Big Fat Story
The president of Ariel Investments sees modest improvements on the ground.
Job numbers and consumer confidence may have observers spooked, but according to Mellody Hobson, president of Ariel Investments LLC, things may be better than they seem. "We might be bumping along the bottom," Hobson told The Daily Beast in an interview. "We're not seeing robust improvement, but we are seeing it trend up a bit in some of our companies." According to Hobson, the Obama administration gets an "A for effort." "I think they've tried everything," she said. Hobson added that calls for a second stimulus are premature given that the first package has largely gone unspent. "Let's get all that money put to work before we start talking about what's necessary," she said. "Since the stimulus was actually passed, it's been just under five months and it's hard to put almost $800 billion to work instantly in a smart way."
When the jobless numbers hit 9.5 percent in June, economists were eager to see the bright side. But not Mort Zuckerman, editor in chief of U.S. News & World Report, who says it's really worse than we think. In an editorial in The Wall Street Journal, Zuckerman points out that cumulative job losses over the last six months are now greater than any other six-month period since World War II. "No wonder poll after poll shows a steady erosion of confidence in the stimulus," he writes. And for those hard-lining optimists, Zuckerman gives 10 reasons why the economy is worse than we think. Among them: The number for June, he explains, ignored 185,000 unidentified people who were probably not at work; it didn't count employees on unpaid leave; work weeks are shortening for per diem workers; and if the unemployed hadn't looked for work in the four weeks before the survey—which is about 1.4 million people—they wouldn't have shown up in the numbers. To top it all off, when things begin to look better again, employers will start by giving existing workers more hours and picking up part-timers before they hire someone unemployed. "The time to get ready for a serious infrastructure program is now," Zuckerman writes. "It's a shame Washington didn't get it right the first time."
Nobel laureate economist says the heady 2000s are not coming back any time soon.
The economy is bound to bounce back eventually thanks to household savings, recovering banks, and innovative entrepreneurs, but how high will it go? According to Columbia Professor Edmund Phelps, winner of the 2006 Nobel Prize, the economy that emerges from the recession may bear little resemblance to the good old days. "I think we're going to be looking at a new reality," Phelps told The Daily Beast. "It would be a pipe dream to think we could get back to 4.5 percent unemployment such as we had in the middle years of the present decade." Phelps said that banks' unwillingness to take on risk and the loss of wealth from the housing crash will take years, perhaps as many as 15, to recover from. He suggested that the government institute programs to similar to one being used in Singapore that pay companies to keep low-wage employees on the payroll in order to help with unemployment in the short term.
Have We Turned the Corner?
Bank profits are up, job numbers are down, and the market is erratic—is the economy any closer to a rebound? Six smart takes from business leaders and Nobel laureates.
Could the recession be distracting us from bigger concerns?
According to Harvard economics professor Claudia Goldin, the long-term damage from the recession might be felt in the environment rather than the economy, if only indirectly. "Climate change is perhaps a much bigger thing," Goldin told The Daily Beast. "In many ways, we are perhaps being misled into believing that this is the big thing. It is sort of like standing around and worrying about your food supply and then having a meteorite come crashing down on your head." As for the economic problem at hand, Goldin recommended making use of the number of unemployed, low-wage workers by implementing policies heavily subsidizing enrollment at community colleges and vocational training.
NYU Professor Nouriel Roubini, nicknamed "Dr. Doom" for his gloomy predictions, drew widespread attention for accurately predicting the housing collapse. But can he predict when it will end? In an interview with Bloomberg this week, Roubini gave his forecast: Six more months of recession, powered by weak consumer spending and mounting bills for struggling companies. “The wave of corporate defaults is going to be massive,” Roubini said. “We’re not out of the woods.” Roubini added that the savings rate, already at a more than 15-year high of 6.9 percent, will climb to 11 percent before things turn around.
The economist and columnist wants more government spending.
A critic of the Obama administration's economic policies, New York Times columnist and Nobel laureate economist Paul Krugman made waves last week when he called for a second stimulus package. Whether or not such a move is politically possible, however, is another story. "The bad employment report for June made it clear that the stimulus was, indeed, too small," Krugman wrote. "But it also damaged the credibility of the administration’s economic stewardship. There’s now a real risk that President Obama will find himself caught in a political-economic trap." Krugman decried the original stimulus bill as insufficient at the time it was passed, arguing that a larger package was needed to close the weak economy's output gap and prevent unemployment from spiraling out of control.
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No riddle here. We keep trying to spend our way out of a spending problem. The only hope we have is to grow our way out, and Obama does not seem to get this.
No, we are trying to put money in people's hands so they can buy what the industrial economy is perfectly capable of producing, but which everyone is too broke to pay for.
There is a kind of "spending problem," though -- at some point, we're either going to fix the problem of one-way resource extraction from the environment (unlike other market phenomena, no balancing payment is made to the earth), or that account will be so overdrawn that Mother Nature will cut off our credit. And you think you've seen an angry bitch before?
Problem is that to many people, growing our way out of debit is the same solution that put us in this place. Tax cuts to the wealthy, more of Regan economics, trickle down economics and the complete bag of tricks the right has been preaching for year after year. If the republican party had it's way, ninety percent of the citizenry would live in squalor while the other ten percent would live like royalty. That and only that, is the ultimate goal of the GOP.
I may have told this story here before, I put in on someplace. One c-span caller said all he wanted was to go to work every day, get a pay at week's end, and go out and buy things.
One lady said on NPR , she was making good money at her job, but now she's willing to settle for A JOB, PERIOD.
The short answer is 'NO'.
Further...it's not so much a corner as a bend; a long bend! And when we eventually get around this bend, we will find that consumers' purchase habits have changed as have their attitudes towards saving as opposed to habitual spending.
This comment has been removed by The Daily Beast's editors.
Maybe some .........there is no comparison between the number of jobs lost to the entrance of 'aliens' and the jobs 'American' (but not good Americans) corporations have outsourced.
Stop being a tool.
3/4 of stimulus money isn't out there yet. Administration is waiting to see it they HAVE to spend it. They are looking for the Nudge. That being said, we are going to tank again in the fall, then get back on the upward by late 2010. China and India will outrace us, and probably have something to do with pulling us out.
We have turn the corner! give me a brake the answer is NO these people are just trying to keep their lucrative jobs and humungous paychecks, invest with me and I'll set you free
been their done that ---- didn't work
why do we even discuss this? Everyone knew economy was a gravy train built on lies and no one wanted to stop the party before they got theirs...Even my aged mother saw this coming 10 years ago....who can respect the businessman, the scholars, the WSJ, the talking heads anymore...it's comical!
Well, I'm a little on the aged side myself and my mother more so and both of us came to the conclusion at least one year before the you-know-what hit the fan that our economy was built on a house of cards. Despite the naysayers, there are signs that the economy is improving. Its just too bad it came to this in the first place. Business cycles are what they are, but the bottoming out of this disaster was totally man made.
Thank you.
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