Department of Labor Reports Seasonally Adjusted Unemployment Claims Up, 4-Week Moving Average Down

The Department of Labor issued a report today showing an increase in seasonally adjusted initial unemployment compensation claims, a decrease in the 4-week moving average for initial claims, and a continued trend of increases in ongoing claims.

In the week ending April 18, the advance figure for seasonally adjusted initial unemployment compensation claims was 640,000, an increase of 27,000 from the previous week's revised figure of 613,000. The 4-week moving average was 646,750, a decrease of 4,250 from the previous week's unrevised average of 651,000.

The advance seasonally adjusted insured unemployment rate was 4.6 percent for the week ending April 11, an increase of 0.1 percentage points from the prior week's unrevised rate of 4.5 percent.

The advance number for seasonally adjusted insured unemployment during the week ending April 11 was 6,137,000, an increase of 93,000 from the preceding week's revised level of 6,044,000. The 4-week moving average was 5,944,000, an increase of 142,500 from the preceding week's revised average of 5,801,500.

For further details, see the full news release. Sphere: Related Content

Deep-Rooted Fear of “Freeloaders” in American Culture May Have Shaped Our Economic Safety Net Policies

When you contemplate the number of American families that have been affected by job losses in the current economic crisis, it’s staggering to consider that, at the beginning of the Great Depression, the nation had no unemployment compensation system to minimize the suffering created during the down-ticks of market cycles.

The reasons why such social policies are relatively recent developments can in part be understood in the relatively simple context of a gradually evolving enlightenment within our society of how working class people should be treated. In this view, social programs like assistance for the unemployed emerged over time for the same reasons as did other protective measures, such as child labor laws, overtime payments, occupational safety regulations, and environmental protections.

As societies shifted away from a primarily agrarian way of life to a more commercially and industrially centered culture, and as the scope of organized business and large markets expanded, awareness gradually increased of the potential harm, as well as good, that organizations and markets could do when left to their own devices. It’s fitting that Adam Smith’s metaphor for the market mechanism was “The Invisible Hand” rather than, say, “The Invisible Mind,” because the metaphor can be extended to help us understand an important fact about markets: a hand, unlike a mind, has no conscience.

So it took time for society to come to grips with “the Dickensian aspects” of the industrial revolution and realize that the impersonal machinations of the market required some prosocial checks and balances. In this view, it’s not too surprising that we were already nearly one third of the way through the 20th century before there was a federal unemployment compensation system.

However, another dimension worth considering is that, in the United States, an additional factor may be at work that has influenced why our safety nets protecting citizens from the vagaries of business cycles are arguably more limited than in some other countries: a fear of “freeloaders” that dates to our colonial origins here in “The New World.”

Many of us can recall, from our elementary school history lessons, the stories of problems in early colonial outposts like Jamestown and Plymouth with people who did not want to pull their fair share of the weight in dealing with the harsh conditions that an unforgiving climate and environment imposed on the settlers, leading to the implementation of strict “no work, no eat” policies.

Given the conditions, the mindset is entirely understandable. But, in or relatively young nation, the mindset appears to continue as a salient component of our cultural memory. Fear of freeloading remains strong even today, evidenced by continued hostility toward groups such as welfare recipients, who, at least in some demographic segments, are still demonized as the cause of a supposedly excessive tax burden, in spite of the fact that such social programs comprise a relatively small proportion of the federal budget. Hostility toward the so-called welfare state may in fact be the result of a political straw-man created during the Reagan era, but the resulting attitude persists among many people.

In “The Old World,” on the other hand, cultural memory of a life as raw and “close to the elements” as that experienced by the initial North American colonists is far more distant. Could this partially explain why, in certain European countries, for example, the social safety net is more extensive, and the reality more accepted as a “necessary evil” that a certain percentage of the population may take advantage of the system and “live off the dole,” so to speak?

The current economic crisis may call for a closer look at this issue, in keeping with the ideas of some thought leaders in economics who, like the Nobel Laureate Paul Krugman, favor markets that are as free as realistically possible while also advocating more robust social safety nets than those that currently exist in the U.S. Sphere: Related Content

Support for Obama Remains Strong Despite Negative Coverage from Some Pundits, Media Watchdog Group Says

WASHINGTON - April 1 - Watchdog group Media Matters for America released a comment today in response to a recent Washington Post/ABC News poll showing that only 26 percent of the public blames the Obama administration for the country's economic situation:

"This poll shows that despite what they are hearing from the media, the public overwhelmingly blames banks, business, and the Bush administration, not President Obama," said Erikka Knuti, a spokeswoman for Media Matters. "The media have repeatedly attached Obama's name to the economic crisis and all but erased the role of the previous administration from their coverage. The American people aren't falling for it."

