Sequester Mania Ignores Other Warning Signs
On February 26th Lenore Hawkins joined Neil Cavuto to discuss the apoplectic fits of politicians and the media all over the country concerning the sequester, which represents a rather small decrease in the increase of government spending. Yes you read that correctly, if the sequester actually occurs, government spending will still be higher in 2013 than in 2012, unless the powers that be do something.
Wall Street is still experiencing a great many layoffs and as a bellwether of the economy, this should get some attention. With record high profit levels, how is this happening? Profit margins are up, but gross revenues are well below their highs, thus the profits are coming from cost-cutting.
The U.S. financial sector expanded dramatically over the last hundred years in both relative and absolute terms. During the mid-nineteenth century the sector fluctuated between around 1% and 2.5% of GDP, rising above the higher range twice in our history. The first time the sector spiked as a percent of GDP was unsurprisingly in the early 1930s, reaching almost 6% of GDP, only to then drop to 2% of GDP in the early 1940s. By 2006, the sector represented 8.5% of GDP, so a contraction in employment here is, while unsurprising, painful for the economy and particularly for those losing their jobs.
According to a report by the State of New York Comptroller, the state has added 8,500 jobs since the financial crisis, but lost 28,300, recovering only about 30% of the jobs lost.
The number of shares traded on major U.S. exchanges this year is down 7.2%, which is likely to fuel additional reductions in headcount.
Overall national employment is still dismal, according to the January employment report.
- The number of unemployed rose from 12.2m to 12.3m.
- Long-term unemployed represents 38.1% of those unemployed, a staggering percentage.
- The average duration of unemployment is now 35.2 weeks.
- The teenage jobless rate is even worse as 23.4%.
