists do) that unemployment insurance discourages immediate job searching—or not—it's worth asking whether the American "unemployment" system should more closely follow a program like Germany's "re-employment" system, which cut stubborn long-term unemployment rates in that country.
And then there is federal disability insurance, where the percent of American adults collecting checks has doubled since 1989 -- even though the American population isn't any less healthy, or more mentally disabled (the fastest growing disability claim). "It is difficult to overstate the role that the [disability program] plays in discouraging…the ongoing employment of non-elderly adults," concludes a study by MIT's David H. Autor and the University of Maryland's Mark Duggan.
If that's not enough to grab the attention of political leaders, here's a 10-year peek into the future of the U.S. labor force if current trends continue: A continued expansion of workers collecting income from disability rolls plus another four million high school dropouts--on top of today's 15.4 million.
And yet, according to a ManpowerGroup report, at the same time companies will face an "acute talent shortage."
Where's the outrage over that?

Gallup Poll: Obama Approval Rating Hits-All Time Low For The Poor

(CNSNews.com) - President Barack Obama’s approval has hit an all-time low among the poorest Americans, according to the Gallup poll. Meanwhile, when compared to the other income brackets reported by Gallup, Obama's approval is highest among the richest Americans.
In the week of June 20-26--the most recent week published by Gallup--only 45 percent of Americans in the lowest income bracket reported by the polling company (those earning less than $2,000 per month) said they approved of the job Obama was doing as president.
Gallup publishes the president’s weekly approval numbers among Americans in four income brackets: those earning less than $2,000 per month, those earning between $2,000 and $4,999 per month, those earning between $5,000 and $7,499 and those earning more than $7,500.
In Gallup's most recent survey, Obama had majority approval in none of these income brackets.
However, of the four, his approval was highest--47 percent--in the richest bracket, those earning more than $7,500 per month.
His approval rating last was 42 percent among those earning $2,000 to $4,999 per month and 43 percent among those earning $5,000 to $7,499 per month.
Prior to last week, when it hit an all-time low of 45 percent, Obama’s approval rating among the poorest bracket reported by Gallup had never dropped below 47 percent. It had hit that level twice: first in the week of Nov. 8-14, 2010; then again in the week of April 25-May 1.
In addition to being at an all-time low among the poorest Americans, Obama’s approval rating is also nearly at an all-time low among the next poorest group of Americans reported by Gallup, those who earn between $2,000 and $4,999 per month. The only time his approval among this group was lower than the 42 percent it was last week was in the week of Aug. 23-29, 2010, when it dropped to 41 percent.
According to Gallup, Obama’s highest approval rating among the poorest Americans came in the week of March 16-22, 2009, just two months after he was inaugurated and one month after he signed his $787-billion economic stimulus law. That week, his approval was 68 percent among Americans earning less than $2,000 per month.
In March 2009, the unemployment rate in the United States was 8.6 percent.  This month, it is 9.1 percent.

McDonald's Jobs Recovery: 1 Million Job Applications, 62,000 Hired, Unemployment Rate 9%

Kurt Nimmo - The Federal Reserve designed 2008 economic takedown is now claiming millions of victims. It is eroding the middle class and slowly turning the United States into a second rank country working its way toward third world status.
In June of 2009, the government announced the economy had entered a recovery after a historical looting by a cartel of international banksters led by the Fed and the Treasury.
It’s turns out to be a McRecovery.
The Labor Department announced today the private sector has created jobs at the fastest pace since 2006. “Nonfarm payrolls rose 244,000 last month, the most in 11 months, the Labor Department said on Friday. The private sector accounted for all of the job gains last month, with payrolls rising 268,000, the largest rise since February 2006,” reports CNBC.
According to the data, McDonald’s was responsible for the modest gain. “McDonald’s and its franchisees hired 62,000 people in the United States after receiving more than 1 million applications,” the Star Tribune reports.
Employment at service-providers rose 200,000 in April after a 184,000 gain the prior month, according to Bloomberg.
Service providers like McDonald’s, not decent paying factory or even office jobs. Factory jobs were long ago exported to slave labor gulags in China and Asia. India now absorbs everything from programming and engineering jobs to telemarketing and customer service.
Burger flipping represents economic growth for Bernanke and the Federal Reserve. “The labor market is improving gradually,” Bernanke told reporters during the first-ever press conference following a Federal Open Market Committee meeting. “We would like to make sure that that is sustainable. The longer it goes on, the more confident we are.”
From The Daily Ticker:

– There are 8.5 million people receiving unemployment insurance and over 40 million receiving food stamps.
– At the current pace of job creation, the economy won’t return to full employment until 2018.
– Middle-income jobs are disappearing from the economy. The share of middle-income jobs in the United States has fallen from 52% in 1980 to 42% in 2010.
– Middle-income jobs have been replaced by low-income jobs, which now make up 41% of total employment.
– 17 million Americans with college degrees are doing jobs that require less than the skill levels associated with a bachelor’s degree.
– Over the past year, nominal wages grew only 1.7% while all consumer prices, including food and energy, increased by 2.7%.
– Wages and salaries have fallen from 60% of personal income in 1980 to 51% in 2010. Government transfers have risen from 11.7% of personal income in 1980 to 18.4% in 2010, a post-war high.

High unemployment and the restructuring of the labor market under corporatist globalism have eroded middle-class incomes after decades of stagnation, explains the New America Foundation. Meanwhile, the cost of health care, education, and other essential middle-class goods have increased, consuming a larger share of household income and driving millions to the poor house.
None of this is a mistake or the result of government incompetence. Since its inception in 1913, the Federal Reserve has slowly but methodically destroyed the American middle class by printing money and deliberately creating inflation.

“Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve’s inflationary policies. This represents a real, if hidden, tax imposed on the American people,” Ron Paul notes. “The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial ‘boom’ followed by a recession or depression when the Fed-created bubble bursts.”
Despite the addition of McJobs reported today, the economy continued its slow decline. “The Labor Department reported the jobless rate climbed to 9.0 percent in April from 8.8 percent in March and 244,000 nonfarm jobs were added to the world’s largest economy,” reports AFP.


9.0 percent, of course, is way off the mark. According to the SGS Alternate Unemployment Rate based on alternate data, the real unemployment rate is well over 20 percent and closing in on Great Depression era levels.

Romney Blame Obama For Record High Gas Prices

Kurt Nimmo - Sick and tired of high gas prices? It’s all Obama’s fault, according to Mitt Romney, who pumped his own gas on Friday as the cameras rolled.

