Before I turn to this week’s report on jobless claims, a brief word first about October’s personal income and spending.
Although personal income declined in October compared with September, more importantly depending on how you measure it, real personal income is still 2.6% to 3.4% *higher* than it was at its peak in February just before the onset of the pandemic:
Much of that is the emergency pandemic aid passed by Congress. When you take out such “government transfer receipts,” personal income actually continued to improve in October, but is still -0.8% below its February peak.
The good mayor of El Paso is at wit’s end. He is worrying himself into the grave. The City’s hospitals and morgues are overflowing. Seems that the people have to work to eat, and, if they work, they get the virus and get sick, and, too many die. Damned capitalism is as deadly as the virus; together they are a catastrophe. Maybe, if he would just step across the border into New Mexico, better yet, hop on a plane to San Francisco, better to get as far away from Texas as possible, we could explain the problem to him without being drowned out by the ignorant Texas dogma coming out of Austin; crapola he’s heard his whole life.
In a functioning state, there are dozens of examples, the government would have handed out masks and hand sanitizer, and free food as the need arose. It would have worked out a deal on the rents. The government would have mandated the changes needed to make the workplaces safe. If the government had done these things, had functioned, instead of blithering on about capitalism and the American way, the people could have kept on working without getting sick and dying by the droves; and, the economy could have kept on working. What our government didn’t do is killing us by the hundreds of thousands; destroying the nation.
This week’s new jobless claims rose from last week’s pandemic lows, while continued jobless claims again declined to new pandemic lows.
On an unadjusted basis, new jobless claims rose by 18,264 to 743,460. Seasonally adjusted claims rose by 31,000 to 742,000. The 4 week moving average, however, declined by 13,750 to 742,000. Here is the close up since the end of July (for comparison, remember that these numbers were in the range of 5 to 7 million at their worst in early April):
Unadjusted continuing claims (which lag initial claims typically by a few weeks to several months) declined by 419,670 to 6,081,402. With seasonal adjustment they declined by 429,000 to 6,372,000, both new pandemic lows:
Nothing definitive yet – after all weekly data is going to be noisy – but there is some indication that the recovery in coincident conditions in the economy have ceased to make progress, and maybe even have begun to reverse, probably due to the pandemic being out of control, and new restrictions put in place in some States as a result.
As usual, clicking over and reading should bring you right up to the moment, and reward me with a penny or two for the effort I put in to bring you this report.
First a story, then an introduction to Student Loan Justice Org. and Their Town Hall Meeting November 20th, and finally some cold hard facts from founder Alan Collinge about what is happening to millions of people who have student loans.
Your Angry Bear blogger and activist went to a garden party in Michigan in support of Democrats and Senator Debbie Stabenow pre-2018 election. I had donated to the Democrats and directly in support of various county, state, and federal candidates. Since I had been involved with student loans for my three, had also talked and written about these loans, and been supportive of Alan Collinge of Student Loan Justice Org.; I had a question to ask. Senator Stabenow sits on the Senate Finance Committee and she supported the the 2005 S. 256 (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ).
“Private student loans were largely stripped of bankruptcy protections in 2005 in a congressional move that had the devastating impact of tripling such debt over a decade and locking in millions of Americans to years of grueling repayments.
The Republican-led bill tightened the bankruptcy code, unleashing a huge giveaway to lenders at the expense of indebted student borrowers. At the time it faced vociferous opposition from 25 Democrats in the US Senate.
But it passed anyway, with 18 Democratic senators breaking ranks and casting their vote in favor of the bill. Of those 18, one politician stood out as an especially enthusiastic champion of the credit companies who, as it happens, had given him hundreds of thousands of dollars in campaign contributions – ‘Joe Biden.'”
Senator Debbie Stabenow was one of the Democrats who voted “yea.” It was a beautiful day and people were there, mostly oldsters like myself and a sprinkling of of young adults. My being older plays in my favor as I am considered safe. So. when I stuck my hand up and was chosen, I asked my question. “Senator Stabenow, you and other Democratic Senators voted for the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 which took away bankruptcy rights for many students who are struggling to pay back their student loans. The total amount of debt they carry is measured in the hundreds of $millions. Many of these students will be carrying their student loan debt into retirement and may have their SS garnished. What do you intend to do to correct this situation?
What do you intend to do to correct this situation?”
Senator Stabenow: “Democrats are not in the majority in 2018”
Recently, it was said she also made a comment of younger people having to suck it up by learning fiscal responsibility due to their having issues paying loans back. Meanwhile, this contingent of up and “hopefully coming ” citizens in chained to student loans and have had their participation in the economy debt-laden by banking, financial interests, and politicians.
Consumer prices were unchanged in October, both on a seasonally adjusted and unadjusted basis:
But while the lack of inflation is good news in isolation, the last two months can also be viewed as a sign of economic weakness – lack of demand – from a recession.
Digging a little deeper, for the past 40 years, recessions had typically happened when CPI less energy costs (red) had risen to close to or over 3%/year. We are nowhere near that now (last 15 years shown in graph):
Again, note that the YoY% change in inflation has decelerated since the outset of the pandemic, potentially another sign of weakness.
