ADP is reporting an increase of 38,000 private sector jobs in May. If you’re not aware of it, ADP is the nation’s largest automated payroll processor. They process payrolls for thousands of companies, large and small. 38,000 is a fraction of what was expected.
The payrolls of large businesses (the ones to which most of the subsidies and bailouts go) actually shrank by 19,000 jobs. Construction shrank, too.
Manufacturing is slowing practically everywhere, even in China.
Consumer confidence has fallen to a six month low. Most of what you buy is more expensive (a predictable outcome of quantitative easing) and wages are, essentially, flat. It’s not hard to explain why confidence has dropped.
Get a load of this chart of financial and construction activity. Both are moving sideways—not entirely unexpected since both were affected by the housing bubble.
See, this is why I don’t read the news anymore. Too depressing.
It’s becoming clearer and clearer that this is the second Great Depression, and it’s going to last just as long as the first one. Hopefully it won’t end with a war with 50 million fatalities.
Maxwell,
I’m not quite that grim in my outlook, but right now it seems like the economy is on the brink of stalling and may have already.
I have to wonder have we spent vast amounts of resources to prevent the economy from correcting and then start growing again in the hopes that preventing the correction long enough things would start growing again?
Further the temptation is going to be to pursue the same policies that were tried before: stimulus spending. Right now it isn’t looking too good for the stimulus spending argument. We are quite possibly on the brink of another recession despite all this spending (TARP and the stimulus spending is what… almost $1.5 trillion? About 1/10th the size of the U.S. economy…where is the multiplier?) we see at best an economy that is neither growing nor shrinking. Of course that can’t last for long. Given all the data and information Dave has been pointing too plus a few others I’ve found the outlook is not good at all.
So, how about another $1.5 trillion in spending? Spend that and things will be fine, should have spent that much in the first place.
(Never mind that for $3 trillion we could have sent a check for $100,000 to 30 million people…people who are unemployed, have lost their home, and so forth…so much better to help out Wall Street, amirite?)
Steve Verdon,
To be fair, I compare the situation to the Depression because I see it as being similarly difficult to solve, not because I think the damage to human well-being will be as severe. As a country and as a species we are better off now in many ways.
But I don’t subscribe to the either of the prevailing notions on how to deal with recessions – that we either have to spend or cut our way out of them. I just don’t see much evidence for either one. My suspicion is that in the end, there’s very little we can do about it.
It’s true that subsidies, in all forms, interfere with competition and our ability to rebuild. But which industries are we not subsidizing – heavily – at this point? I count one, manufacturing, which has not exactly a source of comparative advantage for us in the past four or five decades. We could cut spending in all the others and yet I think we’d still struggle for some time to find a robust source of growth.
FWIW I don’t see much appetite right now for stimulus spending, not compared to ’08. If we get anything it will be in the form of “targeted” tax cuts that will again be an over-the-counter handout to Wall Street. Snake oil all over again.
The data stinks. And as I’ve been pointing out for quite some time, the “animal spirits” of the job creating class are nowhere to be seen, and with good reason. That always gets a good dose of venom from the usual suspects. But alas, I’m right.
Maxwell, I think you are rightfully depressed if we continue down the path of the last several years. Hopefully, we will abandon the “government as solution” posture and get to the task of unleashing the tigers – those who can create growth.
Unfortunately that requires political philosophical change, and for people to get their heads variously out of the sand, or their ass.
I share your pessimism to the extent that the cacophany of media discourse is inane. That won’t change.
Therefore what we need is a real leader to emerge. Right now we have a self absorbed schoolboy. It will take time. But it can be done. Right now we are just wandering aimlessly in the swamp.
Ah, here’s a story that gets the vibe right:
“Expect More ‘Unexpectedly’ Weak Economic Data”
I’m not going to pay for the article, but the synopsis nails what I’m seeing:
Is it just an “attention” cycle in media and culture? Is this the week to notice that a stock market bull doesn’t really a recovery make?