US unemployment disappoints;employment up 163000, headline unemployment rate 8.3 %; U6 15.0%.

Posted on August 3, 2012 by haroldchorneyeconomist

The latest data for unemployment and employment growth in the U.S. confirms that the U.S. is creating enough jobs to absorb new entrants to the labour market but not enough to lower the unemployment rate. In fact, both the headline rate and the broader measure of unemployment U6 rose by a tenth of a percent. U3, the headline rate  is now 8.3 % and U6 15.0 %. All of the employment creation was in the private sector where employment rose by 173,000 but the public sector lost 9000 jobs. So once again we see the negative consequences of premature cuts in the public sector. This is not good news. The participation rate is 63.7 % and there are 12.8 million unemployed of whom 5.2 million have been unemployed for 27 weeks or longer,. The rates of unemployment by different demographics and backgrounds are as follows:

men 20 and over 7.7 %

women 20+ 7.5 %

16-19              23.8%

White                 7.4%

Black                 14.1 %

Asian                   6.2%

Hispanic             10.3%

Source:US Bureau of Labour Statistics

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Premier Charest calls election September 4th :PQ and Liberals neck and neck

Posted on August 1, 2012 by haroldchorneyeconomist

Premier Jean Charest the leader of the provincial Quebec Liberal party has called a provincial election for September 4, 2012. The last election was held December 8, 2008. Charest won last time with a small majority of the seats. But this time it looks like it will be much more difficult to equal that result. In the 2008 election the federalist politician who was originally the federal leader of the Progressive Conservative party which no longer sits in Parliament having been absorbed by the Canadian Reform Conservative Alliance party to form the Conservative party of Canada, won 42.8 % of the vote and 66 seats in the 125 seat national assembly . There is little liklihood of such a good result this time based on current polling.In the most recent poll the Liberals are running second behind the sovereignist Parti Quebecois led by Pauline Marois which attracts 33 % of those polled versus 31 % for the Liberals. The third party,CAQ, a neo-con leaning party under the leadership of François Legault who previously was a a PQ cabinet minister but now promises to put sovereignty on the back burner for a decade attracts 21 % in the poll. The coalition for the future of Québec or  C.A.Q. for short in French would win 11 seats , the Liberals 52 seats and the P.Q. 60 seats. The Liberals lead among non francophones and on the island of Montreal. The PQ leads among francophones and off the island.

The fourth party a sovereignist socialist party, Québec solidaire led by a doctor Amir Khadir who was arrested for violating the highway safety code while demonstrating in support of the striking students protesting the controversial Bill 78 which banned demonstrations without prior notice and a parade permit is running at 8.5% and 2 seats. So the election is likely to be close.

The issues are health care underfunding, the controversy over tuition fees,the problem of corruption in the construction industry, civil liberties and the authoritarian response of the Liberals to student protests to the proposed increases, economic instability if sovereignty once again becomes a leading question in Québec, social exclusion and poverty ,high unemployment among certain sectors of the society, economic development strategy and responsible leadership. If it were not for the fact that we are in the middle of our beautiful hot but always too short summer here in Québec people might be excited. But in truth the party that voters dislike the least and believe can win and govern will emerge the victor of a likely minority government come September.

Posted in Canada, civil liberties, Québec, sovereignty of quebec, Uncategorized, unemployment | Leave a comment

UK growth negative for second quarter 2012:more evidence austerity does not work

Posted on July 25, 2012 by haroldchorneyeconomist

The U.K. office of national statistics has released its latest numbers on the declining GDP in Britain. As I expected they continue to be starkly negative. The UK economy continues to shrink so that Britain has now experienced a clear double dip recession. Growth has been negative over the past three quarters. The latest numbers suggest that the economy shrank by 0.7 % in the second quarter of this year. Since there was an extra bank holiday in honour of Queen Elizabeth’s Diamond Jubilee the decline in real terms is slightly smaller. But nonetheless the data is not good, a sharper decline than most economists anticipated and delivers a very negative grade to the misguided austerity policies of the Chancellor George Osborne.

A full scale turnabout on policy is needed to prevent the situation from worsening further. It cannot be just further quantitative easing but state sponsored job creation and infrastructure and environmental enhancement investment of a substantial size. Plus there must be pressure on cash rich corporations to start hiring rather than hoard their cash.