On the bright side, because wages are “stickier” than prices, typically as recessions beat down prices (or at least price increases), in real terms wages rise. That has been the case for the coronavirus recession as well:
It is the “real” buying power of wages among those still securely employed during a recession that is one of the engines that usually restarts growth.
Also as a result, as I’ve noted for the past several months, real hourly wages for non-supervisory workers have finally exceeded their previous 1973 peak, although part of that has been the asymmetric loss of jobs among some of the lower-paid occupations:
Finally, one of the most telling metrics of the overall health of the middle/working class is that of real aggregate wages. After declining -13.8% from February through April, they have now recovered to a point -3.5% below their peak, approximately at the same level as they were in autumn 2018:
If the rate of gains over the past 4 months were to continue – a *very* open question – aggregate real wages would exceed their February level in about 6 months.
Of course, this data like almost all other economic data remains at the mercy of the course of the pandemic – which is basically out of control in much of the US. It is also very much subject to the public policy that has been stalled in Washington for the past half a year and is going to continue to be stalled until at least January 20.
PAUL GRONDAHL – Director New York State Writers Institute (host)
MATT TAIBBI – Author, Rolling Stone Magazine, Reporter (moderator)
Michael J. Camoin – Videos For Change Productions, SCARED TO DEBT (filmmaker)
ALAN COLLINGE – Founder of StudentLoanJustice.Org (activist)
CATHERINE AUSTIN FITT – Investment Advisor (former Sallie Mae )
THOMAS BORGERS – Wall Street Banker, Financial Investigator
I have known Alan probably a decade or so and am familiar with his efforts and organization to change the laws governing bankruptcy for student loans. Alan has worked tirelessly on this issue which impacts tens of thousands of younger people who can not get the same relief as businesses and other citizens have through bankruptcy. Our president-elect has played a major role along with other political and financial interests in denying any type of relief for student loan debt.
Along with Alan, the list of participants to this Town Hall should make this interesting. I will be watching it and listening to the conversation. Perhaps, you can join too?
These days, the nation, the world, is faced with the problem of how to distribute wealth, wealth that is being created using less and less labor input? How to distribute the profits from highly capitalized, highly automated, production? Unions, that had been much a part of the solution to the distribution problem in the early 20th century, are becoming more and more irrelevant. A new economic model is desperately needed.
Since the dawning of the Industrial Revolution, wealth has been created by the production of manufactured goods. To date, the sharing/distribution of this wealth has been by way of exchanging labor for wages. Except for the brief period from around 1940 to 1970 when union jobs commanded good wages, this method never really work all that well; much of the time, the god awful of Zola, Dickens, and Sinclair Lewis. In this, the age of technology, for a price, many task can be, have been, partially or completely automated using a combination of computers, servo motors, sensors, and programming. Now, many tasks, once performed by well paid union workers, are being performed by ‘robots’. Today’s work force tends to be either professional, highly technical, or service, with the professionals and technicians being well paid and the service workers often being paid less than a living wage. Good paying blue collar union jobs have become rare. In the heydays from around 1940 to 1970, the wealth created from the production of manufactured goods was distributed via the good union salaries to the economy as a whole. As a consequence, merchants thrived, towns thrived, schools thrived, farmers thrived, contractors thrived, … Much of society, including municipal governments, was premised on this model.
We now need an economic model that will somehow directly distribute the profits from production to the population in a somewhat equitable manner that doesn’t rely on the exchange of labor for wages. If, somehow, sufficient numbers of the population shared in the profits from automated manufacturing, and distributed their share into the community at large by consuming goods and services, thus giving others the means of consuming, such a model wouldn’t look a great deal different than the one existent from 1940 to 1970. If, for example, in exchange for the federal monies granted corporations during the COVID pandemic, the government had demanded corporate shares in return, in a sense, the public, via the government, would now be part owners in these corporations. The federal government could then distribute any future returns from this ownership to the public. In another example, a government, federal, state, or local, could exact a share of a corporations profits by way of taxes, then distribute those revenues to the populace. Governments can nationalize corporations. And, no doubt, there are, will be proposed, other ways of accomplishing distribution going forward.
There has to be another way. Not changing isn’t an option. It makes no sense to continue doing something that does not, cannot, work.
This post was written in 2016 and slightly updated on Oct. 31, 2018, exactly two years ago today. The update started like this:
According to this AP report today, alarms are already being raised about the rejection of many mail-in ballots in next week’s elections. Several of these elections are likely to be very close, and in some cases, votes cast by mail may make the difference. As the AP article notes, “nearly one of every four ballots cast in 2016 came through the mail or was handed in at a drop-off location, according to the U.S. Election Assistance Commission.” With more and more people choosing to vote by mail, controversies involving mail ballots are likely. Back in 2016, just before the November election, we ran this article about the potential for an election “meltdown” arising from voting-by-mail issues.
Following is the 2018 update, with no further revisions for 2020. Some of the details are out-of-date and incorrect, but much of the post is more relevant now than it was then.