White House: Jobs report shows economy ‘gaining traction,’ but…

…look out for the impact of across-the-board spending cuts known in D.C. as “sequestration.”

The American economy added 236,000 jobs in the month of February and unemployment dropped from 7.9 in January to 7.7 percent last month, according to new figures released on Friday morning by the Bureau of Labor Statistics.

The White House cheered the report. Alan B. Krueger, chairman of the Council of Economic Advisers, said in a White House blog post that “while more work remains to be done, today’s employment report provides evidence that the recovery that began in mid-2009 is gaining traction.”

But Krueger emphasized that the data came from early February, “before sequestration began.” Those cuts, roughly $85 billion for the rest of the fiscal year, are expected to whittle down economic growth and cost jobs, according to nonpartisan analysts.

“The monthly employment and unemployment figures can be volatile, and payroll employment estimates can be subject to substantial revision,” Krueger said. “Therefore, it is important not to read too much into any one monthly report and it is informative to consider each report in the context of other data that are becoming available.”

By Olivier Knox and Rachel Rose Hartman | The Ticket

People wait on line to meet with recruiters during a job fair in Melville, N.Y., last year

Krueger’s comments recalled President Barack Obama’s March 1 admonition that failing to replace sequestration would hold down what remains a slow but steady recovery—comments that sounded very much like an insurance policy against the potential political damage to come. “Every time that we get a piece of economic news, over the next month, next two months, next six months, as long as the sequester is in place, we’ll know that that economic news could have been better if Congress had not failed to act,” Obama said.

Republicans greeted the report as decent news, but they declared the economy was still weaker than it should be.

“Any job creation is positive news,” Republican House Speaker John Boehner said in a statement. “But the fact is unemployment in America is still way above the levels the Obama White House projected” four years ago in the debate over the stimulus package.

Disputed Asian islands could lead to a disastrous war for everyone

Japanese activists raised flags early last August on Uotsuri Island, part of the small archipelago known in Japan as Senkaku and in China as Diaoyu.  Kyodo/Reuters

By Wei Jingsheng
In both China and Japan, mad and blind policies combined with nationalism and fanaticism are behind the Senkaku/Diaoyu dispute. US policy is making matters worse. Its approach seems to have been “planned by bookworms and entrepreneurs, rather than politicians.” An armed conflict would be a disaster for the entire world. Such a war would bring nothing and would leave no one immune.

Washington (AsiaNews) – Three Chinese vessels have entered the waters near Senkaku/Diaoyu Islands, which are disputed by Beijing and Tokyo. Judging the move unacceptable Japan has said that it would take adequate countermeasures. This military provocation comes after the dispute between the two nations over the islands heated up in September even though it is unclear whether they are economically valuable. What it is clear is that they have become a lightening rod for nationalism in two countries affected by political divisions and economic problems.

According to Wei Jingsheng, a great Chinese dissident who authored one of the essays posted on the ‘Democracy Wall’, the dispute poses huge risks. Now that the United States has waded into the conflict, things might get worse rather than better, and turn it into an armed confrontation that would hurt both sides. Here is Wei’s analysis of the situation.

The dispute between Japan and China over the Diaoyu Islands has been like one wave coming after another. It has already been determined by the U.S. Secretary of Defense that it “could result in violence and could result in conflict” without a good end. This is not what the USA expected when it was realigning its policies to return to Asia. However, it should have been expected.

When the Obama administration planed its policy of returning to Asia, it treated Japan as a major driving force. It planned to promote Japan’s position in Asia to suppress the rapid rise of the Chinese Communist regime. Thus it could stimulate Japan’s sense of responsibility, to encourage it to take some responsibility, and meanwhile save the resources of the United States, instead of a unilateral hands-on approach for everything. This seemed to be a perfect plan. Unfortunately, this plan is too academic and industrialized. In other words, it is like a scheme planned by bookworms and entrepreneurs, rather than politicians.

The genesis of this plan is intuitive and simple as a factory production workshop, rather than an evaluation of the deeper and complicated changes in Japan, China and the United States. So it has encountered a predicament of its own making. Now let us make a simply review of the gap between this plan and reality.

First, the plan incorrectly treated the reaction of the Hu Jintao’s administration as that of Xi Jinping’s. Initially, it reckoned that China would retreat when Japan pressed harder and harder; that China would adopt Deng Xiaoping’s policy regarding this territorial dispute headed by Japan and collaborated with by the Philippines in an effort to keep the momentum of economic development in China. The result would be that the confidence of the U.S. allies would greatly increase while the hegemony of China would greatly reduce. Without a shot being fired, the United States could concretely return to Asia.

But the first result was that the actual reaction from Xi Jinping which was totally unexpected of the USA. First, Xi had just taken over power. If he wanted to achieve something, he needed to establish prestige.

According to tradition in the Chinese Communist Party, to have a victorious battle is the simplest and most effective method to establish prestige. Both Mao Zedong and Deng Xiaoping established their undisputed prestige by defeating a powerful enemy. Second, Xi Jinping dared to take a gamble against the USA and believes that the USA will not dare nor is it capable of waging a war, especially waging a full-scale war with a big country of nuclear power. It can be said that Xi Jinping has basically won the bet already.

.

The second result that was out of the expectation of the USA was the reaction of Japan and the Philippines. The Philippine President has already begun to emphasize his Chinese ancestry, obviously wanting to exit the battle safely and hide on the sidelines waiting for profit from others ‘conflicts. This is a very normal reaction from a weak country such as the Philippines. It also illustrates that the international community clearly views that the USA will not resort to another war. Hoping to confront China by relying on U.S. military support is a very foolish choice.

Japan should not take a hard-line strategy that provokes a war, but should choose entangled tactics, as Mao Zedong said, “When the enemy advances, we retreat; when the enemy retreats, we advance.” That is because Japan will not get any benefit from war, but entangled tactics obviously puts both Chinese foreign and internal affairs at a disadvantage. If Xi Jinping’s administration did not provide results, not only would Xi Jinping be unable to explain this failure to the fanatical nationalist youths in China, he would be unable to explain it to the candidates inside the Communist Party who want to overthrow him. The hard-line of Japan pushed Xi Jinping into a corner. Not to mention that Xi has the assurance to defeat Japan alone.

