From Volume 37, Issue 23 of EIR Online, Published June 11, 2010

U.S. Economic/Financial News

May Employment Report a Harbinger of Further Collapse

June 5 (EIRNS)—President Obama went to a small Baltimore factory on June 5 to celebrate the government's employment report for May—which turned out to be terrible, with the jobs "gains" of March and April going into reverse in May. His decision to celebrate it anyway ("It shows our economy is getting stronger every day") will contribute to the odium of his coming downfall.

Despite large Federal government temp hiring for the 2010 Census, the May report was ominously bad. Overall, the reported increase of 431,000 in the Bureau of Labor Statistics (BLS) survey of establishments was a good deal less than "expected" by the usual economic suspects. It was made up of three parts, all actually or implicitly negative. There were 411,000 Census hires (these temp jobs will be lost in coming months as the decennial Census is completed); a net loss of 21,000 government jobs from state and local layoffs and budget disasters; and a claim of a paltry 41,000 net new private-sector jobs, none of which the Bureau of Labor Statistics actually found in its survey. All of them were produced by computer projections by the BLS which have been proven consistently false for the past two years. These notorious projections have come to be called "virtual jobs," and the Bureau spins out about 100,000 of them every month, which later have to be subtracted.

And, according to the Bureau's simultaneous May survey of households, where things are not so virtual, total employment fell by 35,000; total unemployment rose by 287,000; the U.S. labor force shrank by 322,000, while the number of Americans who've left the labor force rose by 493,000. Long-term unemployment (over six months) kept rising to 6.8 million, nearly half of the 15 million "officially unemployed."

When a candidate for President, Obama claimed considerable support among the younger generation, who now know better. Unemployment of young workers, ages 16-24, hit one-fifth (officially, 19.9%) in May. Already in April, at 19.6%, it was the highest unemployment rate for this age group since at least 1947. This age group now represents 3.8 million, or one-quarter of all official unemployment. And something like 2.5 million more of this young generation of workers has never entered the workforce at all due to the economic collapse—part of an unofficial, but true total of unemployed and underemployed, which stands at about 31 million Americans.

Cities, States Not Paying Bills as Collapse Worsens

June 2 (EIRNS)—While "recovery" propaganda comes from the White House in Washington, cities and states around the country are hitting the "second wall" of the financial hurricane, government bankruptcy; they are becoming unable to pay some of the unpostponable bills they haven't been able to cut.

More than half a dozen U.S. states have delayed paying income tax refunds to their residents, a move certain to draw citizen outrage. These include New York, which postponed payments into its next fiscal year, and has delayed an additional $2.5 billion in school district and other payments, and still lacks about $600 million to pay its June 1 bills, according to its Budget Director Robert Megna. They also include Rhode Island, which is delaying refunds in order to try to pay its debts due in June; Iowa, which couldn't hire temporary workers to send out the refund checks; and others. And other states, which already had delayed paying refunds on time in 2009, such as California, Alabama, Missouri, and Georgia, got such angry reactions that they are under strong pressure to pay on time this year, having to go into emergency fund reserves to do so.

Seven cities have newly fallen into junk-bond territory this week, including Harrisburg, the capital of Pennsylvania. While Obama flew into Pittsburgh to make insane "carbon tax" promises, Harrisburg defaulted on $3.6 million in debt payments amid a debate as to whether it should declare bankruptcy.

All rights reserved © 2010 EIRNS