Sluggishness Certainly Stays

America's Jobs Report: Still Sluggish

The Economist

October 22, 2013

By G.I.

Last fall, the Federal Reserve began open-ended bond buying with newly printed money in hop to generate growth in the larbour market. This seemed to have been successful, until last fall. Data suggests that recently, there is no explanation for the amount of non-farm payroll employment. Non-farm payroll employment rose 148,00 in September from August, which was much less than expected. This was the second weak reading in a row, and vindicates the Fed's decision not to dial back its $85 billion. 

The revisions to prior payrolls were upsetting to the public. A large amount of September's gains were in state and local employment. Normally, this data would be positive, however, recently this has been such a powerful headwind for the economy and has had negative affects. A decrease in private job creation has also decreased the pickup in government hiring. The monthly average of private job creation is 129,000 in the last three months from 232,000 last December. 

One positive to this situation is the decline in the unemployment rate to 7.2%, a tiny decrease from 7.3%, a near-five year low. Lower participation, which means fewer unemployed, are recorded as looking for work, rather than higher employment.The "non-employment" rate, which is simply everyone not working as a share of the civilian, non-institutional population, has remained at 41.4%.This is not primarily due to a weak economy; the number of people not in the labour force who want a job has actually fallen 9% since December, to 6.2m. The people who are leaving the labour force do not want to work. 

The reason that the labour market has dropped is very unclear. Other, less comprehensive information is more upbeat: unemployment insurance claims through September had decreased. Surveys of hiring were also positive, even though they took a plunge during the government shutdown. The overall rise in mortgage rates since the Spring has caused housing to decrease dramatically. However, construction employment rose 20,000 in September. 

Before today's report, the Fed was not willing to decrease bond purchases ($85 billion a month.) Even though officials appear maleable, officials' outlook, they claim, is for improvement. However, the follow-through is hard to determine before it actually occurs, in December. The government shutdown reduced employment overall for October. Also, an index compiled by Gallup suggests private job creation also slowed that month.  

Fed officials have often been unable to explain the criteria for beginning and ending QE, but one thing is clear: they had hoped the labour market would be gaining, not losing, steam by now. Concluding, the exit seems no clearer than when this round of QE started a year ago. 

Starbucks' Snark

Author: James O’Toole

Date: October 11, 2013

Title: “Starbucks Releases Petition Calling for End to Debt Ceiling, Shutdown Fights-Oct. 10, 2013”

CNN.com

Starbucks’ Snark?

Last Thursday, Starbucks called for leaders in Washington to resolve the ongoing financial crisis. The Starbucks company came to the conclusion to offer a petition on the subject to customers at its thousands of locations in the United States. Howard Schultz, CEO of Starbucks, announced on the Starbucks website (SBUX, Fortune 500) that Americans “have no platform with which to voice their frustration with Washington and the current stalemate that threatens our nation.” The petition, instead, requests the lawmakers to “reopen” their government to “serve the

people,” and for Americans to “pay our debts on time to avoid another financial crisis” and “pass a bipartisan and comprehensive long-term budget deal by the end of the year.” "Our leaders need to lead, and we need a better solution in Washington, D.C.," Schultz said in a video posted on the Starbucks website. Throughout the past week, Schultz has called in his chief executives to discuss the showdown in Washington. "I don't pretend that both parties are equally to blame for this crisis," he said. "But, I do think they are equally responsible for leading us to a solution." A meeting at the White House followed Starbucks’ call where Wall Street CEOs were warned of serious, weighty, economic consequences if the shutdown and debt limit issues are not resolved.  Although the government shut down seems as though it does not have an effect as much on things that are not government run, that preconception is in fact wrong.  Starbucks, a corporate company, will be influenced greatly by the government shut down if plans do not get resolved within the near future. “The U.S. Chamber of Commerce, an influential business lobbying group, called legislation to fund the government and raise the debt ceiling "must-pass." In the past, Schultz has successfully provided a positive outlook in traumatic situations. For instance, in 2011, as lawmakers underwent a “fiscal cliff,” Schultz asked his employees in the D.C. area (approximately 120 stores) to write “Come Together” on Starbucks coffee cups when serving them. Throughout the constant interception between the Democrats and Republicans amongst this tough time, it seems as though nobody can really agree upon anything. But, if everyone agreed on what should be done, everyone would be in one political party; democracy would not exist. America would be ruled under one political party with one view on everything. When one party rules every aspect of the government, that is not what a democracy is. Someone needs to pose an opposition and both parties need to be held accountable for getting this country into deep debt, not a single political party. Everyone needs to take responsibility for their actions in this country and need to come to the conclusion with themselves that everyone has contributed to where this country has gotten, not just a single person or a small group of people.

