Shouldn't the DOW at 10K and 10% unemployment tell us that a rising tide doesn't lift all boats?

[LostInAnomie]

That has been the adage that free marketeers and supply-siders have stood by for generations. If it were true, even with employment being a lagging indicator, shouldn't the situation have gotten dramatically better with such a turn around in the markets?

[DJ13]

1. .....

[notesdev]

2. The tide may be rising

but unless you work on Wall Street or in Washington DC, you don't get a boat.


Seriously, though, there is no "rising tide", there is a plummeting dollar index, about to break through its last resistance level, next downside target zero.

[doc03]

3. Another thread about the unemployment

The President has warned us over and over that the unemployment would likely increase for several months after the economy turns around. What would you suggest we do to put people back to work?

[DJ13]

5. How about we stop helping the wealthy and spend on the lower classes?

I thought Democrats were smart enough not to fall for the trickle down crap?

[Hello_Kitty]

9. So did I but, sadly, the supply side koolaid has been drunk by many on our side

They've been out in full force on these threads today, edjumacatin' us peons on how the Glorious Market never gets it wrong.

[DJ13]

14. I think my DU link got redirected to the Chamber of Commerce today

HELP!

[Hello_Kitty]

6. Another round of stimulus

And all of it needs to go to projects that create jobs and address infrastructure issues. Too much of the current stim package went to tax cuts, which have little stimulative effect.

[doc03]

16. I agree 1000% and said at the time

there was to much pork and to little infrastructure spending. I think the chances of passing another one now is nil. Here locally there are several projects underway but there could have been much more. What would have been better was a big project like high speed rail that would put people to work over several years rather than some short term paving or bridge repair jobs. Of course the Republicans would oppose such a thing saying it would cause deficits but instead would be pushing for tax cuts that would cause deficits. They have one solution for all problems, tax cuts.

[LostInAnomie]

7. That's not my point.

My point is that there isn't a connection between what is good for Wall Street and the investor class and what is good for workers and the nation. We need to quit acting like they are linked.

[Hello_Kitty]

11. Oh but dontchaknow, jobs are a LAGGING indicator!

Never mind that we're still waiting for the jobs to come back from the last 2 recessions.

[JVS]

22. Nice class-conflict stirring, Pol Pot!

;-)

[sendero]

62. Exactly...

... Wall Street is it's own game, it no longer has anything to do with the economy. P/E ratios are off the chart. "It's different this time". Yeah, right.

[FreakinDJ]

15. As if everyone DOSEN'T know Employment is a Lagging Indicator

sorry I just can't change reality for you

[Greyhound]

29. The same thing that virtually every independent economist has suggested since this latest loot-fest

began, long before it actually, pump the stimulus into the real economy and let the banksters die. Direct, no interest loans, to small business and start-ups, eliminate all tax deductions for off-shoring and out-sourcing, eliminate income classes, require reciprocity in international trade, deep cuts in military spending, in addition to rebuilding and improving national infrastructure.

There is no mystery or magic to fixing this, the difficulty is only created by insisting on propping up the parasites that did this in the first place.

[doc03]

40. That may all be fine but it is politically impossible

when all the Republicans just say no to everything. Then there are always those Blue Dog Democrats and Lieberman to contend with.

[Greyhound]

60. Very good, ask a question and then pretend there is no answer.

Why don't you guys go take back your own party? You're just fucking this one up, too.

[dana_b]

4. damnit

I meant to recommend and I accidentally unrecommended. sorry.

[FrenchieCat]

8. Employment is tied to Consumer Spending not neccesarily the performance of the Dow....

The Dow numbers are based on last quarter's earnings...which would have risen due to businesses cutting payroll.

But what the Dow going up does is to create a particular mood, which can in turn ignite consumer sentiment, which in turn can increase consumer spending, which creates demand, and in turn cause businesses to hire employees.

I don't believe the cycle is as short as you are estimating, based on the question you are asking.

Over many cycles, employment growth has proved to be a lagging indicator of consumer spending, typically peaking a year after consumer spending and bottoming six to twelve months after the trough in consumer demand.* It is evident in this chart that peaks and troughs in employment follow, rather than lead, those of consumer spending. This suggests that even though employment does have some secondary causality in driving consumer demand, it should never be used as a primary indicator in forecasting consumer spending.



*This reflects, logically, the fact that workers are hired as and after the economy improves and laid off as and after the economy deteriorates. Despite this, a surprising number of economist use employment as the dominant element in the forecasts of consumer spending.

Employment growth (green line) in the 2003-2006 recovery was in line with, to somewhat less than, in past recoveries and, as always, followed the upward path of consumer demand—the economy’s key driver. As year-over-year growth in real consumer spending had fallen, with ancillary effects on industrial production, services, and capital spending, employment growth also fell from late 2006 through 2008, employment growth also fell sharply, to year-over-year declines as of late 2008. We may expect employment statistics look poor well past the trough of consumer spending that may occur in late 2009 and 2010. As always, savvy economic observers and investors should disregard this lagging indicator in forecasting economic direction.
http://www.aheadofthecurve-thebook.com/11-03.html

[doc03]

19. Excellent post the worst thing for the economy is

a gloom and doom attitude. We have all these people preaching gloom and doom, it's like they enjoy suffering. Consumers having enough confidence in an economic recovery to buy things is what will get people to work. Of course on DU that means buy a foreign product because they hate American companies so much they don't care about the workers they hurt. Oh by the way I have been unemployed for nearly six months because people are not purchasing products made in America using American steel.