The foolishness of Japan is not due the foolishness of its politicians, but due to its fanatical nationalism that does not allow its politicians to take a flexible strategy. As soon as the Yoshihiko Noda government slightly displayed some flexibility, the fanatical Japanese people ousted it. The ignorance and fanaticism of the Japanese nation led to its failure in the Second World War, yet they do not think it was their fault.

Now, they are pushing its government toward the abyss. The promise of security from the USA is pouring the oil on this fire of Japanese fanaticism.

Who would profit from this possible war? For certain, Japan will be the most miserable. Because this war will not be carried out on someone else’s land. From the beginning, it will be carried out on the territory of Japan, and may not get the support from the United States. What the United States can do is to confine the war to the territories of China and Japan instead of spreading to the rest of Asia, or even the whole world.

Of course the USA will carry out real trade sanctions, which is conducive to improving its domestic economy and employment conditions.

To the Chinese Communist regime, it will gain more than lose; but to China itself, the drawback would be more than the benefit. This war would make the foreign relations of China return back to where they were before the

1972 U.S. President Richard Nixon’s visit to China, meanwhile losing its favorable international environment for economic adjustment and development. More importantly, it would consolidate authoritarian rule of the Chinese Communist Party with the support of fanatical nationalism, thus losing the last chance for democratic reform. Maybe there would be a revolution like that in 1917, but it may also extend the rule of the Chinese Communist Party.

The original assumption of the Americans is that they could stay out. But this is impossible. When the second and third largest economies in the world are at war the global economy will collapse, thus also resulting in a synchronous impact on the U.S. economy. Although it is possible that the Sino-US trade deficit would be reduced, due to the decrease in exports to both China and Japan the employment rate in the USA would not be increased. The level of consumption in the United States will certainly decline; the financial industry will fall into a disaster. Due to the variability of the war, all the industries must adapt. Development will certainly stagnate or go backwards. The results will not be good for the USA either.

There is another possibility that the war would not be as the people planed and remain only between China and Japan. As was said in Art of War by Sun Wu: warfare is based on treachery. It is characterized by the unpredictable and does not follow rules. Further, a war between two big countries involves a huge range of interests. The possibility of the war being limited only on the territories of these two countries is not likely. Who could guarantee themselves to be safely positioned outside this kind of world war?

Since it is a war that could benefit no one, then each party should try to work together to stop it. What is needed now is for the politicians of the three parties to calm their minds and take some responsible actions.

The disaster of many wars is caused by political intrigue and fanaticism of the politicians whose minds were not clear. Often the small calculations of the politicians are likely to bring huge disasters.

Who would be responsible for these disasters? Usually those who bear the consequences of the disasters are the average people.

Britain Starts To Worry About Continued Debt: More Public Borrowing Isn’t Working

A change in policy is in the air. About time too. Not only was the last quarterly GDP growth figure negative but the next one may also be pretty weak.

‘Companies would be more likely to invest, banks to lend, and households to spend, if they could believe in economic recovery.’ Photo: Alamy

 

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By Roger Bootle

The Telegraph

Meanwhile, the reduction of public borrowing, which has been this Government’s overriding aim, has stalled. Unless something turns up soon, there is a real risk of economic catastrophe. Let’s all hope that something does indeed turn up. But Mr Micawber is not a good example to follow. So what can be done?

The current policy framework is part of the problem. It was designed to maintain the confidence of the financial markets so that the government’s deficit can be funded cheaply. This imperative underlies both the inflation targeting regime and the emphasis on reducing the government’s borrowing requirement.

Admittedly, there was also a belief that low inflation and prudent public finances would boost the confidence of households and companies and hence contribute to the strength of the real economy. But this was a subsidiary objective. In any case, if this was the intention, the outcome has recently been dismal.

Mind you, this strategy was correctly based on the idea that in economic affairs, as in so much else, confidence is often absolutely vital.

The trouble is that the strategy is a direct response to the financial crises of the 1970s, whereas the current predicament shares more in common with the 1930s.

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The most pressing issue now is not how to maintain the confidence of the financial markets but rather how to boost the confidence of firms and households in economic recovery – and thereby to make it more likely.

Companies would be more likely to invest, banks to lend, and households to spend, if they could believe in economic recovery.

Nor is the real economy imperative in blatant conflict with current financial objectives. The financial markets now realise that their greatest threat derives from the absence of economic recovery.

There are several things that could be done. The inflation targeting regime could be tweaked to create scope for inflation to return to target over a longer period, thereby giving the flexibility to undertake more expansionary policy and to give meaningful assurance that interest rates will not rise for a long time.

As Mark Carney suggested, this could be supplemented by a clear statement that rates would not be raised until GDP or employment reached a pre-specified level.

Another (but controversial) measure would be to announce an exchange rate cap, as the Swiss have. The response of exporters to a lower exchange rate is bound to be muted if they have no assurance that the currency is going to stay down. Again, confidence is crucial.

Fiscal policy has its part to play as well. Last week’s report from the Institute for Fiscal Studies argued that after the election the Government would either have to cut departmental budgets by a further 6pc in real terms or raise taxes by £20bn. Such an increase in taxes would be madness. But households and companies may believe that it is going to happen.

The Government needs to rule it out explicitly. Indeed, the Chancellor could announce much tougher future cuts in current spending, but accompanied by pre-announced reductions in taxes.

Moreover, the Government needs to take actions which themselves help to boost recovery as well as encouraging private companies to increase investment.

The first priority is to reverse planned cuts in public investment and indeed to increase spending on infrastructure.

Of course, the Treasury will say that there are no viable projects that could be undertaken quickly. They always do.

Some years ago, an advertising campaign pitched TSB as the bank that likes to say “yes”. The Treasury is the department that likes to say “no”. The Chancellor needs to put his foot down – lay out the plans, really commit to them, and communicate this to the private sector.

I have banged on before about decisions on key projects which have large public sector involvement but which may also hold the key to major private sector spending, e.g. over London’s airport capacity.

The Government has kicked this issue into the long grass by commissioning a study which will not finally report until 2015. But it could lay down a timetable for what will happen thereafter and give an undertaking that one of the major options for expanding capacity will be taken.

Above all, both the Government and the Bank need to instil confidence.

The present Governor’s habit of telling us all that we are in the worst downturn of all time and that it isn’t going to get better until Doomsday has not been helpful.

