Tom Hayes: Another glimmer of hope for the economy

The health care sector continues to add jobs so investor confidence during the past month led the monthly Economic Recovery Reality Index (ERRI) up a modest 4.76 points over July numbers to 16.03 for August. Unemployment dipped slightly and the increase in the number of “discouraged” workers slowed, according to the U.S. Bureau of Labor Statistics - but as with prior economic recessions and depressions employment changes are once again trailing the other economic indicators:

The small ERRI gain shows Wall Street's optimism hasn't yet reached most other streets; it will take some time for average Americans to feel - or believe - that this long subtle assault that started with obscure financial "devices" has eased and real recovery has begun. The problem, we know now, was not sub-prime lending, which can and does help people, but aggressive and deliberately predatory sub-prime lending from companies and CEOs who thought they were immune to the risks in an essentially unregulated environment.

The ERRI uses a hypothetical, indexed fund (similar in some ways to a mutual fund) to measure investor confidence across nearly a dozen sectors of the economy, but until jobs and wages show sustained improvements you won't see it move back closer to (or above) the 100 mark no matter how fast stock prices drive the stock/investment component higher.

"Equity investments are volatile, particularly when not carefully diversified and monitored; the ERRI would have shown even less improvement had closing prices from even a day sooner been utilized in the calculations (since that would have reduced the 'ERRI fund' improvement.)"

The modest gain in the August ERRI figures reflect both equity prices as of the close of the NYSE on Friday, August 7th and data released in the monthly update/estimate from the Department of Labor earlier the same day combined using a new calculation. Without the on-going hiring in health care and the slight turn-around in unemployment rate even the robust gains in various stock markets would not have had much impact on the index.

Toyota predicts first ever loss as sales drop - Dec. 22, 2008

More at CNN.com - Dec. 22, 2008: “NEW YORK (CNNMoney.com) -- Japanese auto giant Toyota said Monday that it would suffer an operating loss due to plummeting auto sales and a strong local currency.

About 30 minutes after the market closed in Tokyo, Toyota said it expected to lose approximately $1.5 billion to $1.7 billion this fiscal year. Toyota reports earnings on a fiscal calendar beginning in April.

This would be Toyota's first operating loss since 1950, Toyota spokesman Steve Curtis said.

Despite the likely operating loss, Toyota expects to post a $557 million net profit for the fiscal year. The profit stems, in large part, from joint ventures whose revenues are not included in the automakers' accounting for its operating profits.”

--- This should show others that it's not just American car companies that are hurt by this economy.

Mary L. Schapiro, Gary Gensler and Daniel K. Tarullo, Obama Economic Appointees

Truthdig - Ear to the Ground - Tough Road Ahead for New Economic Appointees: “Mr. Obama named Mary L. Schapiro, 53, to head the Securities and Exchange Commission, which has come under sharp criticism for its failure to detect signs that major Wall Street banks were in trouble before the financial crisis, as well as lax oversight of the New York financier Bernard Madoff, who the authorities say has confessed to running a $50 billion Ponzi scheme.

[...] Mr. Obama also announced the selection of two former Clinton administration economic officials, Gary Gensler and Daniel K. Tarullo, to leading economic posts.

Mr. Gensler, who will head the Commodity Futures Trading Commission, was a Treasury official in the Clinton administration. He also worked as a senior adviser to former Sen. Paul Sarbanes, a Maryland Democrat, who wrote legislation to increase oversight of the accounting industry and reform corporate governance.

Mr. Tarullo, a law professor at Georgetown University who was also an economic advisor to President Clinton, will fill an open seat on the Federal Reserve board in Washington. He is currently leading Mr. Obama’s transition team at the Treasury Department, and is considered an expert in international economic regulation.”

-- President-Elect Barack Obama is rounding out his economic team with the choice of Mary L. Schapiro, Gary Gensler and Daniel K. Tarullo. I have to note that it seems there are more women appointed to this cabinet than at any time in American History. I think the reason for this is these choices -- and women in general -- may have better "vetting" track records than their male counterparts. It's just a guess -- I have nothing other than experience to base this on.

Socialtext offering laid-off networks for free - Susan Mernit's Blog

Socialtext News - Susan Mernit's Blog: “As we all know, alumni networks frm opast companies ate great ways to get jobs, Ross Mayfield's Socialtext is going to be right there helping those folks out.

Ross writes: "Today, Socialtext is meeting this latent need with a free Corporate Social Network offer for the 2009 Recession. Any former employee and HR director of a company that reduced its workforce by 5% or more in the last year can create a private Corporate Social Network for free by applying here. Please note that this offer does not include free ”

-- Nice find Susan!!! I just wonder, considering the digital divide, how many companies will actually make the leap.

U.S. Loses 533,000 Jobs in Biggest Drop Since 1974 - NYTimes.com

U.S. Loses 533,000 Jobs in Biggest Drop Since 1974 - NYTimes.com: “The nation’s employers cut 533,000 jobs in November, the Bureau of Labor Statistics reported Friday.

Not since December 1974, toward the end of a severe recession, have so many jobs disappeared in a single month — and the current recession, far from ending, appears to be just gathering steam.”

U.S. Economy Headed For Depression? Record Consumer Debt Level Points The Way

I've said this for years: the United States Credit System is the shock-absorber to economic fluxuations and when healthy guarantees constant growth in the economy and guards against a long-term recession or worse, a Depression.

But that party's coming to an end, rapidly. Take a look at these indicators presented by MarketOracle.uk: US Recession in 2007 - Third Leg of the Bear Market Likely

In 2004 I told Gary Hart, who was considering a presidential run, about this. All he could talk about was changing the tax system. Geez!