[Hello_Kitty]

20. Oh, but they want to bring your job back.

They just want to give it to a foreign worker on a visa who's willing to work for half what you do.

But it's not about cheap labor. Nooooooo. :eyes:

[eridani]

63. All the happy shiny horsehit in the world will not connect the fake economy to the real one n/t

[elocs]

61. There you go, dazzling us with fancy graphs and facts.

We all know that if the Dow goes up there needs to be immediate and corresponding job improvement.

[dysfunctional press]

10. in order for the tide to go up in one part of the world- it has to go down in another...

and the american worker can tell you where the tide's been going out.

[janx]

12. What, we're supposed to expect people to offer us jobs at some point?

:rofl:

Nope, we still have to look for them. ;-)

[LostInAnomie]

13. SO you are saying the problem is that people aren't looking for jobs?

That's why there is 10% unemployment? People just aren't looking for work. :wtf:

[janx]

26. Nope--I guess you misunderstood. n/t

[Hello_Kitty]

18. Have you been unemployed for an extended period of time?

I have and I can tell you that the unemployed spend 99.9% of their waking hours looking for jobs, applying for jobs, going to job fairs, networking, etc. And if you are lucky enough to receive UI, guess what you have to do to earn that princely sum of $200 a week? You must prove to the unemployment office that you have been actively seeking work. You have to keep a log and affirm every time you make your weekly claim that you did not turn down any job that you were qualified for. Even if it paid far less than the one you lost and had no benefits. They can spot-check your log to make sure that you went on the interviews you said you did and that you were not offered a job. I went on plenty of interviews but did not get offered a single job until (finally) I landed one right as my benefits were running out. Sadly, that position which I held for all of 5 months was eliminated so I get to do this all over again! I'm in the process of losing my home and all my savings (that I worked years to build up) are gone.


I can't tell you how excited I am to be out there looking for work in our great "recovering" economy. Now, if you'll excuse me, I'm going to drink a bunch of cheap Chardonnay right now.

[doc03]

23. I have been unemployed for 24 weeks

myself. In my case the only way I will get recalled to my job is if consumers have the confidence to start buying things made from steel. The government can't make my company produce steel it can't sell, people have to buy things. The stock market going up will put money in peoples pockets and eventually give consumers confidence to spend again. Those stocks that are going up are not just owned by rich folks they are held in pension plans, 401Ks, IRAs and a by lot of plain ordinary working people.

[Hello_Kitty]

33. I get that but I don't think people cheering the Dow understand the gravity of peoples' situations.

People need more than just confidence to consume. They need actual money. Or, in the absence of that, they need credit that lets them pretend they have money. So many people in this country are out of work and have lost their homes and exhausted their savings and destroyed their credit ratings. Even people with jobs don't have the ability to spend like they used to because the home equity and credit that had been substituting for wage increases all these years is no longer there.

[JVS]

36. They need security. Even if you have the money on hand, knowing that your job could vanish at any..

moment and you'd be unable to survive on the pittance that is our safety net will cause you to hold the money and keep it so that you won't lose everything if the worst comes to pass. It's come to the sad point where consumer spending is just too big a risk for a large segment of the population.

[Hello_Kitty]

49. Yep. eom

[doc03]

39. It's the most serious recession since the 30's I think we are

lucky it wasn't far worse. Most of the economic experts agree that if the financial industry wasn't bailed out things would have been far worse. I have recouped most of the value I lost in my 401k and things are picking up, it takes time. I am thankful we have a Democrat in office and unemployment was increased $25 a week and was extended also we get a tax credit for 80% of COBRA. It took the Republicans 8 years to make this mess, it will take a while to dig out of it.

[doc03]

53. I feel for people that have lost their jobs, I'm one myself

But to say people don't have money is just ridiculous. Average working people have smaller families but their homes are about 2 times the size of the average home was in the 50s. Average working people have $30000 Harley Davidsons, $40000 4x4 pickups, $6000 4 wheelers, $5000 lawn tractors, HDTV's, cell phones they pay $100 plus a month for, pay $150 or more for cable, $30000 boats, second and third cars, camps at the lake, need I go on? If anything many of these people destroyed their own credit ratings by being in debt up to their necks. My father worked all his life on what was considered a good paying Union job and he was never able to afford his dream car a Buick century or the small row boat he always wanted for fishing. People today have no idea what it was like for our parents and grandparents, today's recession is child's play compared to the 30's.