He may be right, but telling all and sundry doesn’t increase the chances of him being proved wrong. Yes, Churchill promised us blood, toil, tears and sweat, but he also promised victory.

He not only created the material means to achieve it but also, by his words and personal bearing, persuaded people to believe in it.

Roger Bootle is managing director of Capital Economics roger.bootle@capitaleconomics.com

 

Obama Reelected Nine Days Ago: All Economic Indicators Regret Voters’ Choice, New Recession Looms, Obama Legacy Could Be as “Poverty President”

Job seekers are reflected in a mirror on the ceiling as they line up to register for an employment fair sponsored by National Career Fairs in San Diego. Photo: Sam Hodgson/Bloomberg

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Jump in Jobless Claims; Inflation Nudges Up

Super storm Sandy drove U.S. weekly jobless claims up to 439,000, while consumer prices rose slightly last month as higher rents and costlier food offset cheaper gas.

Separately, a reading on manufacturing in New York State showed that factory activity slowed in November for a fourth straight month.

Super storm Sandy drove the number of people seeking unemployment benefits up to a seasonally adjusted 439,000 last week, the highest level in 18 months.

The Labor Department said Thursday that weekly applications increased by 78,000 mostly because a large number of applications were filed in states damaged by the storm. People can claim unemployment benefits if their workplaces close and they don’t get paid.

The storm has affected the claims data for the past two weeks and may distort reports for another two weeks, the department has said.

The four-week average of applications, a less volatile number, increased to 383,750.

Sandy hit the East Coast on Oct. 29 and disrupted businesses from North Carolina to Maine. The storm also cut power to roughly 8 million homes and businesses. Some are still without power.

Before the storm distorted the figures, weekly applications had fluctuated between 360,000 and 390,000 since January. At the same time, employers have added an average of nearly 157,000 jobs a month. That’s barely enough to lower the unemployment rate, which was 7.9 percent in October.

There are some signs that the job market is improving. Employers added 171,000 jobs in October and hiring in August and September was stronger than first estimated. The economy has gained an average of 173,000 jobs a month since July. That’s up from an average of 67,000 a month in April through June.

The unemployment rate rose slightly in October from 7.8 percent in the previous month because more Americans began looking for work. That suggest some felt their chances of finding a job had improved. Not all of them found jobs, which pushed up the unemployment rate. The government only counts people as unemployed if they are actively searching for work.

The economy appears to have grown faster over the summer than first thought, based on a handful of positive September reports on inventory growth and trade released this month. Many economists now predict growth at an annual rate of roughly 3 percent in the July-September quarter, up from the initial estimate of 2 percent reported last month.

The government releases its second estimate for third-quarter growth on Nov. 29.

Still, many economists say the economy is growing in the current October-December quarter at a weak annual rate below 2 percent.

The storm combined with cautious consumers to lower retail sales in October. Consumers may also be holding back because of anxiety over big tax increases and spending cuts — known as the “fiscal cliff” — that will take effect in January unless Congress and the White House reach a budget deal by then. Many companies are likely to scale back hiring and investment, too, until the fiscal cliff debate is resolved.

Inflation Ticks Up as Rental Costs Rise

Meanwhile, rising food costs and higher rents offset a drop in gas prices last month, leaving consumer prices only slightly higher in October compared with the previous month.

The consumer price index rose a seasonally adjusted 0.1 percent in October, down from sharp gains of 0.6 percent in the previous two months, the Labor Department said Thursday. In the past year, prices increased 2.2 percent. That’s just above the U.S. Federal Reserve’s inflation target of 2 percent.

The cost of shelter, which includes rents, rose 0.3 percent, the most in more than four years. Clothes and airline fares also rose, while the price of new and used cars fell.

Food prices rose 0.2 percent, while gas fell 0.6 percent. Excluding the volatile food and gas categories, core prices increased 0.2 percent.

Modest inflation leaves consumers with more money to spend, which can boost economic growth. Lower inflation makes it easier for the Fed to continue with its efforts to rekindle the economy. If the Fed were worried that prices are rising too fast, it might have to raise interest rates.

Gas prices rose sharply over the summer and into September, but have since come down. The average price for a gallon of gas nationwide was $3.44 on Wednesday, about 35 cents below last month’s level.

Most economists forecast that food prices rose last month. This summer’s drought damaged corn, soybeans, and other crops. Corn and soybeans are used in animal feed, which means the price of meat and chicken could increase.

And corn is also used in many products found throughout the supermarket, from cereals to soft drinks to cosmetics.

Regional Manufacturing Slows

A gauge of manufacturing in New York State showed that activity slowed in November for a fourth straight month, the New York Federal Reserve said in a separate report.

The New York Fed’s “Empire State” general business conditions index came in at -5.22, from -6.16 the month before. Economists polled by Reuters had expected a reading of -6.70.

New orders rose to 3.08 from -8.97, the first positive reading for the forward-looking component index since June, while inventories were at -12.36 from -2.15.

Employment gauges showed a decline. The index for the number of employees fell to -14.61 from -1.08 and the average employee workweek index fell to -7.87 from -4.30.

The index of business conditions six months ahead came in at 12.88 in November from 19.42 in October.

The survey of manufacturing plants in the state is one of the earliest monthly guideposts to U.S. factory conditions.

The survey also asked how businesses were affected by super storm Sandy, which hit the U.S. Northeast in late October.

In New York City, 100 percent of firms reported some reduction in activity due to the storm, with 70 percent citing loss of power and communication as a major factor.

However, only 21 percent of firms in upstate New York reported a loss of activity.

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Jump in Jobless Claims; Inflation Nudges Up

By Michelle Jamrisko and Shobhana Chandra - Nov 15, 2012

More Americans than forecast submitted claims for unemployment insurance last week as superstorm Sandy wreaked havoc on the job market.

Applications for jobless benefits surged by 78,000 to 439,000 in the week ended Nov. 10, the most since April 2011, the Labor Department said today in Washington. Several states said the increase was due to the storm that hit the Northeastern part of the U.S. in late October, a Labor Department spokesman said as the data were released to the press.

The extent of the damage means it may take weeks for the underlying trend in firings to again become clear. Before the storm, the labor market was gaining momentum even as year-end domestic fiscal policy uncertainties raised concern among businesses.

