Unemployment Over 10%
The October employment report shows there are 5.8 million fewer jobs than last year. This trend is a tad better than September, when the economy was down 6 million jobs. These year-over-year stats show the trend is improving. In the 2001 recession, the economy did not regain health until this number trended up. Although that recession only lasted 8 months, it led to 29 months of job losses. (See Google Spreadsheet Employment)
$3.2 Billion Well Spent to Help Vets
Sometimes you just gotta do the right thing. Secretary of Veterans Affairs (VA) Eric K. Shinseki announced the Federal government will spend $3.2 billion to rehabilitate 154,000 homeless veterans. This includes $2.7 billion on medical services to treat the debilitating depression and PTSD often caused by war. The remaining $500 million will be spent on homeless programs.
Will this help the economy get back on its feet, create jobs or increase GDP growth? We will never know. The results may never be measured. As discussed by Riane Eisler in her book The Real Wealth of Nations, GDP doesn't measure at-home child care, the cost to dispose of plastic or the misery of a veteran living on the streets. If it did, our society would change. Which is exactly what she argues. Until then, sometimes you just gotta trust your gut and know when its time to do the right thing.
How High Will Gold Climb?
Gold hit another all-time record of $1,081.70 an ounce, thanks to India's purchase of 200 metric tons from the IMF (International Monetary Fund).
Read more...What Is the Real Cost of Medicare Fraud?
One of the key arguments in Obama's healthcare reform proposal is that the government can lower healthcare costs by 1.5% a year, by negotiating lower prices and reducing other inefficiencies. The annual healthcare bill is $2 trillion, so this would save $30 billion a year.
A recent "60 Minutes" show, repeated by many sources, says Medicare fraud costs $60 billion a year, which would negate the savings in the Obama plan. However, my About.com colleague and professional journalist Pierre Tristam reports the true cost is closer to $19 billion at most. My own estimates put fraud costs between $14-$30 billion.
Share Your Opinion - Should Healthcare Be Reformed
Recession Is Over, Thanks to Stimulus
The economy grew 3.5% in the third quarter this year, the first time it has been positive since the recession started in 2007. Recessions are usually defined by negative GDP growth. The BEA report means the recession is technically over.
However, much of the growth was driven by the Economic Stimulus Program and the Cash for Clunkers incentive. Government spending contributed 2.3% to GDP growth, while motor vehicle sales contributed 1.66%. Without the spending, GDP would have still been negative. With a Federal debt level hovering around $12 trillion, how long can government spending drive the economy?
For a history of all GDP reports since 2007, see GDP Current Statistics. (Source: GDP News Release)
Critical Business Orders Trend Is ... Better
For the first time in 18 looonnng months the critical economic indicator - manufacturers' orders for Durable Goods - was not as bad as the month before. Whew!
Business orders for things like computer equipment, industrial machinery and airplanes were only 23% worse than the prior year. This shows businesses are not quite as pessimistic about the economy as they were in July and August. Since I've done nothing but report worsening news for the last year and a half, I will desperately grab this as a potential sign of good news.
Foreclosure Trend Is Improving
Foreclosures are trending in the right direction. August foreclosures were 358,471, which was 1% less July's record. It was 18% worse than last year, but this is still better than July's record, which was 32% worse than last year. However, even though the trend is better, this is still a LOT of foreclosures, meaning the housing market will be slogging it out for months to come.
July's foreclosure rate was the most since RealtyTrac began keeping records in 2005. Nearly two-thirds (60%) of the foreclosures are from just six states: Nevada, Florida, California, Michigan, Arizona and Illinois. California banks have beefed up their foreclosure departments, expecting higher home losses.
Will Plummeting Dollar Drive Up Oil Prices?
Today the dollar's value against the euro dropped below the psychological barrier of $1.50 per euro. In response, oil rose to $81 a barrel. The last time this happened? You guessed it - last summer, when oil prices shot above $100. Will that happen again? Probably not, since we area headed into the fall, the beginning of low demand as the summer driving season ends.
Food Prices Down for 1st Time in 40 Years
Good news! Your grocery bill should be cheaper, as deflation has finally lowered food prices, down 2.7% from the year before. The Bureau of Labor Statistics (BLS) reported this is the first time in 40 years that food prices were less than the year before.
Overall, the Consumer Price Index (CPI) was down 1.3% since last year, largely due to a 36% drop in gas prices (Yay!). The only inflation is in health care, which is 3.3% higher than last year. (Source: BLS Consumer Price Index: August 2009)
Surviving the Commercial Real Estate Time Bomb
President Obama was formally briefed by his economic team last week on the commercial real estate time bomb that I've been warning about for months. Tony Richardson, of Richardson Heritage Group, pointed out that:
A Washington trade association for developers, the Real Estate Roundtable, estimates that nearly $300 billion a year in short-term commercial real estate loans will mature each year for the next five years. A lot of the loans could go bad if they are unable to be refinanced. Can you believe it?! $300 billion a year every year for the next five years! Absolutely staggering! Kimberly, you were spot on, but what in the world do we do about it?