Economists make themselves almost as ridiculous when they suggest recovery in the middle of the recession as when they fail predict a recession or bubble when it is already in progress. The recession is not abating. As described by standard economics, perhaps it is, since these numbers concentrate on monetized activity, which surely is increased artificially by government spending. But fundamentally, the economy has stabilized in a "failing" stage. Stabilized by the Recovery Act, but not having escaped the gravitational pull of the financial system's collapse.

This piece from EPI demonstrates the current bad state. Until this number is cut in half, the economy has not recovered.

Number of job seekers per available job continues steep climb

By Heidi Shierholz
October 9, 2009
Economic Policy Institute
While the gradual moderating of job loss is a very welcome sign, it is nevertheless getting harder every month for job seekers to find a job as more people continue to become unemployed and openings for new jobs continue to drop.
This morning, the Bureau of Labor Statistics released the August report from the Job Openings and Labor Turnover Survey (JOLTS), which showed that job openings decreased by 21,000 to 2.4 million in August. At the same time, the number of unemployed workers increased by 466,000 to 14.9 million. Thus there were 12.5 million more unemployed workers than job openings in August, or 6.3 job seekers per available job (see Figure). This was up from 6.0 in July. Importantly, the ratio of job seekers to job openings does not include job seekers who are currently employed but looking for work due to a lack of job security in their current position, so the ratio actually understates the number of job seekers who are competing for each job opening.



Between December 2007 and August 2009, the number of job openings declined by 2 million, or 45.5%. However, thanks to the American Recovery and Reinvestment Act, the declines are slowing—from September 2008 to March 2009, the losses averaged 156,000 per month, but from June 2009 to August 2009, the losses averaged less than a third of that, at 45,000 per month.
Although unemployment numbers for September became available last Friday, JOLTS data are released with a one-month lag. However, given last Friday’s announcement that unemployment increased by 214,000 in September, the number of job seekers per job opening was almost certainly at least 6.3 in September. While layoffs are abating, until employers start posting jobs and hiring again, finding employment will continue to be very difficult for the millions of jobless workers in this country.

Jobs and incomes are the source of any real recovery. We won't say the bailout money has been squandered, but we will say all the sacrifice is being extracted from the worker and the taxpayer. To Robert Reich's list below, we would add some more aggressive measures, like the CCC style employment programs envisioned in the Humphrey-Hawkins bill. Watching people suffer and reading the Dow as if it were their vital signs is mismanagement.

Specifically, What Should Be Done For Jobs?
by Robert Reich
October 8, 2009

In his Saturday radio address, President Obama acknowledged the White House is exploring "additional options to promote job creation.” It's about time. This is the worst job market in seventy years -- including the longest duration of steep job losses.

If anyone had any doubt that something far more dramatic must be done, listen to former Federal Reserve Chairman Alan Greenspan. He warned Sunday against further stimulus because “we are in a recovery, and I think it would be a mistake to say the September numbers alter that significantly.” Greenspan has turned into an inverse soothsayer. After his cataclysmic error about where the economy was headed before the meltdown, his views about the future should be carefully noted as being the exact opposite of what's likely to be in store.

The economy may be in a technical recovery but this is not a real recovery and the "green shoots" or "positive signs" that Wall Street cheerleaders love to shout about are phantoms of their ever-optimistic imaginations. The stimulus is working but it is far from adequate. Before the stimulus, we were losing more than 500,000 jobs a month. Now that 40 percent of the stimulus has been spent, we are losing more than 250,000 jobs a month.

What to do? With the debt ceiling approaching and the gravitational pull of the 2010 elections increasing, the White House can't go back to Congress with a formal bill to enlarge the stimulus package. Four simpler moves would be to:

(1) Use existing authority under both the stimulus package enacted earlier this year and the nefarious TARP bailout fund -- extending and combining them into a fund to make up for state and local cuts in public school budgets, childrens' health, public health (we need workers to administer swine flu vaccine) and public transportation. Instead of bailing out banks and giant automakers, we should switch to bailing out public services that average people need.

(2) Propose a one-year payroll tax holiday on the first $20,000 of income. Republicans as well as Blue Dog Dems could go along with this, and it would be a highly progressive tax cut since 80 percent of Americans pay more in payroll taxes than they do in income taxes.

(3) Give small businesses a "new jobs tax credit" for every net new job created over the next year. Granted, under normal circumstances this sort of jobs credit doesn't have much effect, and it's difficult to separate hires that would have happened anyway from net new ones. But we're not in normal circumstances; small businesses, which are responsible for most new jobs, still aren't hiring. They need a boost.

(4) Dramatically expand the Small Business Administration's lending programs and have the Fed buy up the SBA's debt. Big banks are not lending to small businesses. TARP has been an utter failure in this regard. The SBA and the Fed should circumvent them and help small businesses get the capital they need, so they can start hiring again.