What College Funding?

In today’s economy and society, college has become very expensive! Scholarships are harder to attain and gain now more than ever. Previously, students coming from middle to lower income families would receive scholarships based on merit, however, that money now goes towards the better off students, who might be considered a better candidate for the college of their choice. These scholarships are no longer granted based on need, but rather, on whom the admissions counselors think deserve to attend the college.

The choices that these academic counselor’s are making could possibly negatively impact the government and economy. People that actually need help paying for college are no longer granted the help they once received. In the article, Max Russell was interviewed about his problems attaining financial aid for college. During his junior year, of high school, his dad died and his family members began working twenty-five hours a week. Unfortunately, Max’s study time was intervened by his job, as his grade point average was drastically affected. Max had to attend a community college for a few years in order to qualify for student loans, which allowed him to go to Purdue. On the other hand, Max’s wealthy friend was granted a full ride to his top school.

I think that this has gotten entirely out of hand. The economy is not being fair by not offering students who come from lower income families more money than students that come from well off families. And yes, it makes sense that the rich kids have better grades, mainly because they have the option of paying for tutors and outside helpers to help them get into college and basically do their homework and write their college essays for them. Also, the rich kids do not have to work jobs and instead have time to do homework and play sports. Although all kids face hardships, the hardships amongst the poor seem to usually be more serious and end up taking more time out of their day, generally, than the rich kids. Even though the rich kids have worked hard to attain their grades, well, some at least, it is important to develop scholarships for all different types of kids from all different backgrounds with all different life stories.

People are always complaining about how the government spending is going to the wrong places and this is definitely one of them. As social security funding decreases, college funding increases but only offers money for the wrong reasons. The government should offer all types of students who make all different types of grades and test scores scholarships, not just the smartest kids on paper, but the well rounded kids as well and the quirky one’s as well.

Rampell, Catherine. “Freebies for the Rich.” NYTimes.com. The New York Times Magazine, 24 Sept. 2013. Web. 6 Oct. 2013.

What College Funding?

In today’s economy and society, college has become very expensive! Scholarships are harder to attain and gain now more than ever. Previously, students coming from middle to lower income families would receive scholarships based on merit, however, that money now goes towards the better off students, who might be considered a better candidate for the college of their choice. These scholarships are no longer granted based on need, but rather, on whom the admissions counselors think deserve to attend the college.

The choices that these academic counselor’s are making could possibly negatively impact the government and economy. People that actually need help paying for college are no longer granted the help they once received. In the article, Max Russell was interviewed about his problems attaining financial aid for college. During his junior year, of high school, his dad died and his family members began working twenty-five hours a week. Unfortunately, Max’s study time was intervened by his job, as his grade point average was drastically affected. Max had to attend a community college for a few years in order to qualify for student loans, which allowed him to go to Purdue. On the other hand, Max’s wealthy friend was granted a full ride to his top school.

I think that this has gotten entirely out of hand. The economy is not being fair by not offering students who come from lower income families more money than students that come from well off families. And yes, it makes sense that the rich kids have better grades, mainly because they have the option of paying for tutors and outside helpers to help them get into college and basically do their homework and write their college essays for them. Also, the rich kids do not have to work jobs and instead have time to do homework and play sports. Although all kids face hardships, the hardships amongst the poor seem to usually be more serious and end up taking more time out of their day, generally, than the rich kids. Even though the rich kids have worked hard to attain their grades, well, some at least, it is important to develop scholarships for all different types of kids from all different backgrounds with all different life stories.

People are always complaining about how the government spending is going to the wrong places and this is definitely one of them. As social security funding decreases, college funding increases but only offers money for the wrong reasons. The government should offer all types of students who make all different types of grades and test scores scholarships, not just the smartest kids on paper, but the well rounded kids as well and the quirky one’s as well.

Rampell, Catherine. “Freebies for the Rich.” NYTimes.com. The New York Times Magazine, 24 Sept. 2013. Web. 6 Oct. 2013.