During a dinner sponsored by Americans for Prosperity, Romney said he wants to hang the “misery index” around Obama’s neck.
“You remember during the Ronald Reagan/Jimmy Carter debates? That Ronald Reagan came up with this great thing about the ‘misery index,’ and that he hung that around Jimmy Carter’s neck, and that had a lot to do with Jimmy Carter losing. Well, we’re going to have to hang the ‘Obama Misery Index’ around his neck. And, I’ll tell you, the fact that you’ve got people in this country, really squeezed, with gasoline getting so expensive, with commodities getting so expensive, families are having a hard time making ends meet. So, we’re going to have to talk about that, and housing foreclosures and bankruptcies and higher taxation,” he said.
Romney knows the president has little to do with gas lines and rising commodity prices. He’s just playing the establishment political game where the guy from the other party – that is to say the flip-side of the same party – takes the heat.
If we are unfortunate enough to end up with Romney in the White House, it will be his turn to take heat from Democrats. It’s a tag team game. Meanwhile, nothing changes and the nation continues its slide down the tubes.
Prices are sky high on gas, food, and commodities because the U.S. dollar is being sabotaged by the Federal Reserve and the bankers who own it. Romney’s misery index was created by the Fed.
Even CNBC, usually an obedient lickspittle, admits the Fed is to blame: “A combination of factors accounts for the weakness, with the Federal Reserve’s easy-money policies, huge national debts and deficits and the consequential possibility of a debt downgrade because of the financial mess in Washington leading the w

Obama blames the speculators for high gas prices. He promises to unleash Eric Holder and the Justice Department on them. “We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Obama read from his teleprompter screen as the gathered plebs politely applauded.
It’s not the speculators who are to blame. It is the Federal Reserve with the complicity of Congress and Obama, who are after all merely grocery clerks for the bankster elite.
Dollar devaluation is a direct result of the Federal Reserve printing funny money out of thin air in order to pay an engineered annual federal deficit. In fact, it no longer even prints the money – it just enters a few more digits in a computer.
“There are three primary culprits for today’s high gas prices, and none of them are speculators,” writes Craig Steiner. “The Federal Reserve is directly responsible for the rising prices of oil and other commodities. It is the Federal Reserve that has engaged in QE1 and QE2 and, as a result devalued our dollar which in turn raises prices of commodities such as oil that are priced in dollars.” Obama and Congress carry out the ruinous policies designed by the Federal Reserve.
“It is Obama and Congress that are causing the federal government to spend so much money that new dollars have to be printed to satisfy its borrowing needs. If the government weren’t borrowing so much money, the Federal Reserve wouldn’t be compelled to print money so we wouldn’t be facing the price inflation we are facing in oil and other commodities.”
In fact, the Fed is not compelled to do anything. It designed the Federal Reserve system specifically to lock the nation into a perpetual state of debt slavery.
Earlier this month, presidential hopeful Romney made it clear he has no intention of going after the Federal Reserve. “I’m not going to spend my time going after Ben Bernanke. I’m not going to spend my time focusing on the Federal Reserve,” he told Larry Kudlow. “I think Ben Bernanke is a student of monetary policy,” Romney added, “he’s doing as good a job as he thinks he can do.”
Romney and the Republicans will blame Obama and the Democrats while Obama and the Democrats blame Wall Street and the speculators who have packed Obama’s cabinet since day one. It’s a shell game, a parlor trick, a sleight of hand.
If the American people continue to allow this charade to continue, they deserve to be cut down by the financial Sword of Damocles now hanging by a thread over their heads.
It looks like Ron Paul will run. The American people better get behind him. It’s probably our last chance to save the nation and prevent the slide into grinding poverty and third world status.

Gas Prices 25 Cents From A Record High: Media Don't Blame Obama

Julia A. Seymour - The average price for a gallon of unleaded gasoline hit $3.86 on April 25, more than $1-a-gallon higher than a year earlier and less than 25 cents away from the record high price of gasoline set in July 2008.

In fact, per gallon prices are more than $2 higher than when Obama took office Jan. 20, 2009. Yet the president has been nearly exempt from criticism on the issue of rising prices, despite a six-month drilling moratorium and more regulatory hurdles for industry.

The Business & Media Institute found that out of the 280 oil price stories the network evening shows have aired since the 2010 Deepwater Horizon oil spill, only 1 percent (3 stories) mentioned Obama's drilling ban or other anti-oil actions in connection with gasoline prices.

Instead of asking whether Obama's anti-oil policies could be increasing the cost of gas, the networks blamed other factors such as Mideast turmoil or the "money game" played by speculators. Certainly, the turmoil in Libya, Egypt and surrounding nations has increased worries about oil production and can influence the price. But the networks also should have looked for explanations much closer to home, like Obama's many regulatory actions taken against the oil industry.

First there was the drilling ban, which was later overturned by federal courts as illegal. Seahawk Drilling, a Texas-based shallow-water drilling company cited that moratorium as the cause of its bankruptcy filing saying, they "have been adversely affected by the dramatic slowdown in the issuing of shallow-water permits in the U.S. Gulf of Mexico following the Macondo well blowout."

According to The Heritage Foundation, the Obama administration moved on to a de facto moratorium after the ban was overturned. Add to that the EPA's desire to regulate the industry's greenhouse gas emissions and new environmental regulatory hurdles for the Keystone XL pipeline, which would transport crude from Canada to the U.S. and create many American jobs.

Despite all of these actions on the part of the Obama administration, ABC, CBS and NBC evening news shows have barely mentioned them in stories about rising gas prices.

Obama, Boehner Budget Deal Increases Federal Deficit

Kurt Nimmo - It should be obvious by now. The government has absolutely no intention of ever decreasing spending, reducing the deficit, and eliminating the national debt. It plans to borrow more money. It wants to turn your children and grand children into impoverished debt slaves.
Obama’s budget “deal” speech: 43 minutes of doublespeak, lies, and feel-good propaganda.

On the heels of an onslaught of propaganda claiming establishment Republicans and Democrats are working together to slash the budget and reducing spending comes an estimate by the Congressional Budget Office. It notes that a bill due for a vote in the House today will cut federal outlays by a paltry $352 million through September 30, or by less than one percent. About $8 billion in cuts to domestic programs and foreign aid will be offset by an increase in so-called defense spending.

In fact, as the Washington Post notes, when the cost of occupying Iraq and Afghanistan, attacking Pakistan on the side and bombing Libya and other war on (manufactured) terror ventures are factored in, the budget increases by $3.3 billion.