[Hello_Kitty]

55. You don't get it. They don't have the money for those things anymore.

And while you're scolding people for living beyond their means, recall that consumer spending has been 70% of our GDP the past several years. Those foolish people with their foolish purchases were propping up the economy and responsible for the ephemeral service and retail jobs that provide a big portion of our population with their livelihood.

[eridani]

64. The stock market puts money into rich people's pockets

There is a limit on how much they can spend. The market has not the slightest effect on my real life, and therefore no input into my spending decisions.

[janx]

35. I have been under employed to the extent that I am in debt.

Does that count?

I have worked full-time and been paid part-time.

[Hello_Kitty]

37. Not really.

When you are completely out of work the depths of depression and panic are indescribable.

[janx]

41. Indeed they are. n/t

[janx]

43. Not really?

Amazing.

[Orsino]

17. The Dow is not the economy.

It is a measure of how easily the rich can steal from us.

[JVS]

21. I think there is a fundamental misunderstanding of the phrase

A rising tide lifts all boats seems most logically to mean that if the masses (i.e. the water) live better, the rich (the boats floating on top of the masses already) still do well and are better off for it.

It has come to be understood as what's good for the King is good for the peasants. This is the opposite of what it was meant as in my opinion.

[doc03]

24. I never worked for a poor person

the current owner of my company is on the list of the Forbes 400 richest people in the world.

[JVS]

25. Yes you have. It's mostly poor people who used to buy that steel you mention upthread.

It's when these people become too poor to buy steel that you have no work.

[doc03]

27. There are plenty of people with money to buy things

it's just at the present time they are reluctant to spend it. Our industry is cyclical it's either feast or famine, I have seen a lot of these business cycles over the last 40 years. In mid 2008 we were selling steel faster than we could produce it. In the last quarter of 2008 we were running at less than 40% of capacity as of last week we have come up to around 56%. Things are slowly coming back.

[janx]

31. Is there some Facebook connection here?

?

[JVS]

34. Huh?

[janx]

38. Sorry for the weird stuff--somebody also referenced NASA--

on FaceBook--which, incidentally, is a waste of time. ;-)

ALSO

I love NASA, for many reasons!

[JVS]

42. NASA's moon bombing has inspired me to show my support!

[janx]

51. HA! You might be a friend space friend of mine! The NASA

logo tipped me off.
My uncle was a guy who majored in humanities and also in engineering. He had a couple of degrees in liberal arts and a couple of degrees in engineering--one of which was aeronautical engineering from Cal Tech.

[janx]

52. Many of these!

:hug:

[janx]

56. And the Mars bombing, too!

:rofl:

[Greyhound]

30. Just when did you leave the republik party?

That is the oldest and most inane prevarication in the neocon lexicon.

[doc03]

32. It's just a fact, I never had a poor

person sign my paycheck. Poor people don't buy new cars, middle class and wealthy people do.

[ipaint]

57. I've never had my groceries bagged by a rich man, my car repaired by a rich man,

my hair cut by a rich man, my trash collected by a rich man, my food harvested by a rich man, my clothes sewn by a rich man, my food served in a restaurant by a rich man, rich men don't make anything I buy from cheap labor overseas, rich men don't answer customer calls, they don't clean their toilets or mine, don't do their laundry or mine in fact the laundry mat I wash my clothes at is owned by relatively poor people, the people who ring up my purchases at the store aren't rich, the nurses at the low cost community clinic aren't rich, the librarians that help me find the books I want to read aren't rich, the teachers at the school at the end of my street aren't rich, the mail person isn't a rich man....I could give a shit about the rich. The less of them the better.

In fact if you eliminated that top percentile of mega hoarders we'd probably learn to live just fine without them and their nasty habit of stealing all the wealth our labor produces.

[Hello_Kitty]

48. And yet here you are without a job. So you're not working for a rich person either. eom

[HughMoran]

28. Here in the NE, when the tide changes, it still takes 4 hours before the tide is high

The Dow and several other measures are leading indicators of what's going to happen 6 months to a year down the road. Companies don't hire significant numbers of people until they are pushing their existing capacity - which will only happen in select industries for the time being.

[janx]

44. I could see that happening in Maine. n/t

[girl gone mad]

50. No, the stock market is not a leading indicator.

[Raineyb]

59. And when they can get the same amount of work with less people when exactly do they hire? n/t

[Lisa0825]

45. The stock market is a "leading indicator" and employment is a "lagging indicator." nt

[janx]

46. Please stop it with the cliches that you found somewhere else.

Thanks!

George Orwell thanks you as well!

[TheKentuckian]

47. What made you think the stock market is a rising tide that lifts all ships?

The axiom is pretty good but it doesn't fit this situation at all.

[janx]

54. (cough)

I think it was a joke... ;-)

[TheWebHead]

58. well the markets would still have to rise 45% to reach their 2007 high

but from a valuation perspective, as long as unemployment is stable the economy and stocks can advance with those who are working. For business, it helps their profits because there's a large available workforce that keeps wage inflation down and it makes those who have a job that much more efficient for fear of losing their jobs.