Posted on 09/06/2009 10:37:55 AM PDT by Diana in Wisconsin
The jobless-recovery theme re-emerged on Friday with the arrival of a disappointing employment report. The daunting number was the unemployment rate, which jumped from 9.4 percent in July to 9.7 percent in August. This is a big-versus-small-business issue. Sort of the haves versus the have-nots.
The large companies are gradually recovering as a result of major cost-cutting, inventory reduction, and a lean-and-mean return to profitability and high productivity. So the payroll survey registered a 216,000 job loss, the smallest drop in over a year.
However, the household survey, which picks up small, owner-operated, LLC/S-Corp-type businesses, registered a devastating 392,000 job loss, which follows losses of 155,000 and 374,000 in the prior two months. This is the source of the unemployment-rate jump, as 466,000 newly unemployed were scored in the report.
So while the big companies are getting healthier, the smaller firms are being left in the dust. Unfortunately, small businesses provide most of the new job creation in the United States.
Veep Joe Biden is out there saying the Obama stimulus plan has saved or created 150,000 jobs in the administration's first 100 days and another 600,000 in its second 100 days. But he sure isn't talking about small-business jobs.
In fact, it's hard to know what he's talking about. Uncle Sam has borrowed $388 billion in the second quarter and is scheduled to borrow $406 billion in the third quarter and nearly $500 billion in the fourth. In order to provide $152 billion in so-called fiscal stimulus, the government is draining close to $800 billion from the private-sector savings supply -- $800 billion that will not be invested in new-business enterprises, including small businesses.
Borrowing from Peter to redistribute to Paul is not fiscal stimulus. It's a fiscal depressant. Small businesses are having enough trouble getting their hands on credit. And now they can't find enough capital for new start-ups. The government prospers, but the small-business sector sinks.
Then there are all the tax and regulatory threats related to health-care and energy reform. Until Mr. Obama retreats from his plan for a government takeover of the health-care sector, and a cap-and-trade program that will cripple the energy sector, the cost of hiring the new job will continue to rise.
The threat of higher payroll taxes and energy costs is more than enough to deter new hiring. Taxes on upper-end investors are going to rise, too, and there may be a health-care surtax on top of that. And don't forget that small businesses pay the top personal tax rate, which is going up. Oh, and how about the recent minimum-wage hike? Yet another business cost.
So while the government doles out money for transfer payments and one-time temporary tax credits, the ensuing increase in the private-sector tax-and-financing burden becomes a complete deterrent to new job creation, as well as capital formation.
We're going to recover. Improved ISM reports for manufacturing and services, along with better profitability for big corporations, suggest we're looking at a mild, V-shaped recovery of 3 percent. But it will be a jobless recovery.
Of course, if Mr. Obama pulls the plug on his new government-insurance plan, and all the spending, taxing, borrowing, and regulating that goes along with it, the stock market will rally at least 500 points -- at least. Investors understand that an Obama retreat on government-run health care will lead to stronger economic growth for America's vibrant health-care industry -- and small businesses in general.
With all this, why is Wall Street so shocked by the recent gold rally, with the yellow metal marching back toward $1,000 an ounce? The run into gold is a clear revolt against paper money and financial profligacy.
The Federal Reserve's monetarist experiment to balloon the money supply will backfire with much higher future inflation unless the economy is capable of generating enough new investment and jobs to produce the goods to absorb all the new money. Indeed, this is a worldwide problem. Too much cash chasing too few goods.
The G-20 finance ministers are meeting in Pittsburgh this weekend, although nobody there has an exit strategy from the money explosion that has been aimed at solving the financial meltdown. None of the big countries have plans to reduce marginal tax rates to promote economic-growth incentives. There is no golden anchor of currency value, and no exit strategy from the potential inflation effects of the new-world monetarism.
The bottom line is that governments today have no financial discipline. And while growth will reappear, it may be a meager sort, with incipient inflation pressures plaguing the new recovery.
Before you can successfully introduce communism, you must insure that the entire population is totally reliant on the government. After that, “the Stockholm syndrome” kicks in.
Well, he at least added one to the unemployment rolls today...
Poor Van, at least he can go back to bad mouthing the country and pimpin’ money for all his community activism...
But, hey, "productivity is surging!" (I think I read that on Bloomberg last night...)
Yeah, here it is, albeit watered down from what was there early this am:
At the same time, with economic growth forecast to resume this quarter, the figures set the stage for a surge in worker productivity and drop in labor costs that will stoke corporate profits.Long live Corporate Profits!
