New unemployment claims jumped up sharply in today's report. As you might expect Wall Street took this as good news and they set new records for the Dow and S&P indexes. To summarize the business news: the markets are up because Fed Chairman Bernanke said the current unemployment rate wasn't all that great and implied he'll keep printing $85b a month to stimulate the economy.
In reality the new unemployment claims aren't really that high, given that we're in the Summer Shutdown retooling phase of the car industry model year. With car manufacturing the only major industry that we have left, it should have a huge effect, so the jobs market isn't really all that soft.
The real problem is flat wages, even though things are getting steadily better the average hourly wage is lucky to increase 10 cents from month to month. People without money don't buy anything. Consumer spending is up only because people are again borrowing money.
The House has been successful in ramming through the severing of food stamps now know as SNAP (Supplemental Nutrition Assistance Program), they stopped calling it 'stamps' because they give recipients bank cards so big banks can siphon off billions. The cards are a better system except for feeding the parasitic banks. If the GOP's plan holds up it will not only make millions of more hungry people, but put a further drag on the economy as it is effectively a pay cut for the working poor.
Worker productivity continues to grow, and with wages reflecting none of the growth over the last 30 years, everything is severely out of balance. Median household income is half of what it should be, and the minimum wage is third of what these gains in output dictate. It's simply not possible create new jobs with money continuing to be hoarded in the trillions by the fraction of one percent at the top. Demand has only been maintained over the decades by trillions of unneeded debt, and even worse the selling off of assets by the middle class.
The Conservatives scream about the "Death Tax", but only a small fraction of them will leave anything to the next generation. This might explain the steady increase in suicides among the Baby Boom generation who weren't really able to save for retirement as their parents did who had union jobs with good wages, benefits and pensions.
It's not unusual for 'Boomers' to find themselves trying to support an elderly parent who had Mitt Romney steal their pension, as well as their kids approaching 40 with kids of their own who are living in the Boomer's basement. That 'Trickle Down' that Ronald Reagan promised them is just a leaking pipe that's giving the grand kids 'black mold' poisoning. Twitter @BruceEnberg economic questions answered, and Conservatives made fun of for free