The politics of these four steps aren't difficult. It would be hard to get a new stimulus package through Congress, but no member who's up for reelection next year when unemployment is likely to be in double digits wants to be accused by rivals of voting against steps to help small businesses, public schools, childrens' health, and average working people who need a tax cut.

All the green shoots on Wall Street won't gain a single seat in the House come next November if something more effective is not done in public policy. Demand Side believes a rebound is likely next year, and will in fact generate a larger majority for Democrats. Despite the current weakness, elections are not decided during the autumn of the previous year.

We suspect Mr. Obama will demonstrate the same election year skill on behalf of Congress and the Republican slide will continue. That said, we note we are not so good at forecasting elections as we are at the economy. Robert Kuttner is better.

It's the Unemployment, Stupid
by Robert Kuttner
Huffington Post
October 4, 2009

If the unemployment numbers keep rising into 2010, the Republicans are primed to pick up dozens of seats in the House, crippling the Obama administration's capacity to recoup in the second half of the president's first term. Obama would lose his very tenuous working majority and would confront a situation very much like the one Bill Clinton faced after the Republican gains of 1994, when he worked even more closely with Republicans in order to save his own skin. If you liked triangulation Clinton-style, wait for Rahm Emanuel's version of it.

The most recent employment numbers were bad enough on their face -- 263,000 job losses in September, and a measured increase in payroll employment to 9.8 percent. But the real numbers are much worse. The nominal rate conceals the fact that the labor force is 615,000 workers smaller than it was a year ago, even though the working age population continues to grow. People who can't find jobs and quit looking are no longer counted as part of the labor force. If normal labor force growth had continued, the unemployment rate would be close to 12 percent. See the analysis of the numbers by the good people at the >Economic Policy Institute and the estimable Dean Baker. The administration's people know this reality, and they are aware of the political risks. So what are they doing? Precious little.

I had a conversation with a senior administration economic official last week and I asked him to suspend disbelief and consider a large increase in public spending to create more jobs. What would he spend the money on? We discussed the pro's and con's of emergency fiscal aid to the states versus a tax credit for job creation in the private sector, subsidized job-sharing, and direct public works employment. But it was clear that the administration considers a Stimulus II a non-starter. The view is shared by Fed Chairman Ben Bernanke, who testified last week that there was not much we could do about rising unemployment except wait it out.

This is economically deplorable and politically self-defeating. When the administration considered its $787 billion stimulus bill last winter, its projection was that unemployment would peak at 8.9 percent. It's clear that joblessness is going to be a lot worse, and nobody has a convincing story about where the new jobs are going to come from once economic growth turns positive. Time magazine recently ran a cover story suggesting that we might just have to get used to a new reality of persistently high joblessness, and compensate with other policies such as more heroic job training (but for non-existent jobs?)

But that view is malarkey. Economists were making the same argument in 1938 and 1939. The economy, supposedly, had reached a level of maturity and technological sophistication that there just weren't enough jobs. Unemployment was just stuck around 15 percent. Then along came World War II. The federal deficit rose to 29 percent of GDP (this year it will be about 11 percent) and unemployment disappeared.

The president should be making the case for increased deficit spending on job-creation in 2010 and 2011, followed by a program of deficit reduction financed by progressive taxation. Public opinion on these issues is not static, and in fact a recent poll done by Hart Research Associates for EPI shows that the public cares a lot more about joblessness than it does about the deficit. 53 percent of respondents said lack of jobs was the most important issue, but only 27 percent said the deficit was. Fully 83 percent sand that unemployment was a big problem, and just two percent said it was not a problem. Presidential leadership could make a huge difference in translating these attitudes into action.

The Blue Dog Democrats in Congress are opposed to larger deficits, but many of them would support a ten-year program of more public outlay now coupled with deficit reduction after recovery comes. Unfortunately, a lot of Washington's centrist savants are skipping directly to the deficit reduction, overlooking the fact that we are still a long way from recovery. As EPI was holding a conference releasing the results of its research, the more moderate Center for American Progress (CAP) was holding a big event on alarm about the national debt. CAP President John Podesta, former director of the Obama transition team, is an enthusiast of value-added taxes as deficit-reduction medicine.

My own view is that VAT's are highly regressive taxes on consumption. I could go along with them if they were part of a deal that included progressive taxes such as a tax on financial transactions and if some of the money went to expanding public services rather than just reducing deficits. But this is only half of the conversation, and the less urgent half. Unless we get a bigger recovery going, and get unemployment down well before the 2010 mid-term elections, all this center-left policy wonkery will be beside the point because the Republicans will be running the country.