Gee, what's missing from this picture...........I mean Geeeeeeez!
Well of course worker productivity is going to go up, Silly. Those of us still lucky (and smart and talanted) enough to have jobs are now doing the work of two or more people!
I know I do, but then, I always did. :)
Any small business that adds employees in today's environment is foolish. There is simply too much uncertainty and the cost of jettisoning these employees if they do not pan out is just too high.
But you are correct, small business owners are the enemy of the left, Bam knows this and he will not let them up from under his thumb.
schu
To quote Nasty Pelousy, “Where are the jobs, Mr. President?”
Jobless recovery????
‘The Federal Reserve’s monetarist experiment to balloon the money supply will backfire with much higher future inflation unless the economy is capable of generating enough new investment and jobs to produce the goods to absorb all the new money. Indeed, this is a worldwide problem. Too much cash chasing too few goods.’
I see that Kudlow has put his finger in the wind and now has a problem with the Fed. Honestly, I can’t take him and others of his ilk serious. Kudlow didn’t have a problem with Pres Bush running up deficits and using the Fed and lower interest rates to create the housing bubble.
Classic.
bookmark
An apt description of Biden's career.
Jobless recovery?? That is one stupid statement that only a moron could think up. And why are there no new jobs on the horizon? One word - GOVERNMENT! It got us in this mess and until it wakes up and admits it’s destructive performance nothing positve will ever happen. Government is greedy. Spending is out of control. The National debt has put this Nation in a bankrupt situation. Government has an abnormal fixation on power and control. It is elitist, believes it is superior in intelligence and it’s ability to solve any and all problems. As a result of its arrogance almost 16,000,000 people are unemployed and with little hope that new jobs are on the horizon. Government is a parasite, a leech and a blood sucker all rolled up into one big destructive package eating away the heart and soul of America; it’s citizens and the spectacular performance of a private economy based on ‘The Home of the Brave and The Land of the Free’. And this disaster did not happen only under the current administration. It has been going on for years and years and years. The current group is compounding the previous problems with many ill-advised programs which will make matters even worse. Such as Cap & Trade; new health care bill; higher taxes; larger more intrusive and controlling government; no new nuclear units; no new coal plants; no new drilling; no new refineries; unwise expenditures on ‘green boondoggles’ that cost much and do little to increase energy supplies; higher gas mileage rules; more government control of the private sector leading to higher costs and greater inefficiencies; more stimulus funds that means spending ‘good’ money on ‘bad’ money; and the list goes on. The answer - LESS GOVERNMENT NOW! Reduce the National budget by 10% for the next 10 years. 10% fewer employees. 10% less pay; 10% less everything, (except security). Close the borders and the high cost of caring for illegal’s. Solve the huge unfunded liabilities of Social Security, Medicare and prescription drug programs.Eliminate many rules, regulations and laws that make it impossible for individuals and businesses to do the job of providing goods and services necessary for maintaining a vibrant and healthy economy and providing jobs for our citizens. Will it be easy and without pain? NO! But if this Nation is to be successful, a leader and a light to the world, this must happen, NOW!
Great post. Thank you
Before there can be a “jobless recovery” there has to be a recovery of any kind
Yes, unfortunately, I agree.
The threat of higher payroll taxes and energy costs is more than enough to deter new hiring. Taxes on upper-end investors are going to rise, too, and there may be a health-care surtax on top of that. And don't forget that small businesses pay the top personal tax rate, which is going up. Oh, and how about the recent minimum-wage hike? Yet another business cost.
But, who's to pay all the tax? The businesses not hiring with more tax? A bigger tax burden on the working? (That's kind of a given, anyway.) With fewer back to work, just how much more tax burden will each person be willing to accept before they say 'enough'!
The owner of the company I work for likes to send missives to us along with our paycheck stubs every two weeks. He lets us know what’s going on within the company and without.
I love that man!
Our owner is not backing down and he’s not paying out one PENNY more in taxes or ‘mandatory’ insurance premiums than he has to. (He’s VERY generous; pays us well and we have ‘Cadillac’ insurance policies already.) This is a family-owned company that’s been in business for 105 years now...with no government subsidies and in SPITE of government and it’s hell-bent ways of crippling private industry.
I’d like to see 0bama and Congress take us down, LOL! We’ll all work for freakin’ FREE, 24/7 before that happens.
I despise 0bama with the white-hot intensity of a thousand suns...and I thought I loathed Clinton and Carter, LOL!
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