“At least a few state labor offices were shut in the prior week so it’s almost as if you have two weeks of claims in one,” saidRyan Wang, an economist at HSBC Securities USA Inc. inNew York. “You have a double whammy this week, where people were filing claims they were unable to previously and individuals unable to work for the storm were filing additional claims.”

Stock-index futures dropped after the report, erasing earlier gains. The contract on the Standard & Poor’s 500 Index maturing in December fell 0.1 percent to 1,351.80 at 8:59 a.m. in New York.

Sandy struck the Northeast region, including New York andNew Jersey, as it came ashore Oct. 29, and those who lost their jobs because the storm shuttered businesses may keep filing claims in coming weeks.

Sandy’s Impact

The Labor Department spokesman did not name the affected states, citing agency policy not to single out any one area. Today’s report showed a loss of electricity prevented New York offices from taking claims two weeks ago.

In addition, since Monday was a government holiday, three states and territories — Hawaii, Oregon and Puerto Rico – didn’t report claims data, causing the Labor Department to estimate their totals, the spokesman said. Two others, California and Virginia, provided their own estimates.

Claims were projected to rise to 375,000 from the prior week, according to the median estimate of 49 economists surveyed by Bloomberg. Projections ranged from 340,000 to 475,000. The prior week’s reading was revised up to 361,000 from an originally reported 355,000.

Throwing Darts

“When you’re trying to forecast a lot of the economic data, frankly, around a natural disaster like that, it’s like throwing at a dartboard,” said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York, who projected a rise of 385,000. “We knew they would go up, but it was hard to say how much.”

The consumer price index rose 0.1 percent in October, the smallest gain in three months, Labor Department figures also showed today. The so-called core measure, which excludes more volatile food and energy costs, increased 0.2 percent.

Manufacturing in the New York region contracted for a fourth straight month in November as superstorm Sandy knocked out electrical power and limited activity, a report from the Federal Reserve Bank of New York showed.

The bank’s general economic index was minus 5.2 this month after minus 6.2 in October. The median forecast of 55 economists in a Bloomberg survey called for minus 8. Readings of less than zero signal contraction in New York, northern New Jersey and southern Connecticut.

Bolstering Builders

While pushing up claims, the storm may bolster homebuilders and other housing repair companies. Sandy’s damage could spur a sales boost similar to the one provided by Hurricane Irene, which added about $360 million in sales last year, executives at Home Depot Inc. (HD)said on a Nov. 13 earnings call.

“The property damage, as we understand it, related to Irene was about $16 billion; the property damage for Sandy is about $20 billion, so it would suggest possibly higher sales, but it’s impossible for us to know right now,” said Carol Tom, the Atlanta-based company’s chief financial officer.

A less-volatile measure of claims, the four-week moving average, rose to 383,750 from 372,000, today’s report showed.

The number of people continuing to collect jobless benefits climbed by 171,000 to 3.33 million in the week ended Nov. 3, the most in more than four years. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 33,300 to 2.12 million in the week ended Oct. 27.

States, Territories

The unemployment rate among people eligible for benefits rose to 2.6 percent in the week ended Nov. 3 from 2.5 percent. Thirty-four states and territories reported an increase in claims, while 19 reported a decrease.

Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.

The payroll report released Nov. 2 wasn’t affected by Sandy. Businesses in the U.S. hired 184,000 workers in October, the most since February, indicating they see enough demand to expand even in the face of the tax increases and spending cuts slated for January unless Congress acts.

Still, changes to headcount show the labor market hasn’t been able to gain traction in 2012. Gains in total payrolls so far this year have averaged 157,000 a month, little changed from the 153,000 average for 2011.

A separate survey of households showed the jobless rate rose to 7.9 percent from 7.8 percent in September as 578,000 people joined the workforce is search of a job, swamping the 410,000 gain in employment.

Federal Reserve Chairman Ben S. Bernanke and his policy- making colleagues last month had a detailed discussion about whether the central bank should link its policy of holding the main interest rate at zero to numerical measurements of unemployment and inflation, an approach that participants “generally favored” over the current approach of specifying a calendar date through which rates will remain low, minutes of their October meeting released yesterday showed.

To contact the reporters on this story: Michelle Jamrisko in Washington atmjamrisko@bloomberg.net; Shobhana Chandra in Washington at schandra1@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Census: U.S. Poverty Rate Spikes, Nearly 50 Million Americans Affected

WASHINGTON (CBSDC/AP) – As President Barack Obama is set to begin his second term, new statistics on America’s poverty rate indicate that nearly 50 million Americans, more than 16 percent of the population, are struggling to survive.

New figures released by the Census Bureau this week found a spike in poverty numbers last year, going from 49 million in 2010 to 49.7 million last year. The numbers may come as a surprise to Congress, which estimated in September that the poverty rate would drop to 46.2 million. One of the most startling findings showed that almost 20 percent of American children continue to live in poverty.

The Associated Press reports that the new figures are based on an updated formula devised by the Census Bureau to help give the government a better understanding for how to use safety-net programs.

The numbers found that Hispanics and people living in urban areas had a higher chance of struggling to make it financially. Poverty among full-time and part-time workers also saw a jump from its 2010 numbers.

Based on the formula implemented by the Census Bureau, California tops the list as the sate most likely to bring about poverty. The top five is rounded out by the District of Columbia, Arizona, Florida and Georgia.

“We’re seeing a very slow recovery, with increases in poverty among workers due to more new jobs which are low-wage,” Timothy Smeeding, a University of Wisconsin-Madison economist who specializes in poverty, told The Associated Press. “As a whole, the safety net is holding many people up, while California is struggling more because it’s relatively harder there to qualify for food stamps and other benefits.”

Adults in the age groups of 18 to 64 and 65 and older saw spikes in their poverty rates. Hispanics and Asians saw greater spikes than white people, according to the statistics. Black people saw a slight decrease in poverty, but still have a rate of 25.7 percent.

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Euro zone falls into second recession since 2009

By Robin Emmott and Michelle Martin

BRUSSELS/BERLIN | Thu Nov 15, 2012 9:46am EST

(Reuters) – The euro zone debt crisis dragged the bloc into its second recession since 2009 in the third quarter despite modest growth in Germany and France, data showed on Thursday.