Boehner and Obama have presided over a budget increase, not a decrease as they claim.

Congress critters in the House, meanwhile, could not help but pat themselves on the back. “With this bill we not only are arresting that growth but we are reducing actual discretionary spending by a record amount, nearly $40 billion in actual cuts in spending that has not ever been accomplished by this body in its history, in the history of the country,” said House Appropriations Committee Chairman Harold Rogers, a Kentucky Republican. “The cuts in this bill exceed anything ever passed by the House.”

“The president said he would freeze spending. Our Speaker negotiated, outnumbered 3-1,” he added, referring to Boehner’s negotiations alone in the oval office with Obama, Biden and Senate Majority Leader Reid. “We have cut spending.”

No, they have once again increased spending. The government may cut Pell grants and school lunch programs, but they will never cut the Pentagon off from the public largess trough. Not so long as America is tapped to extend the globalist empire and attack recalcitrant Muslims who reject the predatory behavior of IMF loan sharks and the international bankster criminal class.

Obama, Boehner, and the Republican-Democrat party have pulled a fast one on the people. The Tea Party inspired change in the House is as phony as the change Obama said he would bring to government. Establishment Republicans sold out the Tea Party and are now engaged in doublespeak about a debt that will render our children homeless on the continent their forefathers conquered. Both Republicans and Democrats work for the bankers and elections are largely irrelevant, as the former speaker of the House Nancy Pelosi said the other day.


Ron Paul talks with CIA-CNN operative Anderson Cooper about the budget shell game.

For the international bankers, the U.S. national debt is a plan made in heaven. It was designed as a method for confiscating the wealth of Americans through interest payments paid by the hoodwinked masses on a fractional reserve bank debt which the government assumed as sovereign debt. It is expropriation, pure and simple, based on funny money cooked up by the Federal Reserve out of thin air.

The political whore class supported by the banksters will not fix the problem. A few days ago a top contender for the 2012 fixed race for teleprompter reader in chief, Mitt Romney, said he won’t waste his time going after the Federal Reserve. “I’m not going to spend my time going after Ben Bernanke. I’m not going to spend my time focusing on the Federal Reserve,” he told Larry Kudlow on CNBC. “I think Ben Bernanke is a student of monetary policy; he’s doing as good a job as he thinks he can do.”

Indeed, Bernanke and the Fed are doing the best job they can to enslave you and your children.

Mitt Romney, if elected, will continue the process of turning the once great United States into a bankrupt and indebted third world backwater.

So will a re-elected Obama or Sarah Palin or any other manufactured personality hyped by the elite and its political class.

The only viable candidate for real change is Ron Paul. If he decides to run, as now appears to be the case, let’s hope he stays healthy between now and 2012.

Gas Prices $5 Pre Gallon By Memorial Day

CHICAGO (CBS) – At one time, $5 per gallon gas seemed like a farfetched idea, but that is no longer the case.

As CBS 2’s Roseanne Tellez reports, as of Monday, the average price for a gallon of regular unleaded gasoline in the Chicago area is $4.11, compared with $3.71 a month ago, and about $3.10 a gallon at this time a year ago.

Some experts say $5 per gallon gas is possible by Memorial Day-or sometime in summer. Others caution that reaching that mark is unlikely over the next six weeks. In Chicago, the prices keep rising to near-record levels–with no relief in sight.

Right now, oil markets are so skittish that records set in 2008 could fall.

Drivers Monday morning were practically numb to the price spikes.

“What are you going to do?” said Shannon Thompson. “We’ve become so gas-dependent in this country. There are so many SUVs. I mean, I’ve had a hybrid. It worked great. Right now, I’m just going to deal with it.”

Prices at some gas stations outside the city were still below $4, a bargain compared to the $4.29-$4.40 range at some service stations downtown.

“It’s painful,” said Lamar Magee. “You’ve got to make a decision on where you drive and where you go nowadays.” He said he is “definitely” making changes to his routines.

Magee says it will cost him about $120 to fill up the 30-gallon tank on his van.

But even that pales in comparison to the big rigs. Truck driver Mark Kanarowski says his truck holds 200 gallons.

“It’s got to be a huge expense for the company,” Kanarowski said. “I went to St. Louis over the weekend to fill up my own car, and I was paying about $4.13 a gallon. It hurts.”

A limo driver shared his thoughts as he filled up his tank at the Des Plaines Oasis.

“Normal-sized tank, big price – when you get done at the pump, it’s killing business, and a lot of one-way trips now,” he said, “like I’m going to get somebody this morning, and I’m not bringing him home. His wife will probably bring him home, because everyone’s trying to save a little bit here, a little bit there.”

The Lundberg Survey says the national average for a gallon of regular unleaded as of Monday was $3.76. That is up 19 cents since March 18, and up 91 cents since this time last year.

The sharply rising prices hearken back memories of the summer of 2008.

That year, oil prices were driven well above $100 per barrel, and in June of that year and gas prices were well over $4 a gallon. The highest average record price was $4.34 per gallon, set July 2008.

No one is eager to break that record. But with no end in sight to the turmoil in the Middle East, analysts say we’re likely to do just that – and just as holiday travelers hit the highways for Memorial Day weekend.

Unemployment Rises Unexpectedly 95,000 Jobs Lost. Heck Of A Job Barry Obama!

Protein Wisdom - The U.S. economy unexpectedly shed jobs in September for a fourth straight month as government payrolls fell and private hiring was less than expected, hardening expectations of further Federal Reserve action to spur the recovery.

Nonfarm payrolls dropped 95,000, the Labor Department said on Friday. Private employment, a better gauge of labor market health, increased 64,000 after rising 93,000 in August. A total of 77,000 temporary jobs for the decennial census were terminated last month.

Analysts polled by Reuters had expected overall payrolls would be unchanged, with private-sector hiring gaining 75,000.

The government revised data for July and August to show 15,000 more jobs lost that previously reported. It also said its preliminary benchmark revision estimate indicated employment in the 12 months to March had been overstated by 366,000.

Real Jobs, Fake Jobs

Lew Rockwell - In many ways, the unemployment numbers are much worse than they appear. One factor has been the timing of the US census. The bureau hired some 700,000 workers to collect data, people who otherwise were having a very difficult time navigating the choppy labor markets. They went for the jobs because they were a sure thing, paid decently, and didn’t require unusual skills (anyone can knock on a door and pester people about their private lives).

