By Dave Lindorff
So much for economic "green shoots."
The Obama administration and the Federal Reserve, along with the servile corporate media, have been quick to grasp at and trumpet every little suggestion that things might be improving, as they did when the Labor Dept. announced last week that new unemployment claims had dropped to "just" 434,000, from a high of 684,000 in the week ended March 28 or last year.
Or when the Commerce Dept. reported last month that November housing starts had risen by 8.9% compared to the prior month.
Of course, what none of the rosy analysts and politicians mention is that the number of new unemployment claims would be bound to fall even if the economy were getting worse, because so many of the people who are covered by unemployment insurance have been laid off already for months, or even for more than a year already, and so the total pool of those eligible to file claims is much smaller.
Look at it this way. The labor force totaled about 150 million at the end of 2008, when official unemployment was then about 5%. Now official unemployment is at 10 percent, which means 7.5 million people have become unemployed since that time, reducing the number of working people to only 142.5 million. Actually, of course, the job losses are almost double that, when people who have quit looking for jobs, gone without a job for a year or more or work part time involuntarily are added, so really the total number of people actually still working today is closer to 135 million.
Now when 684,000 people out of 150 million apply for the first time for unemployment benefits, as happened last spring, that represents 0.46% of the workforce. But when 434,000 apply for unemployment for the first time in a week, as just happened, that's 434,000 out of a total of just 135 million, which represents 0.32% of the workforce. In other words, it's a lower rate, but not as significant a drop as if it had been 434,000 new claims out of a workforce of 150 million.
In any case, the real story is not that new unemployment claims are down. It's that the real unemployment rate--the rate that includes discouraged workers who have given up looking for a job because there are none, and those who are only part-timers--went up last month, from 17.2% to 17.3%.
As for housing, the bad news is that pending home sales plunged by 16 percent in November. What that tells us is that the little boomlet in housing sales that resulted from the federal government's $8000 tax credit for new home buyers has kind of run its course, just as did the earlier $4000 cash-for-clunkers car-buying "stimulus". These sorts of programs don't change the market, they only push forward in time purchases that people would have made anyway. So we are actually headed into worse times, as those programs end. It's reminiscent of a scam that companies get in trouble for with the SEC--booking sales from the new year as having been made in the prior year so their books look better, but then they have to do the same thing again the following year, but misrepresenting even more future sales as present sales, and so on, until they get nabbed.
The big test will come as the money provided by last spring's $800-billion stimulus bill (actually just $400 billion in stimulus, with the rest in tax cuts) starts to run out. Much of that money went to prop up state and local government budgets and to thus prevent public employee layoffs, but now those layoffs are going to become a torrent of new jobless people.
It is going to become harder and harder, moving into this new year, to find those "green shoots." Not that the government and the media won't keep trying to find them.
Basically, reporting on the economy has become a kind of cheerleading exercise, while the president and the Democrats in Congress keep trying to pretend things are getting better, even as the ranks of the unemployed keep climbing, and as families struggling to get by run down what little savings they have left. Their goal is twofold: to try and get consumers, who have lost over $11 trillion in household wealth as their stocks and the value of their homes have plummeted, to start buying again (good luck with that), and to try and avoid having to take any dramatic measures to create public sector jobs or restore the tattered safety net destroyed during the Reagan and Clinton administrations.
The only "green shoot" I see is that the Democratic Party, that sclerotic husk of a once relatively progressive organization that brought us Social Security, Medicare, civil rights legislation, and unemployment insurance, but that now is just another corrupt backer of the banks, the union-busters, the corporations that are disinvesting in America and shipping jobs overseas, the pillagers of the earth, and the insurance industry, is headed for an electoral armageddon this November.
A good sign is that the voters of my home state of Connecticut, a Democratic stronghold, who had the good sense to dump Sen. Joe Lieberman from the Democratic Party ticket in 2006, have now dumped the state's senior senator, Sen . Chris Dodd. Dodd has been a servile backer of the banking industry, even accepting special favors in the form of reduced rate mortgages from the now failed and disgraced Countrywide Financial Bank, and of the health insurance industry, many of which companies are headquartered in the state. It is progressive Democrats who have abandoned Dodd and forced him to announce that he is not seeking re-election. I suspect it is also progressive Democrats abandoning the equally servile Sen. Byron Dorgan in N. Dakota who have convinced this one-time prairie populist to quit the Senate.
Even in Massachusetts, where the Democratic candidate to replace the late Sen. Ted Kennedy is in a tight race according to polls, it looks like the Democratic Party is in trouble. The media pundits, reverting to their default setting, blame it all on the party's having moved "too far to the left" and argue that its candidates need to move "back to the center." But there is not evidence that this is the case.
The Democrats in power are decidedly not on the left. Genuine progressives in the Congress can be counted on two hands--or maybe only on one. (You don't even need a finger to count the number of progressives in the White House!)