The French and German economies both managed 0.2 percent growth in the July-to-September period but their resilience could not save the 17-nation bloc from contraction as the likes of The Netherlands, Spain, Italyand Austria shrank.

Economic output in the euro zone fell 0.1 percent in the quarter, following a 0.2 percent drop in the second quarter.

Those two quarters of contraction put the euro zone’s 9.4 trillion euro ($12 trillion) economy back into recession, although Italy and Spain have been contracting for a year already and Greece is suffering an outright depression.

A rebound in Europe is still far off. The debt crisis that began in Greece in late 2009 is still reverberating around the globe and holding back a lasting recovery.

Analysts said even the euro zone’s top two economies were likely to succumb in the final three months of the year.

“That was the last good number Germany for the time being,” said Joerg Kraemer, chief economist at Commerzbank. “I don’t expect the German economy to return to decent growth rates until the middle of next year.

Most economists expect Germany to contract in the fourth quarter for the first time since the end of 2011. And where Germany goes, France is likely to follow.

“We expect the French economy to contract again in the final quarter of this year,” said Joost Beaumont of ABN Amro.

For all of 2012, the European Commission sees the euro zone contracting 0.4 percent, while growing just 0.1 percent in 2013. Business surveys point to difficult times ahead and the public’s backlash to austerity policies is growing.

A Reuters poll of more than 70 economists predicted the bloc’s new recession will extend until the end of the year and 2013 promises little better than stagnation, in line with what the Commission is forecasting.

Conducted before Thursday’s data were released, the consensus was for a 2012 contraction of 0.5 percent and just 0.1 percent growth next year.

Millions of workers went on strike across Europe on Wednesday to protest the government spending cuts they say are driving the region into a deeper malaise but which Germany and the Commission say are crucial to healing the wounds of a decade-long, credit-fuelled boom.

“We are now getting into a double dip recession which is entirely self-made,” said Paul De Grauwe, an economist with the London School of Economics. “It is a result of excessive austerity in southern countries and unwillingness in the north to do anything else,” he said.

SHARP DUTCH CONTRACTION

The Commission says the euro zone’s economies will be much healthier overall next year than in 2009, which was the nadir of bloated budgets when Greece’s fiscal deficit reached a record 15.6 percent of GDP and Ireland was not far off at 13.9 percent.

The threat of a euro zone break up has also diminished after the European Central Bank promised to buy euro zone government bonds in potentially unlimited amounts, should a country first seek help from the bloc’s permanent rescue fund.

There have been fledgling signs the Italian economy is improving. Consumer confidence has risen and the pace at which industrial output has fallen is slowing.

Nonetheless, the country’s “acquired growth” at the end of the third quarter stood at -2.0 percent, meaning that if GDP is flat in the final three months of the year, the economy will have shrunk by two percent over the year as a whole.

Spain, which has kept the euro zone on tenterhooks over a decision on whether or not to seek help from the euro zone rescue fund, is also in recession. It contracted 0.3 percent in the third quarter.

The Dutch economy shrank much more sharply than expected, by 1.1 percent on a quarterly basis, the biggest drop in the quarter of any euro zone country. Austria’s economy contracted 0.1 percent. Tiny Cyprus shrank 0.5 percent.

Figures out earlier this week showed the Portuguese economy shrank 0.8 percent quarter-on-quarter while Greece tumbled further, casting doubt on whether Athens and its lenders can come up with a credible plan to put its finances back on track.

EU policymakers seem aware that government spending cuts cannot keep up at the current pace, particularly after shocking suicides in Spain by people who had their homes repossessed.

Spain’s Economy Minister Luis De Guindos has repeatedly called for EU-mandated budget cuts to take into account the euro zone’s recession, while Greece has been given two more years to make the cuts demanded of it.

“The last couple of days have created a new momentum for a change in policy, because up until this week, social tension was not part of the equation,” said Steen Jakobsen, chief economist at Saxobank. “It seems like the tone has shifted dramatically.”

(Writing by Robin Emmott and Mike Peacock. Additional reporting by Daniel Flynn in Paris and John O’Donnell, Ben Deighton and Robert-Jan Bartunek in Brussels. Editing by Jeremy Gaunt.)

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Market Selloff After Obama’s Re-election No Accident, Recession Coming

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By Charles Biderman

From Forbes

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Ever since Obama won eight days ago, stock prices are down about 4% as this is being recorded. So stocks peaked September 14—two months before the election—when the Federal Reserve announced the current version of quantitative easing, and stocks held up pretty much right through an election day rally.

But now that the election is over stocks are dropping with no bottom in sight. This is no accident given investors’ fears of higher taxes and continued big spending, including higher taxes on capital gains, which inevitably will tank the economy. In fact, I believe we are headed for a recession.

It is important to remember that on election day, $19.3 trillion was the market value of all U.S. stocks. That $19.3 trillion was not that far below the all time peak reached in 2007 but was also more than double the $9 trillion stock market capitalization at the March 2009 low.

To me, that is a major reason why Obama won the election. Romney lost not because the real economy is doing anything good, but because lots of people who voted for Obama incorrectly assumed that the high stock prices were a strong indicator that the economy was on the road to recovery.

They also ignored, or in many cases, didn’t understand, that higher stock prices were actually the result of Fed manipulation. They also believed the highly suspect data from the BLS and other government agencies that the economy was improving.

But now the election is over and stocks are dropping as reality is setting in.

Everything I read and hear says to me and many other investors that the Obama administration is totally committed to raising income tax rates and maintaining virtually all current government spending.

To me that guarantees that next year after-tax income will decline in the U.S. by at least 2% if all the current tax increases happen.

And, declining after-tax income is my definition of a recession.

The realization by Wall Street that higher taxes are inevitable next year is forcing tax oriented year-end selling of lots of assets, including stocks. Ironically that will boost income tax collections early in 2013, but capital gains tax collections will certainly crater later in the year.

By the way, I don’t care what GDP does. GDP is a joke. All that really matters is income. And that is why we at TrimTabs track after tax income in real-time as best we can as soon as it is available from the U.S. Treasury.

I firmly believe if the Obama Administration gets away with raising taxes and not cutting spending it will crash stocks through next year. Lower stocks combined with declining take home pay will create a social mood that will not be perceived as pleasant.

