Ideal Taxes Association

Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog

Unemployment claims Have Fallen But the Economy is Stagnating. What we need to do.
Raymond Richman, 8/28/2011

The economy is stagnating, growing at a very low rate. This was borne out by recent GDP data which showed that economic growth fell to .4 of a percent in the 4th quarter of 2010 and rose to only 1.4 percent in the 1st quarter of 2011. In the 2nd quarter 2011, GDP rose only one percent. Those are poor numbers especially after 2 ½ years of Keynesian policies to promote recovery. Employment has been increasing but at a very slow rate that barely covers new entrants into the labor force. Unemployment claims have fallen over the past year.

During the past few weeks, we’ve called attention to our readers that the US Bureau of Labor Statistics (BLS)  in reporting initial unemployment claims during the preceding week was issuing a questionable statistic called “seasonally adjusted” initial claims. It is true that in the past, there were seasonal variations in the number of claims filed, for example, auto makers closed plants in the summer for the preparation of new models and in the fall retailers hired workers for expected increased sales before Christmas. To give the BLS credit, it also reports the actual number of initial claims. Due to laziness apparently, the media never report anything except the seasonally adjusted figure, which is a statistician’s estimate of what the claims would have been if you did not count the seasonal changes.   

Last Thursday, August 25, 2011, the media reported that the initial figure of seasonal adjusted initial claims during the week ending August 20, 2011 was 417,000, an increase of 5,000 from the previous week’s revised figure of 412,000. The increase of 5,000 was interpreted by the securities markets as negative news, a worsening of the employment picture. CNBC, Bloomberg Financial, and Fox News business reported the same figure. Even the Wall Street Journal on 8/26/11 on its front page used that number. It was bad news and contributed to the fall in stock markets.

The BLS reported the actual data in the second paragraph of its report.  It reported that the actual number of initial claims totaled 341,436 , not 417,000, a decrease of 4,536 from the previous week. The BLS also reported that the number of persons receiving unemployment insurance benefits in state programs totaled 3,452,004, a decrease of 101,224 from the preceding week. A year earlier, the number was 4,219,639.  The BLS also reported that the actual number of persons receiving unemployment compensation last week was 3,641,000, a decrease from the previous week’s revised number of 3,720,750.

The government estimate of the number seeking work, which does not include those employed part-time and those who have stopped looking for work, remains above 9.1 percent. At full employment, the percentage would be about 4 or 4.5 percent, the number of workers in-between jobs. That was the number we reached in 2007 before the onset of this recession. We have no policies in place to create economic growth.

This recession’s immediate cause was the collapse of the housing boom. Millions of houses remain to be foreclosed. There will be little investment in housing until most of the foreclosed properties have new owners. So the housing sector is expected to be depressed for several years, making little or no contribution to growth. The government's policy is to prevent foreclosures by gettng the banks to voluntarily reduce mortgages and payments. In our view, this prevents a final resolution of the mortrgage crisis.

Another major cause was the outsourcing of American manufacturing. Companies like Apple, Hewlett-Packard, Dell, and many others are manufacturing their products abroad and exporting them to the U.S.  Andy Grove, a founder of Intel and its former CEO, estimated that “ for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology, and other U.S. tech companies.” Again, we are doing nothing that would end outsourcing or attract more investment in plant and equipment here at home.

Pres. Obama’s major constituency, the  “ban carbon emissions” lobby, has been doing everything in its power to get  the President to prohibit the production and development of  relatively cheap oil and coal and natural gas and spend hundreds of billions of dollars subsidizing wind and solar energy plants and subsidizing the purchase of hybrid and electric vehicles. Just this week, research conducted at CERN, Europe’s leading nuclear research institution,  on the causes of climate change cast doubt on the whole theory of anthropogenic (man-made) climate change that former V-P Al Gore said was accepted by all scientists, which was a lie. Danish scientists and thousands of physicists around the world challenged the theory from the word go. The hundreds of billions we are spending is not creating sustainable employment. To the contrary, it is costing us jobs as Spain and Italy can testify, by raising electricity prices.

