Friday, November 6, 2009

Financial Markets May Be Working Again, But Average Americans Are Still Waiting

First, let's get the partisan politics out of the way.

It might have been the Clinton or the Bush (41& 43) administrations that got us in to this economic mess. And the policies of the Obama administration may be: correcting the problem; making things worse; simply applying a band-aid to a knife wound; or, all of the above. Your view of today's economic news will probably depend on how you're affected by it and your political affiliation. But one thing is true. Wall Street may be recovering but the average American is still maneuvering on a slippery slope.

Less than two months ago U.S. President Barack Obama stated that all signs indicated that the economy was
starting to grow and financial markets were starting to work again. But while sending an encouraging message to Wall Street he did add the caveat that employment statistics did not indicate improvement and, in fact, could get worse over the next couple of months. This was the message that the President reiterated today.

No one should be surprised by today's announcement that unemployment has reached 10.2 percent.

Columnist Lynn Sweet reported on details provided by the Department of Labor:
"In October, the number of unemployed persons increased by 558,000 to 15.7 
million. The unemployment rate rose by 0.4 percentage point to 10.2 percent, 
the highest rate since April 1983. Since the start of the recession in 
December 2007, the number of unemployed persons has risen by 8.2 million, 
and the unemployment rate has grown by 5.3 percentage points.

Among the major worker groups, the unemployment rates for adult men (10.7 per-
cent) and whites (9.5 percent) rose in October. The jobless rates for adult 
women (8.1 percent), teenagers (27.6 percent), blacks (15.7 percent), and
Hispanics (13.1 percent) were little changed over the month. The unemployment 
rate for Asians was 7.5 percent, not seasonally adjusted.

The number of long-term unemployed (those jobless for 27 weeks and over) was 
little changed over the month at 5.6 million. In October, 35.6 percent of 
unemployed persons were jobless for 27 weeks or more.

The civilian labor force participation rate was little changed over the month 
at 65.1 percent. The employment-population ratio continued to decline in 
October, falling to 58.5 percent.

The number of persons working part time for economic reasons (sometimes refer-
red to as involuntary part-time workers) was little changed in October at 9.3 
million. These individuals were working part time because their hours had been 
cut back or because they were unable to find a full-time job.

About 2.4 million persons were marginally attached to the labor force in October, 
reflecting an increase of 736,000 from a year earlier. (The data are not sea-
sonally adjusted.) These individuals were not in the labor force, wanted and 
were available for work, and had looked for a job sometime in the prior 12 months. 
They were not counted as unemployed because they had not searched for work in 
the 4 weeks preceding the survey.

Among the marginally attached, there were 808,000 discouraged workers in October, 
up from 484,000 a year earlier. (The data are not seasonally adjusted.) Dis-
couraged workers are persons not currently looking for work because they believe 
no jobs are available for them. The other 1.6 million persons marginally attached 
to the labor force in October had not searched for work in the 4 weeks preceding 
the survey for reasons such as school attendance or family responsibilities."

Add to these numbers: the millions of workers who lost a job and replaced it with a lower paying one; the millions whose salaries have been frozen for a few years; the millions of retirees who lost a large portion of their retirement savings when the market crashed; the millions who lost a substantial amount of the equity in their homes: and, the Social Security recipients who will not get a cost of living adjustment (COLA) in 2010, and many Americans are still wondering when things will get better for them.

However, while many Americans are holding on by a life preserver the banking industry is preparing to throw them an anchor. Yes, the financial markets are definitely working again and working in the same old way.

Earlier today, Megan Woolhouse of The Boston Globe reported:
"Credit card companies are rushing to increase interest rates to historic highs of more than 30 percent, cut credit limits, and add new fees, even for customers who pay their bills on time.

Lenders are making the moves in advance of tougher federal regulations for credit cards scheduled to take effect on Feb. 22. The new rules will limit how companies can modify credit card agreements, specifically prohibiting them from retroactively raising interest rates and fees on existing balances.

US Representative Barney Frank, the Massachusetts Democrat who chairs the Financial Services Committee and is a leader in the effort to revamp credit card policies, said banks have 'abused’' the nine-month period granted them to re-tool their practices.

'I didn’t think they would be as blatant as they were about doing this,' he said. 'There’s no justification for raising rates retroactively. This is really just a way for them to make more money.' "

And by the way, have you noticed that gasoline prices are inching up?

Ok, I'm not going to say, "I told you...."

No I'm not going to say it. If you're reading this blog, I'd just be preaching to the choir.

Related posts:

Bill Moyers' Interview with Bill Black and How They Got Away With It

Saying "No One Saw This Coming", Just Doesn't Ring True.

Why So Many American Want Wall Street & The Banks to Suffer

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