That inflated the jobs number for a while. But now these jobs are at an end — a highly unusual event in government employment, which usually lasts a lifetime. Now all of these people are facing the bracing reality of looking for employment in an economy wrecked by the government.

The press has been posting tributes to these people and their jobs and wailing about their fate now that their jobs are vanishing. And that raises questions. If these jobs were so great, why should they be eliminated at all? Surely, there is a way that these people could be transitioned to some other kind of government-funded service? That way, one might reason, people would have jobs, work would get done, and everyone would be better off.

Right? Wrong. Census jobs perform no market function, and the wages of these workers are paid by the taxpayer, meaning that these jobs are actually destructive of wealth. They siphon wealth and work out of the private sector into the wasteful sector. In fact, we can go further to say that eliminating these jobs is actually a step toward economic recovery.

Given the way economic fallacy has gone viral these days, it seems necessary to explain the issue further. The point of employment is not just jobs; it is productive and economically viable jobs.

It would be possible, for example, to reduce unemployment to its bare minimum simply by a mandatory regression in technology. We could abolish the trucking industry and force all freight to be carried by car, thereby creating millions of new jobs. Or we could abolish the car and create even more jobs for people to haul freight around by hand.

In each case, the number of jobs created would vastly outnumber the number of jobs lost. But would we be richer as a result? Not in any way. It would amount to a mandatory drop in living standards for everyone. These kinds of policies violate the Hazlitt dictum that part of good economic thinking consists in looking at what is good not just for one group (the unemployed), but all groups in society, and not just for the short term but for the long term.

The point of jobs is for people to work towards providing goods and services that are valued by the marketplace. If there is no consumer-driven demand for the things people are doing, their jobs are nothing more than waste. It does nothing for society if everyone is employed building pyramids, contrary to what Keynes once claimed. It would be senseless to have a business that employs thousands to do nothing but break new cellphones and repair them again, or to dig holes and fill them. And why is that? Because there is no economically rational basis for these tasks to exist.

To be sure, a wealthy entrepreneur can create a business doing anything, even something that loses money and is even socially ridiculous. But in order to sustain that, he will have to continue to throw good money after bad for an indefinite period of time, even unto the end of time. The day that he decides to stop doing it, the jobs will go away.

Of course, no businessman in his right mind wants to do such a thing. If you are going to create and retain uneconomic jobs, there is really only one way to do it: government. The government takes money from the private sector to throw around in inefficient ways, regardless of whether the job is worth doing in the first place.

The taxing and debt creation that is necessary to fund the government jobs is extracted from the real engine of wealth creation. This is not only true of census jobs but of all public sector jobs, whether in the federal bureaucracy, the military, or the educational sector. For this reason, the public sector’s payrolls really ought to be excluded from the employment rolls.

One objection might be that some of what public jobs produce is actually necessary for long-term economic health. We need an educated society, people might say, and even the results of the census are necessary for private-sector planning. But if that is true, there is no reason why the private sector would not have the incentive to provide these services themselves.

And they do in fact. The private sector has ever more sophisticated means for educating its employees, and making up for the inferior products of public schooling. It is the same with the census results, which are used by the state to keep track of us and control us; the private sector has its own methods of assessing demographic concerns over business location and product development. Even if there were government jobs that are in fact productive in their results, they could be performed at a profit instead of by extortion.

While everyone obsesses about the plight of census workers, there is a genuine calamity taking place in the private sector, which is being attacked by government every day. This is why the latest jobs numbers show nothing like robust job growth where it matters most. We see only slight overall increases from a decade ago, with boom-time jobs almost entirely wiped out in the bust.

This is what needs attention, but not from government programs. We need an absence of government programs, plus dramatic cuts in taxes and regulations of all sorts, and across the board. We need wage reductions in some sectors so that employment can grow in other sectors. Government cannot plan real job growth. It can only get out of the way and let it happen.

Obama And FDR: Failed Economic Policies

Walter Williams - Let's think about President Obama's failed economic stimulus program. Before getting to the nitty-gritty of why stimulus packages fail, let's look at the failed stimulus program of Obama's hero, Franklin Delano Roosevelt. FDR's Treasury Secretary, Henry Morgenthau, wrote in his diary: "We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!"

Morgenthau was being a bit gracious. The unemployment figures for FDR's first eight years were: 18 percent in 1935; 14 percent in 1936; by 1938, unemployment was back to 20 percent. The stock market fell nearly 50 percent between August 1937 and March 1938. Columnist Walter Lippmann wrote, "With almost no important exception every measure he (Roosevelt) has been interested in for the past five months has been to reduce or discourage the production of wealth." The last year of the Herbert Hoover administration, the top marginal income tax rate was raised from 24 to 63 percent. During the Roosevelt administration, the top rate was raised at first to 79 percent and then later to 90 percent. Hillsdale College economic historian Professor Burton Folsom notes that in 1941, Roosevelt even proposed a whopping 99.5 percent marginal rate on all incomes over $100,000. Much more of the Hoover/FDR fiasco can be found in "Great Myths of the Great Depression" (http://fee.org/articles/great-myths-of-the-great-depression/).

The Great Depression did not end until after WWII. Why it lasted so long went unanswered until Harold L. Cole, professor of economics at the University of Pennsylvania, and Lee E. Ohanian, professor of economics at UCLA, published their research project "How Government Prolonged the Depression" in the Journal of Political Economy (August 2004). Professor Cole explained, "The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes. Ironically, our work shows that the recovery would have been very rapid had the government not intervened." Professors Cole and Ohanian argue that FDR's economic policies added at least seven years to the depression.

Where do the trillion-plus dollars come from that Congress and Obama are spending in an effort to stimulate the economy? How about Santa Claus, or maybe the Tooth Fairy? If you said, "Come on, Williams, you're being silly! The only way government can spend a dollar is to tax or borrow it," go to the head of the class. In the case of a tax, one should ask what would that taxpayer have done with the dollar had it not been taxed away. He would have spent it on something that would have created a job for someone. If the government hadn't borrowed the dollar, it might have been invested in some project that would have created a job. When government taxes, borrows and spends, it shifts unemployment from one sector to another. Of course, the sector that benefits tends to be a political favorite of the shifter.

Between 1787 and 1930, our nation has seen both mild and severe economic downturns, sometimes called panics, that have ranged from one to seven years. During that interval, no one considered it to be the business of the federal government to try to get the economy out of a depression because there was no constitutional authority to do so. It took Hoover, FDR and a frightened and derelict U.S. Supreme Court to turn what might have been a three- or four-year sharp downturn into a 15-year meltdown.

