Joe Biden keeps talking about the fabulous improvement on the economy he’s seen from the stimulus, but thus far, those effects have mostly been limited to the White House. Initial jobless claims rose last week to 551,000, 17,000 more than the previous week and 12,000 more than analysts predicted. Americans spent more last month, but that mainly came from the Cash for Clunkers program (h/t Desmond L):
First-time claims for jobless benefits increased more than expected last week, a sign employers are reluctant to hire and the job market remains weak.
And while consumer spending jumped by the most in nearly eight years in August due partly to the government’s Cash for Clunkers program, economists worry whether that rebound can be sustained with U.S. households facing rising unemployment, tight credit conditions and other obstacles.
The Labor Department said Thursday that initial claims for unemployment insurance rose to a seasonally adjusted 551,000 from 534,000 in the previous week. Wall Street economists expected an increase of 5,000, according to a survey by Thomson Reuters.
The increase comes after three weeks of declines. Weekly claims have been trending down since the spring, but the decline has been painfully slow. The four-week average, which smooths out fluctuations, dropped to 548,000, about 110,000 below its peak in early April.
That hardly qualifies as a recovery, or even much of an improvement over when Barack Obama and Biden first took office. If the economy was massively producing new jobs, it wouldn’t be quite as devastating, but it’s not. In fact, the ratio of job applicants to open positions hit its highest level in the past decade in July.
The unemployment report for September will come out tomorrow, and analysts expect it to hit 9.8%. That should give the folks at Innocent Bystanders a chance to update this chart:
Meanwhile, consumer spending rose 1.3% in August, beating analysts expectations. Wages only rose 0.2%, though, and mass layoffs jumped 24.7% as unemployment rose to 9.7%. The spending numbers got a big boost from the sale of almost 700,000 cars through the Cash for Clunkers program. Unfortunately, as dealers are now discovering, those sales essentially shifted purchases from the fall and winter into subsidized car purchases on older inventory. Those consumer-spending numbers will not sustain themselves into September and beyond.
Government intervention will not solve an economic crisis created by government intervention. Until the administration reverses course and pushes capital back into the market, encouraging real growth, this stagnation and decline will continue into the foreseeable future.