Digging into the unemployment numbers

Reading government economic statistics is like listening to a used car salesman - his lies are usually of omission.
For example, look at today's news on unemployment.

There were more encouraging signs, with the number of people collecting long-term unemployment benefits dropping 98,000 to 5.92 million in the week ended Oct. 10, the latest week for which the data is available.
That was the lowest level since March and it was the first time that continuing claims fell below the 6 million mark since April.

Great news, right? Wrong.

Another day, another 7,000 people run out of unemployment benefits.

The "good news" of dropping unemployment numbers is actually working class people slipping through the safety net.

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The House passed a bill extending unemployment insurance by 13 weeks a month ago, but Republicans in the Senate have bogged down their version of the bill.
Of course its not like we are rescuing Wall Street banks, so there is no rush.

She is one of the 1.3 million people set to lose their benefits before year's end if Congress doesn't act, according to the National Employment Law Project, an advocacy group. In October alone, more than 200,000 people will fall off the rolls.

More than one in three people who are unemployed have been out of work for at least six months. In fact, the average period on unemployment is now six months, a new high since records have been kept.
The unemployment exhaustion rate is currently at 52.41% and still climbing.

You can see the trend when you look at the official numbers, if you know how to read them.

For example, if you look at the non-seasonally adjusted numbers, you'll see a drop of 44,913 from state unemployment rolls last week.
But if you scan down to the EUC 2008 numbers (the extended federal unemployment benefits that kick in after state unemployment benefits are exhausted), you'll see an increase of 40,716.

That's all but 4,197 of the unemployed people simply moved from one benefit roll to another.
Well, at a small number of people got new jobs, right? Wrong. You are forgetting the 7,000 people who dropped off of EUC rolls each week. The excess number that isn't being counted is the number of people who have fallen through the safety net.

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Are you depressed yet? Then check out this quote buried in a news article that almost got by me.

More than half of 638 chief financial officers surveyed by a Duke University professor, John Graham, said they expected their companies to employ fewer people in 2012 than in 2007.

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Not surprising that LEI increase

Hell, the stock market jumped. There is something not right about these indicators. I can't quite point my finger on it. My problem is we are told ad nauseam that unemployment is a lagging indicator. But there is some level of circularity to all of this.

If unemployment levels are quite significant as they are now and we now other indicators such as household debt levels are still bad and credit is still tight this all doesn't bode well for future demand. At some point because of the significant levels of unemployment LEI don't mean shit. Right?

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Narrative

IMO, we should be surprised if there were no improvement at this point. Some due to cost cutting, some due to external causes (China infrastructure, etc.) and some due to basic need-driven demand. Some distortion as we borrow from future demand -- as in cash for clunkers. Optomistic narratives being leaked from Fed and others re TARP repayment, etc. What is troublng is "new normal" expectations and absence of growing the middle class. Hell, perhaps China is the new middle class and we are the consumption proles. At this point, I must go back and re-read Vonnegut's PLAYER PIANO. Anyway, the CEO of Nucor Steel was on Cramer last night, and he did not mince words -- this will last a while and demand is not what it should be. I did like his statement that they have not done layoffs and do not intend to in the future.
Frank T.

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Frank T.

Extra 13 Weeks

Why are the Republicans sitting on the 13 week extension? Falling through the safety net is a terrifying reality to the people needing the extra 13 weeks. My brother is in construction and I know what an extra 13 weeks would mean to him and his family. There is no excuse if the republicans are making a political football out of the extension. Its cruel.

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older now at Great Depression unemployment levels

NY Times.

It really looks to me that the great middle class squeeze is coming home to roost.

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On Point

This should be page 1 news -- it goes to the heart of the American dilemma of 2009. People are facing forclosure and tone-deaf banks, and they tried to conserve what was left of their 401k/ IRA plans by going to cash. Badly burned, it is not realistic to tell them to go back into the markets "for the long haul." For them, the long-term has come. We are so eager to bail out the Wall Street Banksters, why not give the American people the same consideration? Rather than a paltry $250 social security payment, why not allow tax forgiveness on 401k/ IRA distributions for those 65 and over, say to a limit of $20,000 annually. This might help to save a portion of the American middle class as they face their last chance at the American Dream.
Frank T.

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Frank T.

tax distributions

I thought there was no taxes on IRA 401k past the age of 65.

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It is taxed

You may be thinking of the Roth IRA, which is funded with after-tax dollars. That one is tax-free withdrawals after age (I think) 59-1/2. Buit regular IRA distributions ar taxed at ordinary income rates (i.e., your marginal bracket).
Frank T.

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Frank T.