Tax Hikes And 2011 Economic Collapse

Arthur Laffer - People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

John Fund of WSJ's Political Diary breaks down Tuesday's most interesting primary contests. Also, WSJ Columnist Mary Anastasia O'Grady translates the latest economic signals from Washington.

Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.
[laffer]

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.

In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

"Key Indicators of a Great New Depression

Neeraj Chaudhary - With the mainstream media focusing on the country's leveling unemployment rate, improving retail sales, and nascent housing recovery, one might think that the US government has successfully navigated the economy through recession and growth has returned. But I will argue that a look under the proverbial hood reveals a very different picture. I believe the data shows that the US economy is badly damaged, and a modern-day depression has begun. In fact, just as World War I was originally called The Great War (and was retroactively renamed after World War II), Peter Schiff has said that one day the world will refer to the 1929-41 era as Great Depression I, and the current period as Great Depression II.

For starters, look at unemployment. During Great Depression I, unemployment broke 25%. If government statistics are taken at face value, the current unemployment rate is 9.9%, but a closer look reveals that the broadest measure of unemployment is currently at 20% - and rising. So, today's numbers are in the same ballpark as the '30s even though the federal government is using unprecedented measures to keep the economy afloat. Remember, in Great Depression I, FDR never ran a deficit nearly as large as President Obama's. Moreover, the Federal Reserve of the 1930s still had a gold standard with which to contend, while today's Fed has increased the monetary base with impunity. Yet even with all that intervention, unemployment figures still indicate that we have entered depression territory.

What is demoralizing to an unemployed person is not simply being let go, it is being unable to find a new job for an extended period of time. And this is where Great Depression II really rears its ugly head. According to the US federal government's own data, the median duration of unemployment is now over five months - and rising. This is the highest it's been since the BLS started compiling this statistic in 1965. As workers start to go this long without jobs, they eat into their savings. Eventually - and especially in a country with a savings rate as low as ours and debt as high as ours - they run out of cushion and hit the street. Formerly middle-class people have to make decisions never thought possible: do I eat in a shelter or go hungry in my home?

It's no surprise, then, that about 40 million people - or one out of every eight Americans - are receiving food stamps in Great Depression II. During the height of Great Depression I, the rate was just one out of thirty-five Americans. Even with the stimulus programs, Great Depression II is actually worse on this measure than Great Depression I - and the USDA estimates that the program could grow by another 50%. Soon, out of ten people you know, one may depend on federal assistance for daily survival.

Despite tax credits that have created a rush of purchases this spring, housing is in just as bad shape. During Great Depression I, home prices dropped some 15% from their pre-depression peak (achieved in 1925). In Great Depression II, housing is down at least 30% from the pre-depression peak (achieved in 2005), with some markets down more than 50%.

So, many of the people expected to keep making mortgage payments as they eat tuna fish to stay alive will be paying double their home's resale value. This is a tremendous incentive to walk away, with disastrous consequences for the country's social fabric in these trying times. Empty homes breed crime and vandalism, encouraging more to flee in a negative feedback loop. Moreover, the many 'walkaways' may create a class of Americans with ruined credit - right when many employers have started checking credit scores before hiring.

Even more worrisome, the present drop in home prices is against a backdrop of price inflation. In Great Depression I, our grandparents may have lost value in their home, but everyday goods (milk, diapers, automobiles, etc.) got cheaper at the same time. That made their savings 'cushion' deeper when they needed it most. Today, as home equity (now our main store of savings) declines, prices for consumer goods are rising. It's a tight squeeze indeed.

From jobs to food to the roofs over our heads, the current period of economic turmoil is at least as bad as the First Great Depression, whether or not the financial media wishes to acknowledge it. The main difference is that unlike in the '30s, the US dollar is now the world's fiat reserve currency, so we are able to push our problems overseas for awhile. The plight of the rural Chinese is really our plight - we are living lavishly on the wealth they create. Were they to quit this dastardly arrangement, the full effects of Great Depression II would be felt in America.

By contrast, in Great Depression I, the US was on the gold standard like everyone else, which forced us to live within our means. This, in turn, made it easier to recognize that the economy was in decline and changes had to be made.

Unfortunately, because of the responses of the Administration and the Federal Reserve, which I believe to be deeply misguided, I remain concerned that Great Depression II could develop into something far more devastating than its predecessor, something that other countries in the world have experienced but was thought impossible in the United States: a hyperinflationary depression. As bad as the current downturn has been, inflation would make it immeasurably worse. It would require an honest accounting of the problems we face today to avert the disaster we see coming tomorrow.

Food Stamp Tally Almost 40 Million, Sets a New Record

(Reuters) - Nearly 40 million Americans received food stamps -- the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update.

Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday.

The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday.

"This is the highest share of the U.S. population on SNAP/food stamps," said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). "Research suggests that one in three eligible people are not receiving ... benefits."

Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.

Real Unemployment Rate Jumps To 17.1%

Business Insider - Nonfarm payroll employment rose by 290,000 in April, the unemployment rate
edged up to 9.9 percent, and the labor force increased sharply, the U.S.
Bureau of Labor Statistics reported today. Job gains occurred in manufactur-
ing, professional and business services, health care, and leisure and hospi-
tality. Federal government employment also rose, reflecting continued hiring
of temporary workers for Census 2010.

Household Survey Data

In April, the number of unemployed persons was 15.3 million, and the unem-
ployment rate edged up to 9.9 percent. The rate had been 9.7 percent for the
first 3 months of this year.

Among the major worker groups, the unemployment rate for whites (9.0 percent)
edged up in April, while the rates for adult men (10.1 percent), adult women
(8.2 percent), teenagers (25.4 percent), blacks (16.5 percent), and Hispanics
(12.5 percent) showed little or no change. The jobless rate for Asians was
6.8 percent, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over) con-
tinued to trend up over the month, reaching 6.7 million. In April, 45.9 percent
of unemployed persons had been jobless for 27 weeks or more.

Among the unemployed, the number of reentrants to the labor force rose by
195,000 over the month.

In April, the civilian labor force participation rate increased by 0.3 percent-
age point to 65.2 percent, as the size of the labor force rose by 805,000. Since
December, the participation rate has increased by 0.6 percentage point. The em-
ployment-population ratio rose to 58.8 percent over the month and has increased
by 0.6 percentage point since December.

