Task force to study how to rejuvenate the middle class

Almost 18 months ago I wrote a post on the need to rejuvenate the dying middle class in America, so I am glad to see that somebody in Washington has woken up to that reality as President Obama and VP Biden have announced the formation of a task force to study and hopefully "fix" the middle class - the White House Task Force on Middle Class Working Families. Whether their efforts will go anywhere is another matter, but at least they are taking a step in the right direction. Limited details about the task force are available. The short summary:

The Task Force is a major initiative targeted at raising the living standards of middle-class, working families in America. It is comprised of top-level administration policy makers, and in addition to regular meetings, it will conduct outreach sessions with representatives of labor, business, and the advocacy communities. The Task Force will be chaired by Vice President Joe Biden. The Vice President and members of the task force will work with a wide array of federal agencies that have responsibility for key issues facing the middle class and expedite administrative reforms, propose Executive orders, and develop legislative and policy proposals that can be of special importance to working families.

Goals include:

• Expanding education and lifelong training opportunities
• Improving work and family balance
• Restoring labor standards, including workplace safety
• Helping to protect middle-class and working-family incomes
• Protecting retirement security

-- Jack Krupansky

A decline in The Great Depression media mania

Ten days ago I used Google News to count the total number of "news" references to the phrase "The Great Depression" in the previous 24 hours. I just redid the search and I see a decline to 319 hits in the last 24 hours from 411 hits in the 24-hour period ten days ago. This search includes noteworthy blogs as well as articles that were republications of various newswire articles.

The absolute number means little other than a mania on the part of the media, but I'll check back in a week and see if there is a trend emerging or maybe even vanishing.

This is only my second week observing this statistic, so it is too soon to call any trend.

-- Jack Krupansky

The Great Depression mania

I used Google News to count the total number of "news" references to the phrase "The Great Depression" in the past 24 hours. The phrase occurred 411 times in that 24-hour period. That includes noteworthy blogs as well as articles that were republications of various newswire articles.

The absolute number means little other than a mania on the part of the media, but I'll check back in a week and see if there is a trend emerging or maybe even vanishing.

Incidentally, there were 1,477 references to "recession" in that same 24-hour period.

-- Jack Krupansky

The Great Depression - fading?

The economy must be on the verge of perking up -- I have only seen four references to The Great Depression this morning. That is a dramatic improvement compared to the past couple of months. And one of those references was actually simply saying that people are getting tired of constantly comparing everything to The Great Depression.

Granted, our economic future is contingent on the Federal Reserve and the incoming administration making a lot of wise decisions, but that is the way it always is.

The overall economy is "the sum of all curves." Some of the curves (e.g., employment, consumer spending, decline of weak companies and poor credit risks) are continuing to trend downwards, but other curves (e.g., mortgage refinance, money supply, Federal Reserve support for various forms of finance) are trending upwards. Sure, the downwards-sloping curves continue to overwhelm the upwards-sloping curves, but that is the way it always is even shortly before an overall turning point.

The Federal Reserve, Treasury, and Congress clearly have plenty of work to do, but the simple fact that there is more work to do or that not 100% of prior efforts have been 100% successful is not a valid reason to abandon confidence in the efforts to come or the value of the work that has already been done.

-- Jack Krupansky

The Depression

At a public philosophy discussion that I was moderating on Thursday evening one participant started to make a point saying "In the Depression, ..." I interrupted him and asked whether he was referring to the current depression or the last one. My query got a few laughs, but at least some of the laughter was probably nervous laughter. Maybe that about sums up where people feel that we are, not convinced that the current economic situation is necessarily headed for a full-blown depression, but not absolutely convinced otherwise either.

The next year will tell us what we are really dealing with.

I continue to belief that we are dealing with merely a "recession with adjectives" and that the combination of the actions of the Federal Reserve, fiscal stimulus, corporate restructuring, the vast amounts of money still in private hands, and just the passage of time will restore at least a facsimile of growth shortly.

-- Jack Krupansky

Is manufacturing heading into a depression?

The ISM Manufacturing report today was quite gloomy, with an article in The New York Times by Bettina Wassener entitled "Manufacturing Reports Show Depth of Global Downturn" telling us that "manufacturing continued to slump amid the worst slowdown since the Great Depression" and that the ISM Manufacturing index "fell to the lowest level in 28 years in December." 28 years points back to 1980. The Times quotes ISM as saying that "New orders have contracted for 13 consecutive months, and are at the lowest level on record going back to January 1948." 1948 was 60 years ago. Awfully gloomy stuff.

While it is true that manufacturing is an important sector of the U.S. economy it is worth noting that the U.S. economy is now primarily a service economy, so that weakness in the manufacturing sector is not necessarily an indicator of weakness ahead for the overall U.S. economy. Next week we will get the ISM non-manufacturing (services) report, which will also likely show weakness in the services sector of the U.S. economy for the month of December. The ISM Manufacturing report notes that "if the PMI for December (32.4 percent) is annualized, it corresponds to a 2.7 percent decrease in real GDP annually." That is bad, -2.7% real GDP, but that is only if manufacturing does not improve in the months ahead.

The real bottom line here is that everybody knew that December was a bad month for the economy. Detroit had slammed on the brakes and remains near a dead stop, but later in the month the bailout funds should enable the car companies to get started again and we may have a near-$1 trillion fiscal stimulus package on the way as well, so I would not use December as a leading indicator of whether manufacturing or the overall U.S. economy is headed in the months ahead.

Yes, the economic reports for December are truly dismal, but still not so bad as to indicate that a true depression is a likely scenario.

-- Jack Krupansky