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Jon Talton

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

Category: Working America
June 11, 2009 at 10:02 AM

How much have you lost in the great recession?

Top of the News: News that American households lost $1.33 trillion in net wealth in the first quarter compared with the same period last year sounds dramatic. Yet it’s only one snapshot of the reality that we are a poorer country as a result of the bad bets and swindles of the financial elite — and the unsustainable economy most of us helped perpetuate.

For example, the numbers mean household net worth is at its lowest since 2004. But the normal march of inflation — we’re not enjoying 2004 prices — means the pain is even greater. Also, most average Americans saw their wages stagnate in the recent boom as income inequality hit levels not seen since the eve of the Great Depression — so the loss of their 401(k)s and, worse, housing values, is a calamity.

Add in the high debt many of the same average Americans face, plus continuing layoffs, and you begin to see how deep the hole is. Unfortunately the great bubble created distortions that must be worked out. For everybody, that is, but the big bankers. Don’t you wish you could have gotten an accounting rule changed that allowed you to value your house and 401(k) at 2006 levels?

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Comments | More in Banking, Consumer spending, Macro/Big picture, Sustainability, Working America

April 23, 2009 at 10:10 AM

On the eve of recession, Seattle outpaced nation in income growth

Top of the News: The federal Bureau of Economic Analysis released personal income data for 2006-2007 today, giving us a sense of how metros and counties were doing as the recession began. The Puget Sound enjoyed some of the highest growth. For Seattle-Tacoma-Bellevue, that meant a 2007 per capita personal income of $49,401, 14th in the United States, and 128 percent of the national average. It was up 7.3 percent from 2006, vs. the national rate of 4.9 percent. Over 10 years, the average annual growth rate here was 5 percent, compared with 4.3 percent nationally.

Elsewhere: Bellingham, $33,487, up 6.2 percent; 87 percent of the national average. Bremerton-Silverdale, $41,521, up 6.8 percent; 108 percent of the national average. Olympia: $38,242, up 5 percent; 99 percent of the national average. Spokane: $32,019, up 4.8 percent; 83 percent of the national average. Yakima: $27,965, up 5.6 percent, 72 percent of the national average. Wenatchee-East Wenatchee: $30,872, up 4.7 percent; 80 percent of the national average. Portland-Vancouver-Beaverton: $38,842, up 4.5 percent; 101 percent of the national average.

Nationally, the poorest performance in income is heavily concentrated in the Rust Belt, the South, and my hometown, low-wage, low-tax, low-regulation Phoenix. The portal to the data is here.

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Comments | More in Working America

April 3, 2009 at 10:15 AM

Why the unemployment epidemic will get in the way of a rally

Top of the News: The March unemployment report should add to suspicions that we’re in a sucker’s rally on Wall Street. Unemployment is a trailing indicator — thus, the economy could find bottom and begin a, realistically, tepid recovery before the jobless numbers show it. But the 663,000 jobs lost in March, raising the national unemployment rate to 8.5 percent, are part of a much deeper dynamic that will make real corporate earnings improvements, and real stock price increases, difficult to sustain.

Add in the broader numbers of people working part-time when they want fulltime work and those who have given up actively looking and the rate rises to a borderline depression 15.6 percent. Former Labor Secretary Robert Reich today pointed out how all those lost jobs have a multiplier effect on the broader economy. “This is still not the Great Depression of the 1930s, but it is a Depression.” He, along with UC Berkeley economist Brad DeLong and others say the Obama stimulus is far too small to offset the production the economy is losing.

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Comments | More in Jobs/Unemployment, Retirement, Stock market, Working America

February 26, 2009 at 9:52 AM

We’re living WaMu’s stress test, with no extra credit

Top of the news: We’re not bitter here in Seattle as the government begins “stress testing” the major banks. No, not us. It’s just too bad the stress testing wasn’t done when Washington Mutual might still have been saved, and we could have kept a major corporate headquarters — and perhaps preserved some of the nest eggs of thousands of WaMu shareholders, not to mention thousands of jobs..

President Obama’s budget includes another $750 billion in bailout money for the banks, double the original figure made available after it was decided to let WaMu fail and fall into the arms of JPMorgan Chase. So Chase became even more “too big to fail” while WaMu went away. Tell me what I’m missing here? Maybe that WaMu wasn’t as politically connected as Chase, Citi and BofA. Ultimately, their bottomless gullet for taxpayer money will make rescue of WaMu look like chump change.

Earlier intervention on WaMu, along with some rescue money, could have potentially saved the nation’s largest thrift and preserved a more competitive banking system with more potentially healthy players. So stress test away as former employees and shareholders here just get the stress.

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Comments | More in Banking, Jobs/Unemployment, Working America

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