The number of persons employed part time for economic reasons (sometimes refer-
red to as involuntary part-time workers) was about unchanged at 9.2 million in
April. These individuals were working part time because their hours had been cut
back or because they were unable to find a full-time job.

About 2.4 million persons were marginally attached to the labor force in April,
compared with 2.1 million a year earlier. (The data are not seasonally adjusted.)
These individuals were not in the labor force, wanted and were available for work,
and had looked for a job sometime in the prior 12 months. They were not counted
as unemployed because they had not searched for work in the 4 weeks preceding
the survey.

Among the marginally attached, there were 1.2 million discouraged workers in
April, up by 457,000 from a year earlier. (The data are not seasonally adjusted.)
Discouraged workers are persons not currently looking for work because they be-
lieve no jobs are available for them. The remaining 1.2 million persons marginal-
ly attached to the labor force had not searched for work in the 4 weeks preceding
the survey for reasons such as school attendance or family responsibilities. (See
table A-16.)

In April, nonfarm payroll employment rose by 290,000. Sizable employment gains oc-
curred in manufacturing, professional and business services, health care, and in
leisure and hospitality. Federal government employment increased due to the hiring
of temporary workers for Census 2010. Since December, nonfarm payroll employment
has expanded by 573,000, with 483,000 jobs added in the private sector. The vast
majority of job growth occurred during the last 2 months.

Manufacturing added 44,000 jobs in April. Since December, factory employment has
risen by 101,000. Over the month, gains occurred in several durable goods indus-
tries, including fabricated metals (9,000) and machinery (7,000). Employment also
grew in nondurable goods manufacturing (14,000).

Mining added 7,000 jobs in April, with most of the increase in support activities
for mining. Since last October, mining has added 39,000 jobs.

In April, construction employment edged up (14,000), following an increase of 26,000
in March. Over the month, nonresidential building and heavy construction added 9,000
jobs each.

Employment in professional and business services rose by 80,000 in April. Temporary
help services continued to add jobs (26,000); employment in this industry has in-
creased by 330,000 since September 2009. Employment also rose over the month in ser-
vices to buildings and dwellings (23,000) and in computer systems design (7,000).

In April, health care employment grew by 20,000, including a gain of 6,000 in hospi-
tals. Over the past year, health care employment has increased by 244,000.

Employment rose by 45,000 in leisure and hospitality over the month. Much of this
increase occurred in accommodation and food services, which added 29,000 jobs. Food
services employment has risen by 84,000 over the past 4 months, while accommodation
has added 18,000 jobs over the past 3 months.

Federal government employment was up in April, reflecting the hiring of 66,000 tem-
porary workers for the decennial census.

Over the month, employment changed little in wholesale trade, retail trade, informa-
tion, and financial activities.

Employment in transportation and warehousing fell by 20,000 in April, reflecting a
large decline in courier and messenger services.

In April, the average workweek for all employees on private nonfarm payrolls increased
by 0.1 hour to 34.1 hours. The manufacturing workweek for all employees increased by
0.2 hour for the second straight month to 40.1 hours, and factory overtime was up by
0.1 hour over the month. The average workweek for production and nonsupervisory em-
ployees on private nonfarm payrolls increased by 0.1 hour to 33.4 hours in April.


Average hourly earnings of all employees in the private nonfarm sector increased by
1 cent to $22.47 in April. Over the past 12 months, average hourly earnings have in-
creased by 1.6 percent. In April, average hourly earnings of private-sector production
and nonsupervisory employees increased by 5 cents to $18.96.

The change in total nonfarm payroll employment for February was revised from -14,000
to +39,000, and the change for March was revised from 162,000 to 230,000.

Real Income Falls 3.2% During Obama's Term

Real personal income for Americans - excluding government payouts such as Social Security - has fallen by 3.2 percent since President Obama took office in January 2009, according to the Commerce Department's Bureau of Economic Analysis.

For comparison, real personal income during the first 15 months in office for President George W. Bush, who inherited a milder recession from his predecessor, dropped 0.4 percent. Income excluding government payouts increased 12.7 percent during Mr. Bush's eight years in office.

"This is hardly surprising," said Douglas Holtz-Eakin, an economist and former director of the nonpartisan Congressional Budget Office. "Under President Obama, only federal spending is going up; jobs, business startups, and incomes are all down. It is proof that the government can't spend its way to prosperity."

According to the bureau's statistics, per capita income dropped during 2009 in 47 states, with only modest gains in the other states, West Virginia, Maine and Maryland. But most of those increases were attributed to rising income from the government, such as Medicare and unemployment benefits.

Two of the most populous states in the country reported dramatic declines: Per capita income in California dropped 3.5 percent to $42,325; in New York, the drop was 3.8 percent to $46,957.

"The evidence from New York and California reinforces a basic lesson: Where government gets too large, prosperity suffers. Let's hope that the Congress learns this lesson before it is too late for the country as a whole," said Mr. Holtz-Eakin, who also served as chief economic policy adviser to Sen. John McCain's 2008 presidential campaign.

On the campaign trail, Mr. Obama often derided Mr. Bush for what he said were dramatically falling incomes for workers.

"American families, since George Bush has been in office, have seen average family incomes go down $2,000," Mr. Obama said in a September 2008 speech on the economy in Green Bay, Wis.

The bureau, which doesn't compile statistics on "family" income, reported that per capita income rose during Mr. Bush's two terms, from $29,159 to $32,632 (using 2005 dollar values as a base). During Mr. Obama's 15 months in office, per capita income has dropped nearly 1 percent to $32,343.

Economists agree that Mr. Obama inherited a severe recession, although some dispute that it is the "worst since the Great Depression," as Mr. Obama often asserts. Still, the dropping numbers show that the $862 billion stimulus package has not turned the tide on dropping incomes.
"All in all I think the [bureau's] data are just another confirmation of what we all know - the recession has been just brutal, and while we may in the past couple of months have stopped the downward slide in jobs and incomes, we'll be digging out of a big hole for a long time," said Josh Bivens of the Economic Policy Institute.

Carol Moylan, chief of national income and wealth division at the Bureau of Economic Analysis, said comparing real personal incomes while excluding government payments is a good barometer. "A lot of people like that number," she said.

The White House did not respond to requests for comments on the numbers.

Personal income with government "transfers" - which include such federal money as Social Security, unemployment insurance, Medicare and food stamps - has grown during Mr. Obama's time in office, up 1.2 percent from January 2009 to February 2010. During that period, government unemployment insurance benefits rose from $88 billion to $143 billion.

