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The Bad News Behind a Falling Jobless Rate
Tweet Share on Facebook January 7, 2011 Comment (4)It sounds like welcome news. The unemployment rate dropped from 9.8 percent to 9.4 percent, the sharpest one-month drop since 1998. After months of grim news about jobs, it finally seems like things are heading in the right direction.
[See 20 industries where jobs are coming back.]
But the fine print is discouraging. The economy did add 103,000 new jobs in the latest month, which accounted for about half of the steep drop in the unemployment rate, according to forecasting firm IHS Global Insight. But the number of new jobs is much lower than economists expected, and the current pace of job creation is far too weak to offset all the jobs lost during the recession. The other reason the unemployment rate fell is a shrinking labor force. Nearly 400,000 unemployed people stopped looking for work in the most recent month, because they felt no jobs were available. They gave up, in essence, and dropped out of the labor force. And that is not what is supposed to happen as the economy recovers and workers, in theory, become more optimistic.
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How U.S. Consumers Are Conquering Debt
Tweet Share on Facebook January 6, 2011 Comment (9)The behavior of American consumers routinely surprises economists—usually because of their dogged determination to keep spending. But lately they've shown another unexpected trick: Getting rid of debt.
[See 20 industries where jobs are coming back.]
Excessive debt helped cause the recent recession, and made it worse than it needed to be. Consumers with unaffordable mortgages and bulging credit-card balances defaulted in record numbers, pushing up bank losses and sucking the whole economy into a panic that started in the financial sector. Families that should have had a cushion during the downturn instead found their finances maxed out, with no ability to borrow as a bridge to better times. Banks share much of the blame, of course, for lending to anybody with a pulse and persuading gullible borrowers to take out unmanageable loans. But millions of Americans willingly used debt to live far beyond their means, raising perfectly valid questions about whether U.S. consumers had become the most irresponsible spenders on earth.
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How We're Learning to Be Happy With Less
Tweet Share on Facebook January 5, 2011 Comment (1)The economy is still in rehab, but it doesn't bother us all that much any more. In fact, we seem to be feeling nearly as good as we did before that awful recession messed everything up.
[See 12 ways to stop America's decline.]
That's what Americans have been telling the Gallup polling organization—and the nation's mood suggests that the recession may have made us a wee bit heartier. We seem to be happier with less, for one thing, and we may even be getting more satisfaction out of the "little things" that took a back seat for a while to fancy cars, splashy homes, and tell-everybody vacations.
Gallup's "well-being index" shows that Americans felt more happiness and less stress in 2010 than they did in 2009, which isn't surprising, since 2009 was the year the economy hit bottom, unemployment surged, and the stock market hit a 13-year low. What is surprising is that the latest well-being numbers are comparable to those of February 2008—which was a high point before the nation's mood began to sour and then turn downright grim as the financial panic hit in the fall of that year.
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How the Facebook Economy Trumps the Real One
Tweet Share on Facebook January 3, 2011 Comment (44)I couldn't help but noticing: Facebook has become a startup wonder and Web powerhouse at about the same time that the overall U.S. economy has hit the skids. So I decided to apply some cutting-edge economic analysis to determine whether there's a correlation.
[See 20 companies that cratered in 2010.]
First, a brief economic history of Facebook. Mark Zuckerberg started the site in 2004, while in college, and by 2005 he had relocated to Palo Alto, Calif., where little startups go to get big-time funding and make billionaires of the founders. In 2006, Facebook changed from a small-time membership site to a worldwide social network open to anybody. Microsoft boosted Facebook's profile in 2007 with a $240 million investment that put the startup's value at about $15 billion. Traffic grew in 2008 and soared in 2009, when the number of Facebook users nearly doubled. By 2010, there were a few days when Facebook even drew more Web traffic than Google. Zuckerberg, at 26, became the model for the lead character in a hit movie and Time's Man of the Year. And the social networking site began 2011 with a $450 million investment from Goldman Sachs that set the company's value at about $50 billion—more than Yahoo, Time Warner, or News Corp.
