Initial unemployment claims were down 29,000 last week from a recent high of 498,000 the week before but this will turn out to be from the last snow storm and not because of hiring. 350,000 is considered the neutral point where job creation would occur. The elimination of jobs to out sourcing and the ripple of unemployment this sends through the economy continues to exceed jobs created by the stimulus and Census Bureau hiring.
Currently there are 5.8 million on extended benefits as well as 5.5 million on traditional state unemployment programs. But the number of former middle class receiving no help at all is accelerating with 134,000 losing benefits last week alone as their federal extended weeks ran out. This number will grow to more than five million by the end of April if no extension is granted by Congress. This does not include almost a million workers who took Social Security earlier than they wanted to according to the Social Security Adm. in the last Federal budget year. On the other end a growing number say that they can’t afford to retire even though they would like to with 70% of workers over 60 who say they aren‘t retiring giving that as the reason.
The index that measures home sales contracts dropped nearly 10 percent to the lowest level since last April. This came despite a hefty government incentive to buy that will expire next month. It’s now estimated that 20% of homeowners could be justified in walking away from their underwater mortgages. Since they have almost no chance of ever recovering the equity they have already lost and they are wasting their money paying interest on that lost home value. This estimate is based on the assumption that prices stay flat, they could rise but there is better chance that prices will decline still further.
Retail sales were up last month by 3.7% but this does not Wal-Mart who no longer reports sales figures. The increase is attributed largely to spring clothing sales and may not be sustained growth. Even as bad as the employment numbers are, most people still have jobs and money to spend. They don’t have as much to spend however, as labor costs have dropped by six percent in the fourth quarter alone. Average productivity rose by seven percent in the past quarter. Productivity is difficult to measure accurately with almost everything being out sourced so you can’t tell what percentage is being done where. The decline in pay is not hard to measure however and is being reflected throughout the economy. Time to buy the seeds for the garden if you want to eat next winter. www.prairie2.com