In fact, that could be why Marc Faber said he wants a tank to deal with what is coming, not just guns.

Sooner or later the developed world will come to understand that governments are ineffective at providing services and if governments are not stopped they will bankrupt us.

Charles Biderman is president and CEO of TrimTabs Investment Research and portfolio manager of TrimTabs Float Shrink ETF.

Jobs Reports Still Very Troubling: Unemployment Rate Drops — But Not For Black Men

Economists are reporting that the economy is improving and we are seeing the evidence in a lower unemployment rate but the lower rate has not meant more jobs for African American men. The latest statistics from the Department of Labor show that African American men have not gained from the decrease in the unemployment rate.

In September an additional 114,000 jobs were added to the economy. There were over 86,000 additional jobs also added in July and August. In the last 31 months, the private sector has added jobs every single month which reflected well on President Obama who took office during the worst economic crisis since the the Great Depression.

It’s interesting to note that among adults over the age of 20, the improvement in unemployment rates was only for African-American women. The employment rate for Black women improved from 55.1 percent to 55.3 percent but the employment rate for Black men decreased from 57.7 percent to 57.5 percent.

Over the course of President Obama’s first term, more than a million jobs have been created and the unemployment rate has reached its lowest point in 44 months at 7.8 percent in September.

While the rest of the country celebrates, it’s important to note that overall, African-American employment only went up from 52.7 percent to 53.0 percent and unemployment only fell from 14 percent to 13.4 percent.

Since the Obama administration implemented the American Recovery and Reinvestment Act of 2009 we have seen more jobs being added every month starting from March 2010.

While the rest of the country and the Obama administration talk about how more jobs are being created, a conversation also needs to be going on about why Black men are not reaping the benefits of those additional jobs that are being created.

As Election Nears, Romney Crowds are Surging

SIDNEY, Ohio (AP) — The crowds tell the story. As Election Day nears, Mitt Romney is drawing large and excited throngs.

Look to dusty Iowa cornfields, rain-soaked Virginia parks, the muddy fields of the Shelby County

Fairgrounds, where a crowd of 9,500 – almost half of this western Ohio town – gathered among the barns and stables on a frigid October evening this week to glimpse the Republican presidential contender.

“Where else would we want to be?” said one of the shivering faithful, Judy Cartwright, a 71-year-old nurse from Sidney. “I want to see the next president of the United States.”

Romney’s debate performance against President Barack Obama last week – and his energetic appearances following it up – have fueled a rise in enthusiasm on the campaign trail. Whether or not it will translate into votes, polls do suggest that Republicans are fired up. It’s a welcome development for the Republican businessman, who is hardly a natural politician and has long struggled to match Obama’s ability to inspire excitement.

In Virginia, for example, Republican leaning counties appear to be getting the fastest start on absentee voting ahead of Election Day. State Board of Elections data analyzed by the Virginia Public Access Project, a nonprofit and nonpartisan tracker of money in state politics, shows that of the 25 localities where absentee voting is busiest, 21 voted Republican in the 2008 presidential race. And of the 25 localities where absentee balloting is the slowest so far, 16 supported Obama.

Romney seems to be feeding off the energy pumping through his now-sprawling crowds, even as aides downplay the newfound momentum among the GOP base.

“I’m overwhelmed by the number of people here,” he exulted while scanning the sea of supporters packed beyond the fairgrounds fences here. “There are even people out there – that’s another county over there.”

Virginia is for Romney lovers: Republican presidential nominee Mitt Romney gestures at a campaign event in Richmond, Virginia on Friday

Read more: http://www.dailymail.co.uk/news/article-2217201/Mitt-Romney-Crowds-surge-campaign-events-GOP-candidate-rides-wave-momentum.html#ixzz29CuErcQK
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Romney’s growing crowds come as new polls suggest he has erased Obama’s advantage in voter support nationally. Races have tightened in a handful of battleground states, too.

The president’s challenge on the campaign trail this year has been to match the high excitement bar he set in 2008. For Romney, it has been to exceed low expectations.

But recent polling suggests the “enthusiasm gap,” long thought to lean toward Obama, has leveled off.

The Pew Research Center poll this week found that 68 percent of registered voters who back Obama support him strongly. Some 67 percent of Romney voters are strongly behind him. That’s the first time Pew’s poll has found the two candidates even on this measure.

Romney “getting it done” in Ohio

And a Washington Post-ABC News poll conducted after the Oct. 3 debate showed the GOP nominee drawing “strongly favorable” reviews from 62 percent of Republicans, the highest level of deeply positive views that poll has found during the campaign. Overall, Romney’s favorability among Republicans stands at 87 percent. Obama draws favorable views from 93 percent of Democrats, including 68 percent who hold strongly favorable views.

Obama can still turn out big crowds. As the election draws close, the president is appearing in college settings where he can depend on the enthusiasm of younger supporters. Within the past nine days, he has spoken before 30,000 people at the University of Wisconsin, 15,000 at Ohio State University and 9,200 at the University of Miami.

But in 2008, to note one striking example, he drew an astonishing 100,000 people to a single rally in Denver in late October. And this year’s campaign audiences, like Obama himself, seem to vary in their enthusiasm. The students who filled a field at Ohio State on Tuesday were supportive but hardly buzzing when Obama implored them to vote.

One recent night, at a concert hall in San Francisco, Obama showed he can still whip 6,000 supporters into building cheers.

“I still believe in you. I’m asking you to keep believing in me,” he declared. “I’m asking for your vote. I’m asking you to knock on doors. I’m asking you to make phone calls. And if you do, we will win this election. We’ll finish what we started. And we’ll remind the world why the United States of America is the greatest nation on earth.”

The level of enthusiasm matters as each side tries to get as many of its supporters to the polls as possible. A big Republican enthusiasm advantage two years ago helped the GOP capture control of the U.S. House of Representatives in addition to making huge gains in statehouses across the nation.

For much of this year, Romney, the sometimes-stiff former businessman, has had a hard time generating the same electricity as Obama.

Indeed, most of the GOP’s most passionate voters did not back Romney during the extended Republican primary season. His campaign typically favors made-for-TV invitation-only events where the emphasis is imagery – Navy ships, manufacturing plants, farm equipment – rather than crowd size. Audiences did increase as Romney began campaigning alongside running mate Paul Ryan, a favorite of the tea party, but he has generally struggled to get people excited on his own.

