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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Outlook
March 22, 2013 at 10:31 AM

Vote: Is the economy getting better for you

The stock market is up and housing sales are recovering. Unemployment remains stubbornly high and mandatory government cutbacks will be kicking in with the sequestration. Job openings increased slightly in January, but there are 3.3 job seekers for every position. The Seattle area is booming; the rest of Washington, not so much. Today’s poll asks how you are faring personally compared with six months ago:

Read on for the best links of the week and the haiku:


Comments | More in, Global economy, Gold and precious metals, Google, Great Recession, H1-B skilled foreign worker visas, Income/living standards, Jobs/Unemployment, Nordstrom, Outlook

October 8, 2012 at 10:30 AM

October, beyond the election

Whatever happens in the American electioneering over the next month, here are a few things to watch that touch only peripherally on the campaigns:

1. Slowing in Asia. The World Bank today lowered its growth forecast for East Asia and the Pacific region, chiefly because of China’s ongoing slowdown and lack of effective stimulus. This will have a direct effect on the Pacific Northwest because of our trade dependency on Asia (China is Washington’s No. 1 export destination).

2. The eurozone. Yes, this is getting old, but it’s not getting better. Greece is still in the monetary union, barely. Germany continues to resist more aggressive measures to restart growth. Austerity is causing a deep recession in many eurozone nations. It’s amazing how far they can kick the can down the road. But the best outcome on this trajectory is a long downturn complete with social unrest. The worst: A sudden crisis that causes all the dominoes to fall down.


Comments | More in China economy and business, Debt ceiling debate, Dollar, Eurozone, Federal Reserve, Interest rates, Macro/Big picture, Oil prices, Outlook, Pacific Northwest economy, Politics and the economy, Stock market

June 1, 2012 at 10:00 AM

The economy on the edge

I read an economist comment that today’s report of only 69,000 net new jobs created in May is “what a jobless recovery looks like.” No, this is what an economy tipped on the edge of a new recession looks like.

China and India are slowing. Much of the eurozone is already in a recession and on the verge of a breakup and breakdown that will make Lehman Brothers look like a community bank failure. And the U.S. economy is rapidly decelerating. The job growth was half what’s needed just to keep up with the natural growth of the labor force, much less find new work for 12.7 million unemployed. Worse, all the new jobs came from part-time positions. With the decline in labor-force participation, the unemployment rate badly underestimates joblessness. Average hours and weekly wages fell. The share of people unemployed for longer than six months grew. (Here’s a quick briefing in charts).

In Europe, leadership is lacking; the big banks are in control and seem happy to take the continent down. The Federal Reserve has consigned itself to the sidelines. Unlike the Reagan administration, which expanded federal jobs amid the 1981 recession and after, the Obama White House has been cutting them. The demand hole mostly behind the jobs crisis was never adequately addressed. Yet no new stimulus will be forthcoming from a gridlocked, election-year D.C. Unless things get really scary. And they just might.

Read on for the best links of the week and the haiku:


Comments | More in Debt, Deflation, Eurozone, Federal Reserve, Global economy, Great Recession, Jobs/Unemployment, Outlook

April 19, 2012 at 9:30 AM

A spring slowdown? Chances are strong

Jobless claims are moving higher and new reports show weakness in manufacturing and (continued) problems in housing. The Wall Street Journal wonders if the economy faces a “spring stall.” You can’t count on it, but you can’t count it out.

The European crisis is getting worse again. China has slowed down. At home, one of the biggest problems is continued job cuts by government. The closest event to the Great Recession was the 1981-82 recession. But coming out of that, the Reagan administration spent big to raise public-sector employment. States hadn’t been hobbled by 30 years of tax cuts and tax limitation measures. This time, the public sector has lost nearly 200,000 jobs and, the Economic Policy Institute argues, those “these extra government jobs would have helped preserve about 500,000 private sector jobs.”

A housing recovery won’t come until at least 2020, one more reason to pivot the economy away from its dependence on this sector. Another problem: The jobs that have been created since the end of the recession have disproportionately gone to those at the top and bottom of the income range. Those in the middle have been left behind.


Comments | More in China economy and business, Eurozone, Income/living standards, Macro/Big picture, Outlook, Real estate, Recovery

March 5, 2012 at 9:52 AM

What could possibly go wrong?

The U.S. economy seems to be slowly healing and Wall Street is rallying, although stocks pulled back today and 13,000 seems a tough barrier to stay across. How could things go sideways? Let me count the ways.