Despite a near doubling in unemployment payouts, Mr. Obama in February announced a multitrillion-dollar spending plan that boosted the federal deficit to a record-breaking $1.56 trillion.

"While the market income of Americans has fallen since early 2008, government assistance has offset this somewhat through greater transfer spending such as unemployment benefits and new tax credits such as the 'making work pay credit,' albeit at the expense of higher deficits," said Gerald Prante, a senior economist at the Tax Foundation organization.

Mr. Obama, who just finished pushing a $1 trillion health care reform bill through Congress, is falling behind on his predictions. In a September speech, he said: "All in all, many middle-class families will see their incomes go up by about $3,000 because of the Recovery Act."

Other numbers show dramatic differences between the state of the economy in the opening months of Mr. Bush's first term versus that of Mr. Obama. While disposal income during Mr. Obama's term has risen $2.5 billion, extra cash for Americans rose $113 billion over Mr. Bush's first 15 months in office.

Meanwhile, the findings of a new survey of leading economists by the Associated Press found widespread pessimism over a quick recovery.

The finding included ominous news:

c The unemployment rate will stay high for the next two years and still be at 8.4 percent by the end of 2011.

c Home prices will remain almost flat for the next two years, even after dropping an average 32 percent nationwide since peaking in 2006.

c The economy will grow about 3 percent this year, less than usual during the early phase of a recovery, but few jobs will be added.

Commerical Real Estate: The Next Financial Crisis

“Between 2010 and 2014, about $1.4 trillion in commercial real estate loans will reach the end of their terms. Nearly half are at present “underwater” – that is, the borrower owes more than the underlying property is currently worth. Commercial property values have fallen more than 40 percent since the beginning of 2007. Increased vacancy rates, which now range from eight percent for multifamily housing to 18 percent for office buildings, and falling rents, which have declined 40 percent for office space and 33 percent for retail space, have exerted a powerful downward pressure on the value of commercial properties.

“The largest commercial real estate loan losses are projected for 2011 and beyond; losses at banks alone could range as high as $200-$300 billion. The stress tests conducted last year for 19 major financial institutions examined their capital reserves only through the end of 2010. Even more significantly, small and mid-sized banks were never subjected to any exercise comparable to the stress tests, despite the fact that small and mid-sized banks are proportionately even more exposed than their larger counterparts to commercial real estate loan losses.”

We have extracted these two paragraphs from the executive summary of the February 10, 2010, Congressional Oversight Panel’s Special Report entitled “Commercial Real Estate Losses and the Risk to Financial Stability.” This 190-page document is packed with vital and detailed information. Find it at: http://cop.senate.gov/documents/cop-021110-report.pdf .

The issue of CRE is on everyone’s mind. And, unlike residential housing, there is no political will in Washington to subsidize a mall developer or office landlord. That is a good thing. In the longer run the CRE adjustment will be faster and less costly to the American taxpayer than the protracted demise of the Fannie and Freddie.

At Cumberland, we expect the forthcoming losses on CRE debt to be large and continuing. Essentially the United States is re-pricing its commercial real estate sector with debt-driven deflationary forces.

CRE is another of the several reasons the Federal Reserve will remain committed to its very low interest-rate policy for an “extended period.” In the case of CRE, the Fed does not have the policy of subsidy and support in place that it has for the federal housing finance agencies.

Large-scale federal attempts at subsidy for CRE have failed miserably. That is what we would expect when the government tries to create a mechanism to avoid the reality of taking a loss. The most notorious of those attempts is the PPIP. That monstrosity was designed and released with great fanfare by the Treasury Secretary. Notice how little you hear about it now. Had it advanced, there would have been a $1.1 trillion program with a massive transfer of subsidy from taxpayers to special finance interests.

The Senate report doesn’t mince words about PPIP. It also clearly establishes that PPIP is not likely to have much impact. The section on PPIP starts on page 127. In the spirit of American history it could be nicknamed Geithner’s Folly. The only thing wrong with that metaphor is that Secretary Seward’s purchase of Alaska turned out to be a dramatic success for the US while Secretary Geithner’s PPIP stands no chance of a positive outcome.

Let’s sum this up. Big losses are going to be reported on CRE. Banks have another round of pain ahead of them. The stress test on the 19 large institutions only runs through 2010. It is clear that the nation has not reach a stabilized level with its commercial real estate. It is likely that another round of painful adjustments lies ahead.

We conclude that the falling price level in CRE is a deflationary force in America and will continue to be so for several more years. Debt tied to it is in trouble. Banks will take more losses and bank capital will be tested again. This impact on banks can only be determined on a case-by-case issue.

Meanwhile, this is another reason why the Federal Reserve will continue its very low interest-rate policy for an “extended period.” We believe that means all of this year and most if not all of next year. Our forecast is that the short-term interest rate in the US will be between zero and 1 percent during that period. Add to that the conditions in the rest of the world, and one can make that projection of low interest rates for nearly all of the major economies. Exit strategies may eventually come, but not for an “extended period.”

We look forward to seeing some readers at the Philly Fed conference on March 3. See www.interdependence.org for details. Also, we are scheduled to discuss our market outlook on CNBC’s Power Lunch on Monday, March 1 shortly after the noontime opening. Good weekend wishes to all from the Cumberland Advisors’ Sarasota office.

Battle For The Middle Class: 20% Underemployment And 38 Million On Food Stamps

For most Americans a jobless recovery is an oxymoron. After all, the vast majority of Americans who pump money into the economy through consuming what they earn, typically find it harder to spend if they don’t have a job to draw an income from. It is understandable that there is a lag between a recession and when companies start to hire. But over the last four decades each subsequent recession seems to add more and more months of so-called jobless recovery. Part of this has to do with the amount of exports we bring in. When spending goes down in the U.S. the actual contraction goes beyond our country and hits many of our trading partners. Yet the middle class in the U.S. has fallen behind both in nominal and inflation adjusted terms for over 40 years. Part of this has to do with the structure of our banking system and our heavy reliance on debt spending. Today, as talk of a recovery permeates the media outlets we have 38,000,000 Americans on food assistance and nearly 20 percent of Americans are registering as underemployed.