Until this week.

He drew an estimated 12,000 people to a central Florida rally last weekend, 1,200 to an Iowa town of just 1,000, and several hundred more to Newport News, Va., under heavy October rain.

“People wonder why it is I’m so confident we’re going to win. I’m confident because I see you here on a day like this. This is unbelievable,” Romney said, his wet hair stuck to the side of his face.

Soaked supporters standing in muddy puddles cheered as he delivered an abridged version of his standard campaign speech. Some wore ponchos, while many others stood shivering and drenched, hands in pockets.

At the Shelby County Fairgrounds, Judy Cartwright was wearing four layers to try to keep warm as the cold wind pushed temperatures into the 30s Wednesday night. It was Shelby’s first glimpse of a presidential candidate since she met Harry Truman as an elementary school student more than six decades ago.

“At least it’s not snowing,” she said with a smile. “This is a chance of a lifetime.”

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AP White House Correspondent Ben Feller and Deputy Director of Polling Jennifer Agiesta in Washington and Bob Lewis in Richmond, Va., contributed to this report.

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The crowds tell the story. As Election Day nears, Mitt Romney is drawing large and excited throngs.

Look to dusty Iowa cornfields, rain-soaked Virginia parks, the muddy fields of the Shelby County Fairgrounds, where a crowd of 9,500 – almost half of this western Ohio town – gathered among the barns and stables on a frigid October evening this week to glimpse the Republican presidential contender.

Romney’s debate performance against President Barack Obama last week – and his energetic appearances following it up – have fueled a rise in enthusiasm on the campaign trail. Whether or not it will translate into votes, polls do suggest that Republicans are fired up. It’s a welcome development for the Republican businessman, who is hardly a natural politician and has long struggled to match Obama’s ability to inspire excitement.

Read more: http://www.dailymail.co.uk/news/article-2217201/Mitt-Romney-Crowds-surge-campaign-events-GOP-candidate-rides-wave-momentum.html#ixzz29CuORmsi
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Romney and Obama focus on debate preparations

Republican vice presidential candidate, Rep. Paul Ryan, R-Wis., right, speaks as Republican presidential candidate, former Massachusetts Gov. Mitt Romney, listens during a campaign rally in Lancaster, Ohio, Friday, Oct. 12, 2012. (AP Photo/Paul Vernon)

By KASIE HUNT | Associated Press

COLUMBUS, Ohio (AP) — Republican presidential candidate Mitt Romney is preparing for his second debate with President Barack Obama but taking time to tell voters in Ohio that enthusiasm for him is surging both in this critical state and across the country.

Obama was hunkering down Saturday in Virginia to go over the game plan for the town hall-style debate with Romney. But his weekly radio and Internet address on Saturday spoke of an industry that’s critical to Ohio, another battleground state and perhaps the most important to his Republican opponent’s White House hopes.

“We refused to throw in the towel and do nothing. We refused to let Detroit go bankrupt,” Obama said in the address. “GM is back. Ford and Chrysler are growing again. Together, our auto industry has created nearly a quarter of a million new jobs right here in America.”

Romney opposed using government funds to help the auto industry go through bankruptcy. Many analysts believe the industry would not have survived if it had relied on private investment for rescue. It’s an issue that has dogged Romney in Ohio, where numerous auto parts suppliers benefited from the survival of the Detroit Three automakers.

The Obama campaign also released a new TV ad narrated by actor Morgan Freeman noting the challenges Obama inherited and highlighting the president’s successes, including saving jobs for American autoworkers and killing Osama bin Laden.

Romney is concluding a week of campaign rallies that saw him drawing larger, more excited crowds than he has through the fall campaign. More than 10,000 people turned out to several rallies, with the campaign saying that more people were signing up to attend events since Romney’s strong debate performance last week in Denver.

“I’ve had the fun of going back and forth across Ohio, and this week I was also in Florida and Iowa, I was in North Carolina and Virginia. And you know what? There is a growing crescendo of enthusiasm,” Romney told a crowd of thousands at a sunset rally Friday in Lancaster, south of Columbus, where he and running mate Paul Ryan appeared together. “There’s more energy and passion. People are getting behind this campaign. We are taking back this country.”

Saturday will be the fourth of the last five days Romney will spend campaigning in this industrial, Midwestern state — with 18 electoral votes, it’s critical to his hopes of winning the White House. His campaign swing comes as he and Republicans criticize Obama for the handling of the terrorist attack on the U.S. Consulate in Benghazi, Libya.

Romney accused Vice President Joe Biden of “doubling down on denial” concerning security at the diplomatic post where the U.S. ambassador and three other Americans were killed. During the vice presidential debate Thursday, Biden said “we weren’t told” about the Benghazi consulate’s requests for additional security. Although a State Department official told Congress on Wednesday about the requests, the White House said Friday that Biden was speaking just for himself and for the president.

“The vice president directly contradicted the sworn testimony of State Department officials,” said Romney, who was eager to stoke a controversy that has flared periodically since the attack. “American citizens have a right to know just what’s going on. And we’re going to find out.”

Romney plans to spend Saturday morning at a hotel outside Columbus, where he’ll meet with top advisers and get ready for his showdown with Obama in Hempstead, N.Y., on Tuesday. He returns to Massachusetts in the evening but first makes two campaign stops in Ohio.

After his widely panned performance in the first presidential debate, polls show Obama still holds a slim edge in Ohio. The state is crucial for Romney because his path to winning the 270 electoral college votes he needs is far narrower if he can’t win Ohio. Losing here would mean he’d have to win almost all of the other up-for-grabs battleground states.

Obama was in Ohio this week, too, but he was spending the weekend in Williamsburg, Va., preparing for the debate. The president has acknowledged he needs to turn in a stronger performance when the two meet again.

Obama and top aides plan hours of practice sessions ahead of the town hall-style event, including some mock exchanges with Sen. John Kerry, D-Mass., who is playing the role of Romney.

Campaign officials sought to keep details of Obama’s preparations secret. But they said the president was working on being more aggressive in responding to Romney and calling the Republican out on issues as well as pointing out what they maintain are Romney’s true positions.