1. Europe. The sovereign debt crisis hasn’t been fixed. Even Greece hasn’t been fixed. At best, European leaders and the bazooka infusion by the European Central Bank have bought time. As debt continues to reset at high rates, Germany remains at odds with the rest of the eurozone on a bailout. A breakup of the euro is still possible, with a resulting global depression. Even if the eurozone stays together, most European economies will be in recession or near-recession conditions for years.

2. Israel attacks Iran. Israel is very good at starting wars and reaching its initial goals; not so good at an exit strategy. If Jerusalem tries to take out Iran’s nuclear capability, it might set the program back for a time. But Iran might not be as passive as Iraq and Syria in the face of similar strikes. Iran has the capability to shut down oil traveling out of the Persian Gulf, causing a huge price spike and recession.


Comments | More in Banking, China economy and business, Debt, Eurozone, Federal debt/deficit, Federal Reserve, Global economy, Great Recession, Great reset, International economy, Outlook, Stock market

December 22, 2011 at 9:54 AM

Sorry, few green shoots for Christmas || Talton

The year-end search for green shoots is in full swing. The Associated Press writes, “The economy is ending 2011 on a roll. The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the housing industry appears to be under way. Gasoline is less expensive. Factories are busier. Stocks are higher.”

The reality is more somber. Today the government revised third-quarter growth of gross domestic product down from 2 percent to 1.8 percent. If we see a spurt in the last quarter, it’s likely to be short-lived. Such anemic growth makes it impossible to dig out of the demand hole left by the Great Recession, and especially the jobs crisis.

The Economic Policy Institute offers 11 charts showing the misery that remains in the labor market. More visual evidence of the wide economic wreckage comes from the Washington Post. Among the more arresting graphics shows how male employment has been falling since the 1970s.


Comments | More in Great Recession, Great reset, Housing, Income/living standards, Outlook

October 28, 2011 at 10:05 AM

Vote: Did we step back from a worse recession?

So German Chancellor Angela Merkel stood up to the bankers and forced them to take a serious haircut to save the eurozone. Is she available to run for president in 2012? It’s bracing to see somebody show some (insert very long German word for intestinal fortitude) instead of doing another bailout where the enablers of crisis walk away with 100 cents on the dollar, or euro. Will it really work to stop the crisis in Italy from spreading to Spain and causing the breakup of the eurozone with all its ugly consequences on this side of the pond? Nobody knows.

Meanwhile, a report showed that GDP in the third quarter backed away from the stall speed of earlier this year. The bad news: Real disposable income fell and savings-rates sagged. The worse news: Even 2.5 percent GDP growth isn’t enough to fix the unemployment crisis. Which brings us to this week’s question:

Have we backed away from a worse recession


Comments | More in Eurozone, Great Recession, Great reset, Income/living standards, International economy, Outlook

July 29, 2011 at 10:50 AM

If the default happens, there’s no place to hide

Forget “safe havens” of gold, corporate bonds and Swiss francs. If a U.S. default really happens in the next week or two, most of us will be trapped in the express elevator to hell. Sorry. There’s just no nice, compromise-ey way to phrase it. A freeze-up in short-term credit and layoffs at Flir are only the beginning.

While President Obama has brilliantly channeled the ghost of Herbert Hoover, the blame for this wholly unnecessary event will lie with the radicals that have taken over the Republican Party. There is no debt crisis. We do face a jobs and growth crisis, which was not squarely addressed by a president in thrall of Robert Rubin and a bought-and-paid-for Congress. As I’ve written before, playing games with the full faith and credit of the United States is as dangerous a ploy as one could imagine. Yet our representatives have done it. The message to the world is that the world’s largest economy can’t govern itself.

The economy has already hit stall speed, with growth slower than at any time since the Great Recession already ended. It won’t take much to push us into a double-dip.


Comments | More in Debt ceiling debate, Deficit, Federal debt/deficit, Outlook

July 27, 2011 at 10:00 AM

Second-quarter GDP outlook is another worry for economy

The debt-ceiling game of chicken may have taken all the oxygen out of the room, but pay attention Friday when the government announces second-quarter gross domestic product. While GDP arguably misses many areas of critical economic performance, it remains a gold-standard metric. U.S. GDP growth slowed to only 1.9 percent in the first quarter. Nobody’s looking for a strong rebound for the second quarter — estimates range from 1.7 percent to 2 percent growth.

This matters on two pressing fronts. First, weak growth makes it more difficult for the economy to dig out of high debt, especially with the federal deficit and debt. Second, it makes it impossible to make significant gains against high unemployment. Three percent, better; 4 percent, now you’re talking. Below that, real gains in the labor force are impossible. Slow growth isn’t the only thing holding back hiring, but it’s a huge impediment.


Comments | More in Outlook

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