The U.S. economy is sick and Joe Consumer is tapped out. Now for millions begins the revolving door game of how to pay essential bills without going bankrupt.

by Apocrypha for The International Chronicles 



I’m just gonna’ throw this one out there for you to chew on. It is from the work of Heidi Shierholz at EPI (Economic Policy Institute). And I think it demonstrates just how far down the rathole the jobs situation is. Check it out: … “The length of the average workweek increased slightly in January, from 33.8 to 33.9 hours. All else equal, an increasing workweek at this point is a sign of hope for a broader recovery, since hours are likely to pick up before employment picks up as employers who have cut hours will restore the hours of their existing workforce before hiring new employees. To provide an idea of the scope of this factor, the decline in the total number of hours worked in the economy since the start of the recession that is due to reduced hours alone (i.e., not job loss) is equivalent to 2.5 million jobs. This means there is an enormous amount of hours to be restored before hiring picks up."


Imagine this? This economy shed the equivalent of 2.5 million jobs based on the number of hours cut. The ramifications of this tidbit run the gamut from Productivity to a case for lack of Inflationary pressure to Retail Sales … and beyond. Kinda’ like jobs lost invisibly. Jumpin’ Jehosaphat. But come to think of it, while a depressing figure, it should be no surprise. Don’t you remember how we learned months ago as the average work week was on its way to a record low … how so many businesses were going to “short time” and “shared time”?


Well, I guess we’re starting to understand that eventually, it all catches up. But man, that’s a humdinger: 2.5 million jobs worth of hours. That’s a lotta’ hours to be reinstated before actual body count starts to be added. Holy smokes.


And please note: There is only one other thing that needs mentioning about Friday’s NFP (Non-Farm Payroll employment numbers). Contemplating the Unemployment rate which surprisingly and inexplicably dropped to 9.7%, déjà vu finally arrived. Because there was a disconnect between the conditions being suggested by the Household and Establishment Surveys. Veterans will recall that during the prior “jobless recovery”, we also had a situation where the Household Survey was offering a much brighter picture than that of the Establishment Survey. It was hysterical. There was some very spirited debate that ensued as many of the experts … who up until that point had dissed the Household Survey as far inferior to the Establishment variety, flip-flopped …. to worshiping the Household Survey instead. Why? Because it was better supportive of the rosy economic outlook they were peddling to their clients on the Street.


But Newbies should take a lesson: When all was said and done, the Establishment Survey turned out to have been the better indicator. So you may wish to jot that down. It’s a much bigger universe, for starters. And it is compiled by businesses who manage payrolls. As opposed to a laid-off line worker who is baby sitting her nephews … for free … and is counted as “Employed” by a government bean counter. As a matter of fact, this m.o. is extremely familiar. As I recall, as the jobs situation was mired in inactivity for such a prolonged period back then, folks got very creative. Do you remember? “Spamming for Viagra” and EBay selling, for example, became full-time work for some … who were, natch, counted as “Employed”. Even sole proprietors! There is truly nothing new under the sun, is there? Nope. Next.


In the last quarter of 2009, revolving debt sunk by a total of $29.1 bil. That is surely no chump change.


And as plastic banging has abated, once again there is talk of more cash purchases (includes debit cards) in its place. Makes sense, right?
We have discussed this before.

To wit: If a person’s credit card is maxed, they leave that in the dresser drawer and *make minimum payments. The alternative is shoplifting or cash. And with cash, something else … likely a contractual monthly obligation … will be overlooked. There was a time when we were thinking in terms of, say, the electric bill because the utility companies take a huge amount of abuse if they shut anybody off. But now we think that any and all monthly obligations are at risk of being dissed. The mortgage note, included, natch. As a matter of fact, it now looks like folks will pay the car loan and/or the credit card (minimum or larger payments) before the mortgage. Makes 100% sense in the current environment.
*Per US News this morning: … “A recent study developed by TransUnion found the percentage of Americans who were current on their credit cards but behind on their mortgage increased to 6.6 percent in the third quarter of 2009, up from 4.3 percent in the first quarter of 2008. Meanwhile, the share of consumers making mortgage payments on time but behind on their credit cards moved in the opposite direction, sliding from 4.1 percent to 3.6 percent over the same time period.”

I view the ceaseless plunge in revolving credit as folks up against a wall or at the least, suffering from job insecurity or other financial-related anxiety or even caution. And eventually, this will come home to roost in an ugly fashion. Because there can be no doubt that many used the credit card as supplemental income. Read: they need to hang on to it just as desperately as they need to hang on to their other income-producer, their job. So they will do all in their power to keep that credit line available. Because with that gone, there is a finite number of ways that you can kite your monthly obligations. But unless jobs begin to be created, this, too, will backfire.

Others celebrate the decline in Consumer Credit as proof positive that Americans are more reserved in their spending habits with a view towards managing their household debt. This is surely the case in spots, but I don’t think it is representative of the broader view.
I think most don’t have a choice in this matter. Which is a far cry from voluntarily layin’ off the plastic. So that’s where we part company. Only time will tell.

Back to Jobs...
Meanwhile, we have a situation where a ton of hours must be reinstated before we start to create jobs. And a consumer who is either tapped out or afraid. And who, in increasing numbers, is paying only necessities as they come due. And evidently, a home mortgage is no longer considered a necessity in terms of paying it in a timely fashion.
I’ll give you a hint as to how I am looking at it: There never was any intention to create jobs with that infernal ARRA  stimulus bill. None. Because the Administration can see the decline as clearly as we can. Thus, a record number of Americans on food stamps and a plunge in revolving credit … and the discomforting, growing trends it suggests … would spur the government to step right up to the plate and take immediate steps to jump start hiring in this country. You would think, right?
The response of the Administration to the 33 million + Americans on food assistance? Obama has recommended another billion bucks be added in the budget to expand school lunch programs. He wants all kids to have at least one hot meal per day. Me, too. But I’d rather create a job for his father so that he could feed his children a hot meal on his own, not depend on School District 356 to do it for him.
Big difference.

The m.o. is clear: Control all consumption and production. And as the food chain gets uglier, pushin’ more folks deeper into financial decomposition … at all levels … this gives DC even more room to manipulate us into serfdom.                                       



APOCRYPHA is former Lieutenant Governor of Rhode Island, part-time tuna fish sandwich-shop operator, and a semi-professional golfer with over 30 years of experience on Wall Street.  Her vast "insider" knowledge and unassailable wisdom allows her to confirm the fact that the U.S. government is Wall Street's concubine, and the Federal Reserve a criminal operation that needs to be disbanded immediately.
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published this page in The Attic 2012-03-26 21:42:00 -0400