The 4th major foolish policy, whose proponents include leaders of both political parties, is the ideology of free trade. For free trade to be a sound policy requires freedom of movement of labor, capital, and goods. The fact is that many of our trading partners, including Japan, China, and Germany and the OPRC countries have mercantilist policies (policies that favor exports and impede imports) to get and maintain an artificial trade advantage. In 2008, the trade deficit on goods and services reached $698 billion. Had the goods we imported been produced here, they would have given employment to 5 - 8 million workers. For all practical purposes, we administration has no policy to balance trade. As our reader knows, we have advocated the use of single-country-scaled tariffs which would compel our trading partners to import as much from us as they export to us.

Your Name:

Post a Comment:

  • Richmans' Blog    RSS
  • Our New Book - Balanced Trade
  • Buy Trading Away Our Future
  • Read Trading Away Our Future
  • Richmans' Commentaries
  • ITA Working Papers
  • ITA on Facebook
  • Contact Us

    Jan 2022
    Dec 2021
    Nov 2021
    Oct 2021
    Sep 2021
    May 2021
    Apr 2021
    Feb 2021
    Jan 2021
    Dec 2020
    Nov 2020
    Oct 2020
    Jul 2020
    Jun 2020
    May 2020
    Apr 2020
    Mar 2020
    Dec 2019
    Nov 2019
    Oct 2019
    Sep 2019
    Aug 2019
    Jun 2019
    May 2019
    Apr 2019
    Mar 2019
    Feb 2019
    Jan 2019
    Dec 2018
    Nov 2018
    Aug 2018
    Jul 2018
    Jun 2018
    May 2018
    Apr 2018
    Mar 2018
    Feb 2018
    Dec 2017
    Nov 2017
    Oct 2017
    Sep 2017
    Aug 2017
    Jul 2017
    Jun 2017
    May 2017
    Apr 2017
    Mar 2017
    Feb 2017
    Jan 2017
    Dec 2016
    Nov 2016
    Oct 2016
    Sep 2016
    Aug 2016
    Jul 2016
    Jun 2016
    May 2016
    Apr 2016
    Mar 2016
    Feb 2016
    Jan 2016
    Dec 2015
    Nov 2015
    Oct 2015
    Sep 2015
    Aug 2015
    Jul 2015
    Jun 2015
    May 2015
    Apr 2015
    Mar 2015
    Feb 2015
    Jan 2015
    Dec 2014
    Nov 2014
    Oct 2014
    Sep 2014
    Aug 2014
    Jul 2014
    Jun 2014
    May 2014
    Apr 2014
    Mar 2014
    Feb 2014
    Jan 2014
    Dec 2013
    Nov 2013
    Oct 2013
    Sep 2013
    Aug 2013
    Jul 2013
    Jun 2013
    May 2013
    Apr 2013
    Mar 2013
    Feb 2013
    Jan 2013
    Dec 2012
    Nov 2012
    Oct 2012
    Sep 2012
    Aug 2012
    Jul 2012
    Jun 2012
    May 2012
    Apr 2012
    Mar 2012
    Feb 2012
    Jan 2012
    Dec 2011
    November 2011
    October 2011
    September 2011

    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010

    Book Reviews
    Capital Gains Taxation
    Corporate Income Tax
    Consumption Taxes
    Economy - Long Term
    Economy - Short Term

    Environmental Regulation
    Last 100 Years
    Real Estate Taxation

    Outside Links:

  • American Economic Alert
  • American Jobs Alliance
  • Angry Bear Blog
  • Economy in Crisis
  • Econbrowser
  • Emmanuel Goldstein's Blog
  • Levy Economics Institute
  • McKeever Institute
  • Michael Pettis Blog
  • Naked Capitalism
  • Natural Born Conservative
  • Science & Public Policy Inst.
  • Votersway Blog
  • Watt's Up With That


  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]