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Originally Posted by mortimer
For the January numbers, less than 40k new jobs were created yet the unemployment rate went down from 9.8% to 9.0%. It didn't drop because unemployment dropped, it dropped because many have just dropped out. A better measure is the 'employment rate.'
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That is better, but even that is flawed.
Should everyone between age 18 and 65 be working?
Why?
If my spouse loves her job and she makes enough money to support us, why can't I stay home and write tele-plays and screen-plays and take care of the kids? Why
must I work?
Or maybe I should work and my spouse should stay home and play with her potter's wheel and kiln or enroll in university courses.
If everyone has to work or must work, that is a problem.
Quote:
Originally Posted by mortimer
I think there is a two-tier economy now. Those without jobs are eating macaroni and those with jobs are buying cars and eating at restaurants.
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Not macaroni, Ramen Noodles.
Quote:
Originally Posted by mortimer
Almost 30% of mortgages are under water.
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That puts a damper on the HELOCs. So do lower housing prices. No credit, no spending.
Quote:
Originally Posted by mortimer
Also, the December number ( about 300k jobs ) shown in an earlier post is only enough jobs to keep the unemployment rate ( the real one ) steady. The economy needs 400k jobs - per month - to actually grow.
I read yesterday in the WSJ that the economy would need to generate 750k jobs per month for the next three years ( an impossible task ) to bring the unemployment rate down to 5% ( considered to be about "full employment" ).
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Too bad for you.
I already said that here months ago, so the WSJ is a $1 short and several months late. I'll re-post what I said several months ago.
The BLS job projection for the 10-year period 2008 to 2018 was 50.6 Million jobs.
That averages out to 5,060,000 per year.
That averages out to 421,666 jobs per month.
The BLS also projected that 67% of those 421,666 jobs would be, um, er, "created" due to Baby Boomers leaving the work-force ie "retiring."
That means the 421,666 job openings each month would stack up this way:
1) 139,150 brand-spanking new never before worked jobs would be created; and
2) 282,516 Baby Boomers would retire each month providing 282,516 job openings for jobs that already exist.
Who is vying for those jobs?
Each month, there are 150,000 to 200,000 new entrants to the work-force. Those people are high school, college, tech school graduates, and people (mostly women) who voluntarily left the work-force to give birth, raise children, or provide in-home care to an elderly parent or other family member who was ill.
And there are some 13.9 Million or so who are unemployed seeking employment, and another 9 Million who have given up looking for work.
It would take 54 straight months of 421,666 jobs to get unemployment anywhere near 5% and you'd still have to deal with 8,100,000 or so new entrants to the work force, which would take another 19 months, or a total of 73 months to get back to 5%.
73 months is a little over 6 years. Roughly the year 2016 (which is what I said in 2010).
Of course, that is predicated on the BLS being correct and that 67% of Baby Boomers really do retire and don't keep working for 2-5 years past age 65.
Quote:
Originally Posted by mortimer
On topic, interest rates are set by the bond market ( a much bigger market than the stock market ). The US trade deficit just ticked up again. The rates in the bond market are set by those who lend us money so we can buy crap from other countries. The U.S. is a nation living beyond its means and that means that rates that other countries charge us will tend to go up and up and up.
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Yes, many of these people don't understand it, but a continual trade deficit creates pressure to send jobs overseas.
That is one reason, but not the only reason, that jobs are being exported.
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Originally Posted by mortimer
Although we ( the US Fed ) is creating money from nothing, so is everyone else. Our money is crap, but it's less crappy than the Euro or the Pound, so the process of others ( mostly Asia ) raising our rates will take time.
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Indeed. Many of the people here just don't get it. I think the name is confusing to them. They think "Federal Reserve" is somehow different than "Central Bank."
All Central Banks on Planet Earth do the exact same thing the US Central Bank does (except the US Central Bank has a cool sounding name like Federal Reserve).
Quote:
Originally Posted by mortimer
I think we will eventually go back to 7% mortgage rates as the normal rate. It might take a few years, but it's going to happen. Historically, that's not a high number, BTW.
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Low interest rates create Interest Inflation and the prices of those things that are heavily tied to interest, like housing and automobiles, get artificially inflated way above market value.
That isn't the only factor in housing prices, but it is the factor that artificially ramps up the values.
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