Now the Bureau of Labor and Statistics usually measures the above through their U-6 rate. This rate measures those that are working part-time but would like to have a full-time job. There is something psychological about this that makes it seem a lot better than full unemployment but the repercussions on the working class is deep and profound nearly as deep as full unemployment. First, if you are working part-time you have less money to spend and this showed up in the survey clearly:

This is important in understanding that even with a 6 percent growth rate in GDP last quarter that many people still feel this recession deep in their pocketbooks. In addition, that latest GDP number is based on companies cutting their top line item, employees and also inventory restocking. But these are usually one time measures. What we want to be seeing is GDP growth because of additional consumption and growth through hiring. That is the real nature of a healthy expanding economy. Cutting and firing middle class workers isn’t exactly the recipe for a longer-term recovery.

Americans are having to do more with less and are facing new measures of austerity. Many are adapting and many are simply unable to cope with the radical changes taking place. Even in the past decade, many Americans came to rely on credit cards and home equity as some kind of embedded ATM for most households. For over a decade this seemed to be the case. Even many that relied on this deep down realized that something just wasn’t right when home prices kept going up by double-digits while their salaries remained stagnant. Any lack of wage growth was made up by additional borrowing. Banks were willing to lend out this money. But now that the bubble has burst, Americans are filing for bankruptcies in record numbers, losing jobs, and losing their homes through foreclosure. At the same time, the banking industry has kept their practices going thanks to taxpayer bailouts. The middle class is bailing out the same industry that was largely at the center of this financial crisis and their practices still largely remain the same.

This struggle to maintain the middle class is going to be the story of the next decade. But beyond that headline, we now have over 38,000,000 Americans receiving food assistance in this country.

The most prosperous nation in this world has over 12 percent of its population receiving food assistance. It is tough to see fellow Americans in such difficult times. You can see on the chart above how quickly the rate has risen in this recession. Clearly in every recession the rate will go up but in this recession the number has struck many more Americans. In fact, the length of unemployment is a large reason for this as people eat into emergency funds. Beyond that, we now have the largest percentage and number of Americans working part-time in history:

In fact, the large number of underemployed has been a shadow to how deep this crisis really is. For example, the headline unemployment rate nationwide is 9.7 percent. That seems bad but nothing historical. But just look above and add in that underemployment rate. In reality, we can understand why middle class Americans are struggling so much with daily financial life. Think of someone that lost their job and is now working at Wal-Mart as a greeter. Sure they aren’t part of that 9.7 percent but they probably would think so:

“(The Atlantic) Over lunch I spoke with one attendee, Gus Poulos, a Vietnam-era veteran who had begun his career as a refrigeration mechanic before going to night school and becoming an accountant. He is trim and powerfully built, and looks much younger than his 59 years. For seven years, until he was laid off in December 2008, he was a senior financial analyst for a local hospital.

Poulos said that his frustration had built and built over the past year. “You apply for so many jobs and just never hear anything,” he told me. “You’re one of my few interviews. I’m just glad to have an interview with anybody, even a magazine.” Poulos said he was an optimist by nature, and had always believed that with preparation and hard work, he could overcome whatever life threw at him. But sometime in the past year, he’d lost that sense, and at times he felt aimless and adrift. “That’s never been who I am,” he said. “But now, it’s who I am.”

Recently he’d gotten a part-time job as a cashier at Walmart, for $8.50 an hour. “They say, ‘Do you want it?’ And in my head, I thought, ‘No.’ And I raised my hand and said, ‘Yes.’” Poulos and his wife met when they were both working as supermarket cashiers, four decades earlier—it had been one of his first jobs. “Now, here I am again.”

We are in a deep struggle and fight to preserve the middle class of this country. What has made this country strong has been a compact between the government and the citizenship between work and some semblance of financial protection. Yet right now with the banking system in power, it is all about that bottom line and they have no idea what is happening in Main Street USA. They are happy with GDP going up by 6 percent even though this was based on restocking lost supply and firing workers. But how is this really good for the middle class?

Unemployment Benefits To Expire After Senate Stalemate on Extension

FOXNews.com
Unemployment insurance and COBRA benefits will expire Sunday for millions of voters because the Senate was unable this week to pass a short-term extension, a failure that reflects partly the partisan gridlock that has stalled the Democratic legislative agenda and partly the Senate rules that allows one lawmaker to block legislation.

Unemployment insurance and COBRA benefits will expire Sunday for millions of voters because the Senate was unable this week to pass a short-term extension, a failure that reflects partly the partisan gridlock that has stalled the Democratic legislative agenda and partly the Senate rules that allows one lawmaker to block legislation.

But the Senate will likely be able to renew them with a Tuesday vote. Democrats are expected to take up a broader bill next week, the second in their “jobs agenda” that will extend the benefits, among many other provisions – including popular tax extenders – for one year.

The bill is expected to pass by the end of next week.

The latest stalemate, however, produced a rare, late-night partisan floor brawl between two scrappy senators.

In the red corner is Sen. Jim Bunning, R-Ky., whose decision not to seek re-election this year has made him a wildcard. He has blocked a $10 billion bill that extends the benefits for 30 days because he wants to lay out how the extension will be paid for, preferably with unallocated stimulus funds.

In the blue corner is Sen. Richard Durbin, D-Ill., who, along with other Democrats told Bunning no way because the extension is an emergency and shouldn’t come with any offsets.

The battle lasted for hours Thursday when Durbin sought unanimous consent, a move that forced Bunning to object each time to uphold his filibuster.

“It is unthinkable, unforgivable that we would cut off unemployment insurance payments to these people, that we would cut off COBRA payments, which helps them to pay for their health insurance while they’re unemployed,” he said. “And yet, that’s what’s going to happen Sunday night. It’s because the senator from Kentucky has objected to extending unemployment insurance payments and COBRA health insurance payments for 30 days.”

Bunning decried the move and was joined by Sen. Bob Corker, R-Tenn., who accused Democrats of a “sneak attack.” Corker vowed to stay on the floor with Bunning all night.

Durbin said he was defending out-of-work Americans, that he would love to be home because he is “no spring chicken."

Bunning told Durbin that he would not object if the senator agreed to adopt his or any amendment that would pay for the bill.

But Durbin said Bunning rejected a chance earlier in the week to offer that amendment for an up or down vote.

When Bunning tried to offer an amendment Thursday that would offset the spending, Durbin objected.

“The present level of debt is unsustainable,” Bunning said. “I have too many grandchildren that want to grow up in the same America that I grew up in,” he said.

In the end, it was a draw, although Bunning won the battle.

While Democrats have ganged up on Bunning for his actions, Republicans have blamed Senate Majority Leader Harry Reid for the benefits expiring. Reid had a chance to renew unemployment benefits with the first jobs bill that passed before he decided to dramatically scale back the proposal.

Fox News' Trish Turner contributed to this report.