Posted in austerity, business cycles, classical economics, deficit hysteria, deficits and debt, U.K. economy, Uncategorized, unemployment | Leave a comment

Chinese state oil company seeks approval to buy strategic Canadian oil and gas company:thorough critical analysis required

Posted on July 23, 2012 by haroldchorneyeconomist

China’s third largest oil and gas company  has made a $ 15.1 billion  bid for one of Canada’s leading oil and gas companies, Nexen. The Chinese National Offshore Oil corporation(Cnooc) is China’s largest offshore oil supplier with a capital of over 50 billion RMB and a large employer has made the bid to acquire the Canadian company and its debt for the price of 15.1 billion dollars. Since Cnooc is a totally Chinese state owned corporation and this acquisition is subject to foreign investment review by the Canadian government there is a need for a very careful and sober analysis of the implications for Canadian strategic interests, the needs of the Alberta oil sector for secure and reliable export markets and offshore capital, the needs and interests of Canadian consumers as well as future generations, the impact upon labour and environmental standards and the overall good of the Canadian people and economy. There are already many voices including some conservatives who are voicing initial opposition to approving this venture. We shall see where this leads but there is a need for Canadian political leaders to assess the situation very carefully before agreeing to this transaction.

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Spanish austerity misguided policy

Posted on July 11, 2012 by haroldchorneyeconomist

The government of Spain despite its horrible 24 % plus unemployment rate continues to implement further austerity policies . This guarantees a deeper and profound recession that damages the life chances of  a quarter or more of the Spanish population. Spain is a country that has suffered plenty in the last century.When I first visited it in 1968 I was struck by the warmth of its people, the deep authoritarian character of the Franco regime, the scars of the civil war, the promise of its beautiful  urban centres, the extent of poverty in parts of the countryside. Once Franco was gone and democracy restored I expected great progressive strides from this proud and troubled land.  It had become for a period of time a country of considerable promise. But the out of control property bubble , the Spanish banking crisis and the precisely wrong policies implemented in an effort to escape the crisis have guaranteed a lost decade in Spain . The European policy making  elite illusion that austerity will sufficiently lower wages to revive the slumping economy is demonstrably wrong headed but still not yet abandoned. It needs to be for the sake of Spain and for all of Europe.

Posted in austerity, classical economics, deficit hysteria, European debt crisis, European unemployment, Spain, treasury view, Uncategorized | 1 Comment

Canadian unemployment falls to 7.2 % in June

Posted on July 6, 2012 by haroldchorneyeconomist

The employment news was better in Canada than the U.S.Accoring to Statistics Canada the rate of unemployment fell one tenth of a percent in June from 7.3 to 7.2 % . The participation rate is 66.7 %. The unemployment rate fell in both Ontario and Québec to 7.7 % Unemployment in Alberta was 4.6 %;Manitoba 5.2 %; Saskatchewan 4.9 %; B.C. 5.6 %. It remained elevated in Newfoundland at 12 %;P.E.I. 11.3 %;Nova Scotia 9.6 % and New Brunswick 9.5 %

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U.S. unemployment remains 8.2 %, U6 rises to 14.9 % disappointing news

Posted on July 6, 2012 by haroldchorneyeconomist

The US bureau of Labour Statistics released its latest employment data for the month of June and the news is disappointing. Some 80,000 net new jobs were created but this was just enough to absorb a little over half  the 128,000 new entrants to the labour force. The headline rate of unemployment remained at 8.2 % which is more or less where its been stuck for the past five months. Unemployment was 8.3 % in February, 2012, 8.2 % in March,8.1% in April and 8.2 % in May.

It is beginning to look that we are stuck in a high unemployment equilibrium for which the only solution is a major fiscal boost of government investment that jolts the private sector into using their large accumulated cash reserves to increase hiring. The Fed is likely to keep interest rates low and may do more quantitative easing but that will not be enough to push the unemployment rate down substantially without a fiscal shot in the arm. The broader measure of unemployment U 6 which includes discouraged workers, those working part-time when they would rather work full time and marginally attached workers actually rose to 14.9 %.  41.9 % of the jobless have been without a paid job for 27 weeks or more. The unemployment rate for teenagers is 23.7 %; for blacks 14.4 %; for whites 7.4 %; for Hispanics 11.0 %;for Asians 6.3 %; for adult men 7.8 5; for adult women 7.4 %.  The participation rate is 63.8 %.   All data courtesy of the US Bureau of Labour Statistics.

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Eurozone unemployment rises to 11.1 %.A major stimulus is required.

