Employment Situation:Economic News release

The Civilian Non-institutional population represents all citizens over age 16 eligible to be employed. This measures the flow of workers entering the job market and those retiring.

–Current: 239.49 million; up 176,000 from last month; up 1.8 million in the last 12 months (from 237.69 million).

Employment is a moving target. In a healthy economy, around 60% of those newly eligible look for employment, so about 125,000 jobs a month or 1.5 million new jobs per year must be filled just to keep the unemployment rate stable.

The Civilian labor force represents employed and unemployed workers actively looking for work.

–Current: 153.42 million; down 272,000 from last month; down 26,000 in the last 12 months (from 153.68 million). **Exactly the same size as April.

–Employed workers: 139.33 million; down 445,000 from last month; up 242,000 in the last 12 months (139.09 million).

–Unemployed workers: 14.09 million;up 173,000 from last month; down 506,000 in the last 12 months(14.59 million).

–Civilian population not in the labor force: 86.07 million; up 449,000 from last month; up 2.06 million in the last 12 months (84.01 million).

At the start of the recession, 62.7% of the population was employed. Currently it is 58.2%.

–Unemployment rate (Civilian labor force unemployed workers) returned to 9.2 (9.181) percent due to a combination of the significant drops in both the Civilian labor force (-272,000) and those employed (-445,000). This is almost the same number of workers (+449,000) that are no longer in the labor force (perhaps retiring) and not replaced.

Nonfarm payroll employment represents the Civilian labor force in selected industries (does not count farm workers).

–Current: 131.02 million; up 18,000 jobs from last month; up 1.036 millionin the last 12 months (129.98), increased by 1.77 million since the February 2010 low (129.246 million).

Private sector employment represents nonfarm payroll employment (not counting government workers).

–Current: 108.95 million; up 57,000 jobs from last month; up 1.69 millionin the last 12 months (107.26).

Government employment represents federal, state and local government employment.

–Current: 22.064 million; down 39,000 jobs from last month; down 659,000in the last 12 months (22.723).

Bottom Line:

What happened?

Reports released a day ahead of the Labor Department’s monthly survey of the jobs market predicted that Friday’s survey results would show that the economy added 100,000 jobs to nonfarm payrolls in June, up from a 54,000 gain in May. They certainly did not forecast a rise in the unemployment rate, that edged up AGAIN to 9.2 in June from 9.1 percent in May and from 9.0 percent in April.

Those pre-Friday reports were based on the Labor Department news that initial claims for unemployment benefits declined by 14,000, to 418,000, as of July 1. Payroll giant ADP said its own monthly survey showed that the private sector added 157,000 jobs in June.

Consumer Confidence Survey

For this month, the Conference Board shows that the:

• Consumer Confidence Index^® (short-term outlook) decreased to 59.5 from last month’s 60.8 (1985=100).
• Present Situation Index (optimism or pessimism about current conditions such as unemployment) decreased to 35.7 from last month’s 39.3 rating.
• Expectations Index (optimism or pessimism about future conditions) increased to 75.4 from last month’s level of 71.6 on American optimism.

Household Survey Data

Nonfarm payroll employment gained 18,000 jobs in June. Previous month changes were: May (+25,000); April (+217,000); March (+194,000); February (+235,000); January (+68,000); December (+121,000); November (+93,000); October (+210,000); September (-24,000; Census workers -136,000; net -112,000); August (-57,000; Census workers -114,000; net +57,000); July (-66,000; Census workers -143,000; net +77,000); June (-175,000; Census workers -225,000; net +50,000).

Census workers peaked at 564,000 workers in May 2010.

The quarterly average nonfarm payroll job data has three-month averages at: April through June (+86,667); January through March (+165,667); October through December (+141,333).

Between January 2007 and December 2009, 6.9 million workers were displaced from jobs they had held for 3 years or more. By January 2010, 49 percent of them were reemployed, but not necessarily in the same industries they had worked before.

Average weekly hours and overtime

The average workweek for production and non-supervisory employees employees remained consistent at 33.6 hours;average hourly and weekly earnings decreased slightly to $19.41 with weekly earnings at $652.18.

These figures closely correlate with overall output and when workweek hours increase give clues when firms will start hiring.

The number of persons working part time for economic reasons in non-agriculture industries (sometimes referred to as involuntary part-time workers) increased by 4,000 to 8.55 million. These persons had their hours cut back to 34 hours or less (-28,000) or could only find part-time work (-7,200).

The number of persons not in the labor force but marginally attached to the labor forceincreased by 474,000 to 2.68 million.These are workers who wanted and were available for work, and had looked for work sometime in the last 12 months. They had not looked for work in the last 4 weeks and so were not considered part of the labor force. This number is up from 2.59 million a year ago.

