Top of the News: So how does one square 5.7 percent GPD growth in the fourth quarter with real unemployment of 17 percent (“officially” 10 percent)? Part of it is a statistical fluke from lean inventories. Yet another issue is all the cheap money propping up the financial services sector, which is now larger than manufacturing.
I bet it will be revised down. The entire year saw the biggest contraction since 1946, when the wartime economy was winding down. In any event, we continue in uncharted and scary territory.
UC Berkeley economist Brad DeLong makes the point, “You expect 8 quarters over which real GDP has not grown to see a rise in unemployment of 2.78 percent — and 8 quarters over which real GDP has fallen by 1.62 percent to see unemployment rise by 3.5 percent and not 5.2 percent A world in which the unemployment rate were not 10 percent but rather 8.3 percent would be quite a different world than the one we live in…”
The Fed has been unwilling to take on job creation, instead focusing on saving the big banks. As a result of this and other failings, 30 senators, including Sen. Maria Cantwell voted against Chairman Ben Bernanke’s reappointment — the biggest ever vote of no confidence for a U.S. central bank chief. Bernanke’s bigger problem is the dissent rising in the Federal Open Market Commitee. This week’s vote to hold rates steady was not unanimous. The Kansas City Fed president opposed the language of open-ended low rates. This is a very weakened Fed chairman.
The Back Story: Haiti’s catastrophic earthquake was made worse by damage to port facilities, making it much more difficult for aid to arrive. God and infrastructure willing, Seattle would be in a better situation.
Port of Seattle spokeswoman Charla Skaggs told me that seaport and airport facilities have all been retrofitted to withstand another Nisqually-like quake, “and I think the Port of Seattle would be a major reason that our region could recover quickly – first physically, then economically.” In addition, the new cruise ship docks could accommodate ships that could serve as temporary housing.
Today’s Econ Haiku:
Strong earnings reports
At Microsoft, Amazon
for par-tay Friday