William Katz:  Urgent Agenda

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DOLDRUMS – AT 10:18 A.M. ET:  Despite heroic struggles by the mainstream media to portray our economy as making a comeback, the comeback always seems to be reversed in short order.   We've been told, for example, that the employment picture is improving.  Well, it really isn't.  From Bloomberg:

Applications for unemployment benefits in the U.S. rose for the first time in three weeks, returning to levels seen prior to the holiday period and indicating little change in the pace of firings.

Jobless claims increased by 20,000 to 362,000 in the week ended Feb. 16, the Labor Department reported today in Washington. The median forecast of 48 economists surveyed by Bloomberg called for an increase to 355,000. The number of applications in three states and the District of Columbia was estimated because of the holiday-shortened week, a Labor Department spokesman said as the data was released.

Companies are maintaining their staffing levels even amid concern that rising gasoline prices and a January tax increase will damp consumer spending. Looming cuts in government spending also threaten to slow growth, a sign that hiring may be limited in coming months.

“It’s a stable level of claims,” said Yelena Shulyatyeva, an economist at BNP Paribas in New York, which predicted claims would rise to 365,000. “The main issue is the pace of hiring is not picking up. Businesses feel very uncertain about the outlook.”

COMMENT:   If claims reach 400,000 again, we'll be in serious trouble.  That is considered a major danger point.   Also, the story mentioned it, gasoline prices are rising once more, and normally rise again as summer begins.  That always has a dampening effect on the economy.

One of my great fears is that we will enter a long-term recession, and get used to it.  It's happened in Japan.  It happens regularly in Europe.  Some may feel that this will produce electoral change, and that Americans will look to the Republicans for salvation.  No, that probably won't happen.  When times are tough people often turn to the government for help, even though it doesn't help the long-term economic prospects of the country. 

February 21, 2013