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Thursday, June 17, 2010

New Jobless Claims Point to More Problems

Just as the jobless claims inched toward four hundred thousand, they took a step back this week.

Initial claims for jobless benefits rose by 12,000 to a seasonally adjusted 472,000, the Labor Department said Thursday. It was the highest level in a month.

First-time jobless claims have hovered near 450,000 since the beginning of the year after falling steadily in the second half of 2009. That has raised concerns that hiring is lackluster and could slow the recovery.

Yesterday, there was a poor real estate number. On the other hand, there's some good news from manufacturing.

Manufacturing in the Philadelphia region expanded in May for a ninth straight month, another sign factories are leading the recovery.

The Federal Reserve Bank of Philadelphia’s general economic index rose to 21.4 during the month from 20.2 in April. Readings above zero signal growth.

Since the economy began recovering last summer, a pattern has emerged. For every two steps forward, the economy takes a step back. So, a year into this so called recovery things remain very choppy. Meanwhile, Keynesian policies have drowned the nation's economies in debt. That, along with the choppy recovery, has given rise to a world double dip recession.

The risk of a double-dip recession is growing, especially in the euro zone, where restructuring Greece's debt is inevitable, famous economist Nouriel Roubini told CNBC Tuesday.

Moody's became the second major agency to cut Greece's debt ratings to "junk" late on Monday, as it admitted that the country does not face immediate liquidity problems due to a joint IMF/EU aid package, but that the austerity program will probably weigh on its economic growth prospects.

"I would say that the risk of a double-dip recession is highest in the euro zone… I would say there is a more than 50 percent probability," if not of a technical double-dip then of economic stagnation in the area, Roubini said.

A double dip recession is nothing more than an economic term. What is clear is that our economy isn't strong, isn't going to strengthen soon, and it will cause pain for years to come.


AG said...

"but that the austerity program will probably weigh on its economic growth prospects."

So, cutting spending is going to hurt the economy?

mike volpe said...

According to Roubini it is, and that's in Europe.