Posted on July 2, 2012 by haroldchorneyeconomist

Eurostat has released their latest unemployment data and it is ugly. Unemployment has risen again to 11.1 % overall for the Eurozone led by a rise in Spain as well as a small rise in France. Only a major co-ordinated stimulus well beyond the 140 billion euros spoken of so far combined with banking reform and debt relief and the abolition of deficit hysteria will get Europe out of the high unemployment equilibrium into which it has settled.

According to Eurostat, overall unemployment rose to 11.1 % in May 2012 compared to 11.0 % in April and and 10.0 % in May 2011. For the EU 27 the rate was 10.3 % up from 10.2 % compared to 9.5 % a year earlier. Eurostat estimates that 24.868 million men and women in the EU27, of whom 17.561 million were in the euro area, were unemployed in May 2012.  Compared with May 2011, unemployment rose by 1.952 million in the EU27 and by 1.820 million in the euro area.

Among the Member States, the lowest unemployment rates were recorded in Austria (4.1%), the Netherlands (5.1%), Luxembourg (5.4%) and Germany (5.6%), and the highest in Spain (24.6%) and Greece (21.9% in March  2012). The rate was 10.1% in France; 10.1 % in Italy;10.8% in Cyprus; 8.1% in U.K.; 15.2 % in Portugal;14.6 % in Ireland; 7.2% in Belgium; 7.8% in Sweden; and 5.6% in Denmark.

All data courtesy of Eurostat.
Posted in austerity, business cycles, deficit hysteria, deficits and debt, European debt crisis, European unemployment, France politics+economy, Greek sovereign debt crisis, Italian debt crisis, Spain, Uncategorized, unemployment | 1 Comment

Eurozone allows stabilization fund to inject capital into private banks: Spain, Italy and France win partial victory

Posted on June 29, 2012 by haroldchorneyeconomist

After late night negotiations it has been decided to permit the European stability fund to purchase directly the assets offered by banks in Spain and and Italian sovereign bonds and by so doing permit European funds to be injected directly into ailing Spanish banks thereby reducing the burden of potential sovereign debt for which Spain is responsible. As the Italian Prime Minister Mario Monti explained there will still be conditionality, meaning the countries affected will have to meet eurozone objectives on debt reduction and timetables but it will not as strict as was imposed upon Greece. This is, along with moving toward better regulation of the banks, an improvement over the original German strict austerity position which forbid the ECB and the stability fund from buying sovereign debt. But in the absence of a major stimulus package – the 140 billion euro package that is being spoken about is far too small to accomplish much – there is still a long way to travel to rescue Europe from a recession and continued high unemployment. Nevertheless, it appears to be a small step in the right direction.

Posted in austerity, deficit hysteria, deficits and debt, European debt crisis, European financial stability fund, European unemployment, France politics+economy, Greek sovereign debt crisis, quantitative easing, Spain, Uncategorized | 1 Comment

Supreme Court upholds Obama Care; Europe continues to debate how to rescue economy from bond market blackmail

Posted on June 28, 2012 by haroldchorneyeconomist

The Supreme Court in a 5 to 4 decision with Chief Justice Roberts siding with the majority has upheld most of the Affordable Care Act by ruling its provisions constitutional under the federal powers of taxation. Four of the liberal judges considered it constitutional under the federal powers to regulate commerce and trade but Justice Roberts rejected that approach but accepted the act and wrote the majority decision  under the powers to tax. The only part of the act struck down was the right of the federal government to impose penalties upon states refusing to expand medicaid, the health insurance program for low income and destitute people. This might turn out to be a problem that will need correcting but for the time being the decision is a major victory for President Obama and the American people. For his part Governor Romney and the Republicans insist if they capture the Presidency they will repeal the act on day one. the entire decision is available on the wsj site and from the court. Justice Ginsburg’s dissent on the power to regulate commerce is very revealing and informative.

In Europe the Eurozone leaders continue to debate how to rescue their economy from bond market blackmail. Chancellor Merkel appears to continue to oppose a major stimulus and the use of eurobonds and continues to push for fiscal austerity. Some of the others are in favour of the ESM buying government bonds directly from governments in the primary market or perhaps a portion of the debt above a certain threshold. This would help although not do much for employment creation unless governments spent the proceeds on direct job creation. We await their decision with great interest.

Posted in austerity, deficit hysteria, deficits and debt, European debt crisis, European financial stability fund, European unemployment, France politics+economy, Greek sovereign debt crisis, Italian debt crisis, monetary policy, quantitative easing, Uncategorized, unemployment | 1 Comment