Friday, May 4, 2012

Blue good, Red bad

The number of new jobs created in April totaled only 118,000 which is down from the previous month, but the February and March numbers were revised upward by 19,000 and 34,000 respectively. The good news is that we were doing better than we thought, but that makes April even more disappointing.

The bright spots are that average hourly pay was up a penny and the average work week remained unchanged at 34.5 hours. Manufacturing workers are at more than fulltime with an average of 3.4 hours of overtime per week. This sector also added jobs indicating there is a recovery in manufacturing. The new jobs in this area appear auto industry related, and Chrysler has announced that it will forgo its usual summer shut down at many of its plants. This will be a significant boost for any areas that have parts suppliers as well as assembly plants.

The first quarter GDP numbers are out and while conservatives trumpeted that growth was down from 3% in the 4th quarter to only 2.2%, they didn’t mention that they were to blame. (these numbers are subject to revision, and may turn out to be closer to 3% given the continued increase in people working)  The positive growth in GDP came from increased personal consumption, exports (gasoline being a big contributor), growing inventory and residential investment. The GDP increase was drawn down by reduced Federal government spending, reduced non-residential investment as well as cuts in state and local government spending. Increased imports were also counted as a negative. Ironically as the economy picks up, Walmart imports more crap thus driving the GDP down.

In short the economy is growing at a respectable rate despite the Republican efforts to impose austerity in the states they control. The growth is almost exclusively in the Blue states. If we didn’t have the conservatives dragging the economy down, we would be growing a sustained rate not seen since before Reagan.

If you think I’m painting a rosy picture, I’m not. In fact we are in deep trouble. America has great potential, we’ve had fantastic productivity gains in the last 30 years, but almost all of the wealth produced by the gains has gone to the fraction of one percent at the top. These super rich aren’t shy about using this massive wealth to get their way. The debate over whether the crack down on Occupy protestors comes from Washington or is just local is moot. The billionaires control government at all levels to some degree, and can exert crippling pressure on anyone who opposes them. With decades of propaganda behind them, many officials even think they are doing the right thing, they don‘t remember “before Reagan“.

Then there are the banks, they’re in every bit as bad shape as they were four years ago, if not worse. The Dodd-Frank Act was supposed to deal with this problem, but again the Republicans are withholding funding and using their influence to keep regulators from doing anything meaningful.

Austerity imposed by bankers and the IMF in Europe is dragging that continent into a Great Depression. Spain, the 4th largest economy, is now at 20% unemployment and going into free-fall. Germany continues to do well since they are at the top of the food chain, as are the democratic-socialist countries that stayed out of the Euro-zone. Iceland that was the first country to collapse under the weight of the crooked bankers has simply flipped them all off, and they are recovering nicely. Ireland, that bailed out the bankers, has been touted as a success, but the actual numbers show it to be on the edge of a cliff.

There is some movement politically in Europe to crack down on the bankers, since they have the example of countries nearby to learn from. Americans have had it drilled into them for decades to not pay attention to Europe and will need to learn on their own before it’s too late.