Left-handed Complement

MUDGE’s Musings

The ‘R’ word: recession. It’s pretty much inescapable now. The Wall Street Journal was among all the major media to let us know:

Jobs Data Suggest U.S. Is in Recession

Largest Payroll Fall In Five Years Spurs New Stimulus Talk

By SUDEEP REDDY March 8, 2008; Page A1

U.S. employers shed 63,000 jobs last month, the most in five years, reinforcing a widening view that the U.S. is falling into recession. Among economists and politicians, the debate is shifting to how deep the downturn will be and how to ease it.

The jobs dropoff came after the nation lost 22,000 jobs in January, the Labor Department said. In the past, such back-to-back monthly employment declines have occurred only around recessions.

Coming amid continued turmoil in the financial and credit markets, the report sent stocks lower, with the Dow Jones Industrial Average falling 146.70 points Friday to close at 11,893.69. The index lost 3% for the full week.

By far the most distressing feature of this distressing development is that the dimension of the job loss was such a surprise, especially to the guys who are paid good coin to anticipate such news, economists.

Harvard economist Benjamin Friedman, who served on the group’s Business Cycle Dating Committee for 15 years including 1990-91, said recent data suggest an economic downturn in the making.

“What impresses me about the current situation is that there has been a steady stream of surprises, and every surprise is a disappointing one,” he said.

And the Federal Reserve stands ready to step in to provide banks with more liquidity, and even lower interest rates. Not jobs, though, sorry, not their function.

[Please click the link below for the complete article — but then please come on back!]

Jobs Data Suggest U.S. Is in Recession – WSJ.com

Daniel Gross of Slate, as usual, puts economic news in context, and sees what the true impact of this recession really means: stagflation. Bane of the last generation.

Stagflation Is Back

And it’s even worse than you feared.

By Daniel Gross Posted Thursday, March 6, 2008, at 4:25 PM ET

It’s like a bad ’70s flashback. Oil at $100 per barrel, and now stagflation. The unhappy coincidence of sluggish growth and rising inflation, stagflation is economic poison. (Read my colleague Robert Samuelson’s excellent primer on it in Newsweek.) It is the opposite of the economic idyll of the last quarter-century, an era of relatively low inflation and relatively rapid growth.

The stag? Gross domestic product rose at an annual rate of only 0.6 percent in the fourth quarter of 2007 and probably isn’t doing much better today. The flation? The Consumer Price Index rose 4.3 percent between January 2007 and January 2008.

The numbers seem positively buoyant compared with our last serious bout of stagflation in the late 1970s, when inflation rates spiked to double-digit levels and mortgage rates were in the high teens. Compared with the mountain of economic woes in the late Carter years, the economic woes of the late Bush years are a mole hill. But that doesn’t mean those fretting about stagflation are crying wolf. Here’s why.

The inflation part is by no means as horrendous as 25 years ago, a time yr (justifiably) humble svt remembers all too well, but it’s such a contrast to the benign times since that it has rocked consumer confidence, and that makes all the difference.

[Please click the link below for the complete article — but then please come on back!]

Stagflation is back and just as bad as ever. – By Daniel Gross – Slate Magazine

The Bush years have exacerbated our distress, since his pets, the oil companies, have made obscene profits at our expense while letting domestic production fall, and making very little investment in new reserves and production infrastructure.

Bush’s ugly little wars for oil (war on terrorism is its public facade — war for oil supply is the real agenda) have hollowed out the dollar and bankrupted our children’s and probably our grandchildren’s generations.

And our economists, and the government, was surprised by the severity of the job loss numbers? Guess it means they get all their news from Fox.

It’s it for now. Thanks,

–MUDGE

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This entry was posted on Saturday, March 8th, 2008 at 8:47 pm and is filed under "War on Terrorism", Economy, History. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.