While Obama has no public events planned in Virginia over the next three days, his mere presence in the state will drive some local news coverage. And he may make unscheduled visits in the Williamsburg area.

The president practiced for the first debate in Nevada, another battleground state.

Rock and Roll Hall of Famer Bruce Springsteen will join former President Bill Clinton at an Obama rally in Parma, Ohio, on Tuesday, the day of the second presidential debate. Obama will not attend the rally.

Springsteen campaigned for Obama in 2008, but this is his first political appearance of the 2012 cycle. Clinton and Springsteen’s joint appearance in Ohio underscores the importance of the key swing state. Polls show Obama with a slight lead there over Mitt Romney.

Romney: ‘I will put work back in welfare’

Romney in Illinois (Scott Olson/Getty Images)

By Holly Bailey, Yahoo! News | The Ticket

Mitt Romney went after President Barack Obama in his own backyard on Tuesday, accusing his Democratic opponent of gutting bipartisan welfare reforms signed into law by former President Bill Clinton.

Speaking at a manufacturing company in Elk Grove, Ill., just outside Chicago, the presumptive Republican nominee accused Obama of trying to “reverse the accomplishment” of Clinton’s welfare reform efforts, which he called “one of the greatest bipartisan successes we’ve seen.”

Romney was speaking about a recent Department of Health and Human Services directive that removed federal work requirements in what Obama administration officials said was an effort to grant states more flexibility in determining who can qualify for welfare assistance.

Romney called that move “wrong”—arguing that the work requirement signed into law by Clinton had not just been a cost-saving measure but had encouraged Americans to walk away from a “culture of dependency.” The work requirement, Romney said, had cut welfare caseloads in half and had reduced the number of Americans living in poverty—which he described as a “great accomplishment.”

“They did not want a culture of dependency to continue to grow in our country, but instead wanted people to have the blessings of work,” Romney said of those who backed the welfare reforms signed into law by Clinton.

“If I am president, I will put work back in welfare,” Romney added. “We will end a culture of dependency and restore a culture of good hard work.”

Romney’s line of attack came hours after his campaign unveiled a new television ad accusing Obama of trying to undo the Clinton-era reforms. The spot featured a photo of Clinton and came just weeks after the Romney campaign featured the former president’s wife, Secretary of State Hillary Clinton, in two other ads ripping Obama for false attacks in 2008.

Lis Smith, an Obama campaign spokeswoman, called Romney’s claims on welfare reform “untrue and hypocritical”—citing a 2005 letter Romney signed when governor of Massachusetts that pressed Congress to give states more flexibility to determine who should qualify for welfare.

“These false and extremely hypocritical attacks demonstrate how Mitt Romney lacks the core strength and principles the nation needs in a president,” Smith said in an email to reporters.

But perhaps anticipating that push-back, Romney addressed his critics while on the stump today in Illinois—telling supporters he moved to strengthen work requirements for welfare recipients when he was governor.

“Not because I don’t think people who need to be helped shouldn’t be helped,” Romney explained Tuesday. “I very much agree that those who are seriously disabled or can’t work need to have the help of the rest of us. But those who can work ought to have the opportunity for a good job.”

MORE COVERAGE FROM YAHOO! NEWS

• Mitt Romney’s dad had a card giving him free McDonald’s for life
• Photo of the day: Romney courts middle-class voters in Illinois
• Elephants may be contributing to deforestation

Obama’s gift to Mitt Romney campaign: ‘You didn’t build that’ business speech

“If you’ve got a business, you didn’t build that. Somebody else made that happen.”

If you haven’t heard, President Obama gave Mitt Romney a great gift when he uttered those words in Roanoke, Va., last week.

But you don’t have to wrench these words out of context to make a conservative attack on them, as Rep. Raul Labrador (R) of Idaho pointed out Thursday and as Mr. Romney has demonstrated on the stump.

In fact, the most conservative attack on Mr. Obama’s clumsy phrasing leaves the words just as they are. Here’s a fuller reading of Obama’s statement:

“If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business, you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

“The point is, when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.”

As Representative Labrador pointed out on Thursday, taking the president at his word – that he meant not that government built American businesses but instead that government built and/or fostered the roads, Internet, and public safety necessary for business to flourish – is still ripe for conservative attack.

 David Grant | The Christian Science Monitor | Jul 22, 2012

“It’s not the government’s money!” Labrador said. “It was business people who gave the government money so we could have roads and buildings and infrastructure. That is what is fundamentally deficient in this administration…. He completely and fundamentally misunderstands what creates business, what creates a thriving economy.”

Referring to his colleague, Rep. Jeff Duncan (R) of South Carolina, who noted on the House floor that he drove some 60,000 miles building his business, Labrador noted that Representative Duncan “was paying for the roads that he was driving.”

“I want to know what government entity created a business that paid for those roads,” he said. “Not a single one!”

In other words, the money the government used to build the roads and develop the Internet came from somewhere. That somewhere was private enterprise – and some say that Obama’s inability to recognize that is his fatal flaw, economically speaking.

Romney himself offered a similar critique this week.

“The taxpayers pay for government. It’s not like government just provides those to all of us and we say, ‘Aw, thank you, government, for doing those things,’ ” he said in Irwin, Pa., on Wednesday. “No, in fact, we pay for them, and we benefit from them, and we appreciate the work that they do and the sacrifices that are done by people who work in government. But they did not build this business.”

But that’s not the critique most American people are seeing.

The Romney campaign cut a slick commercial taking Obama to task over that statement, using a heavily modified version of the president’s words as an introduction before cutting to a powerful monologue from Jack Gilchrist of Gilchrist Metal Fabricating Company in Hudson, N.H.

“My father’s hands didn’t build this company? My hands didn’t build this company? My son’s hands aren’t building this company? Did somebody else take out the loan on my father’s house to finance the equipment?” Mr. Gilchrist says.

“With hard work and a little bit of luck, we built this business. Why are you demonizing us for it?” he adds, which could very well be Romney’s core message to voters over the past few days.

(This requires Romney to engage in some old-fashioned political opportunism: He has to hack Obama’s actual statement to pieces, as Talking Points Memo demonstrates here.)

But although “demonizing” is a lot splashier and evocative than simply not identifying the source of economic growth, a conservative reading of Obama’s full statement still generates a forceful critique.