The Washington Post/ABC News poll, released on March 31, asked respondents who they thought "deserve[d]" the most "blame" for "the country's economic situation." Results for who deserved a "great deal" or "good amount" of blame are as follows:

-80 percent said banks and other financial institutions
-80 percent said large business corporations
-72 percent said consumers
-70 percent said the Bush administration
-26 percent said the Obama administration

In their news release, the watchdog group also cites their documentation of how media figures, in their reporting of economic issues, have blamed Obama for the economic recession by disappearing the Bush administration's role and repeatedly referring to the "Obama recession."

Specifically, according to Media Matters, beginning in early November 2008, conservative media figures such as Rush Limbaugh, Sean Hannity, Dick Morris, and Hugh Hewitt have asserted that Obama is to blame for the decline of the stock market since the election and have promoted the myth of an "Obama recession," in spite of the finding from the National Bureau of Economic Research that the recession began in December 2007.

Media Matters also claims to have documented numerous media outlets declaring the existence of an "Obama bear market," and charges MSNBC with using, in numerous reports, misleading charts to suggest that the Dow only began dropping after Obama's election or inauguration, despite the fact that the Dow was on a downward trajectory months before the election, dropping 3,738 points from May 2, 2008, to November 3, 2008.

The watchdog group cites the phrase "Obama bear market" as just one example of a pattern of the media allegedly leaving out relevant information about the role of Bush-era policies in discussing the current state of the economy. According to Media Matters, among the examples is a March 8 Associated Press analysis, in which Tom Raum suggested that Obama is to blame for job losses since he took office and even before he did so -- an argument the watchdog group asserts has been rejected even by conservative CNBC host and National Review Online economics editor Larry Kudlow.

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Can We Learn Something from the Aussies?

Early in 2008, I was chatting with a colleague from Australia on my way to a sales meeting in Asia. I don’t quite recall how the conversation got started, but apparently signs of trouble in the U.S. economy had already started to spread in the international news, and my colleague asked me about it. Somehow the subject of unemployment came up.

“You don’t have services in the States for people who are unemployed, do you?” she asked.

I was a bit surprised to hear that, and clarified that we do indeed have an unemployment compensation system to help people who have lost one job through no fault of their own get through until they find a new one.

“But it’s very limited, isn’t it?” she replied.

“Well, yes,” I said. “It’s normally around three months, but in a particularly bad economic situation it’s sometimes extended.”

“It’s indefinite in Australia,” she said. “Some people even live off the dole.”

The conversation then, understandably, switched around to taxes, and she said that their heavy tax rate was what they sacrificed in exchange for a measure of security in Australia. She said that she understood that we don’t pay very much in the way of taxes in the U.S., but I responded that, when you add up our sales taxes, income taxes, fuel taxes, property taxes, state and local taxes, etc., our tax burden ends up being pretty heavy. I told her about our “Tax Freedom Day” concept which, last I heard, held that we all have to work until sometime in May before we can finally call our income our own.

“My tax bracket last year was 47 percent, by the way,” she said, which does translate to somewhat more than 5/12 of the year … but not a lot more.

It makes you wonder. Australians pay somewhat more in taxes than we do, but perhaps not a whole lot more. But seemingly they provide a better safety net for those who are having trouble. Is it a good tradeoff? Conservatives in the U.S. would argue that a huge social welfare system in the U.S. would be devastating to the economy.

But if the compared GDP growth rates for the past five years in Australia vs. the U.S. (see chart, data source indexmundi) are any indication, maybe this isn’t the case. Although Australia recently declared that its economy, as a result of the global crisis, is projected to shrink this year, they are doing better than we are on the unemployment front, with a jobless rate of 7 percent. And for the last five years, they beat us by a small margin in average annual GDP growth – 3.24 percent for Australia as opposed to 3.18 percent for the U.S.

Maybe a “welfare state” isn’t such a bad thing economically as the conventional wisdom in the U.S. leads us to believe. Is it possible that a larger and more expensive social safety net amounts to a form of “permanent stimulus?” Here in the States many of us don’t like the idea of handouts, and that’s understandable. But perhaps giving the poor a consistent level of money to spend and a reasonable minimum standard of living can have a beneficial and stabilizing effect on the economy, and a moderating effect on fluctuations driven by the booms and busts of business cycles.

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