Among the marginally attached workers, the number of discouraged workersincreased by 160,000 in the current month to982,000. These are persons no longer looking for work.

This number has decreased by 225,000 from a year earlier.

Long-term unemployed persons (jobless for 27 weeks and more) increased by 89,000 to 6.29 million this month. This is more than 4.8 times the number at the start of the recession in December 2007 (1.3 million). In 2009 alone, 3.5 million were added to that number. 44.6% unemployed persons are in this category or nearly 4.1% of the work force.

The average duration of unemployment has increased to 39.9 weeks. A year ago it was 34.8 weeks. At the start of the recession the average length of unemployment was 16.6 weeks. Half of the unemployed regain employment in 22.5 weeks.

The long-term unemployed number is down by 421,000 workers since the May 2010 high of 6.71 million.

Unemployment spreads stayed relatively the same with the highest among teenagers (24.5%), followed down by African-Americans, then Hispanics. The lowest unemployment started with Asians (6.8%), followed up by Adult women (8.0%), Whites then Adult men (9.1%).

Establishment Survey Data

Construction lost 9,000 jobs in June. Previous month changes were May (-4,000); April (+4,000); March (+5,000); February (+30,000); January (-32,000); December (-16,000); November (-2,000); October (+4,000); September (-11,000); August (+34,000) reflecting 10,000 workers on strike in July who returned to work; July (-2,000); June (-21,000).

The quarterly average construction job datahas three-month averages at: April through June (-3,000); January through March (+1,000); October through December (-4,667).

Currently, there are 5.513 million construction jobs, an increase of 2,000 from a year ago (5.511 million). In December 2007, there were 7.5 million.

Manufacturing gained 6,000 jobs in June. Previous month changes were May (-2,000); April (+28,000), March (+20,000);February (+33,000); January (+49,000);December (+14,000); November (+15,000); October (-4,000); September (-6,000); August (-26,000); July (+32,000); June (+13,000).

The quarterly average manufacturing job data has three-month averages at: April through June (+10,667); January through March (+34,000); October through December (+8,333).

Currently, there are 11.7 million manufacturing jobs, an increase of 159,000 from a year ago (11.55 million). In December 2007, there were 13.73 million.

The Institute for Supply Management said manufacturing activity expanded for the 23^rd consecutive month with new orders and production modestly up. The ISM manufacturing index (PMI) read 55.3, the second reading below 60 for 2011 and the past 12 months. A reading above 50 indicates growth, and a PMI above 42 percent over a period of time indicates an expansion of the overall economy.

Of the 18 manufacturing industries, 12 are reporting growth led by Miscellaneous Manufacturing; Printing & Related Support Activities; Computer & Electronic Products; Paper Products. .

Retail trade gained 5,200 jobs in June. Previous month changes were May (-4,300), April (+64,100); March (-5,600);February (-8,100); January (+27,500);December (+2,800); November(-15,600); October (+38,200); September (-3,900); August (+6,400); July (+11,100); June (-20,500).

The quarterly average retail job data has three-month averages at: April through June (+21,667); January through March (+4,600); October through December (+8,467).

Currently, there are 14.537 million retail trade jobs, an increase of 128,700 from a year ago (14.408 million). In December 2007, there were 15.57 million.

Professional Business Services gained 12,000 jobs in June. Previous month changes were May (+45,000); April (+45,000); March (+75,000);February (+44,000); January (+31,000);December (+54,000); November (+85,000); October (+40,000); September (+28,000); August (+38,000); July (-5,000); June (+33,000).

Professional and business services consist of legal, accounting, management consulting, administrative and support services. In hard times, they are the first to be trimmed. In recovery, the jobs grow in these fields, as employers emerge from survival mode.

The quarterly professional business services job data has three-month averages at: April through June (+34,000); January through March (+50,000); October through December (+59,667).

Currently, there are 17.168 million professional business servicesjobs, an increase of 485,000 from a year ago (16.683 million). In December 2007, there were 18.05 million.

This is one of the largest job growth fields.

Temporary help services (a subset of Professional Business Services) lost 12,000 jobs in June.Previous month changes were May (-1,700); April (-5,400); March (+30,000); February (+22,700); January (-11,400); December (+38,100); November (+26,800); October (+27,200); September (+27,300); August (+22,500); July (-6,700); June (+11,200).

The quarterly temporary help services job data has three-month averages at: April through June (-6,367); January through March (+13,767); October through December (+30,700).

Currently, there are 2.228 million temporary help services jobs, an increase of 152,400 from a year ago (2.076 million). In December 2007, there were 2.56 million.

Temporary hiring is the first step to permanent hiring as employers see if revenues justify the extra help.

Educational Services lost 17,400 jobs in June. Previous month changes were May (-10,400); April (+6,200); March (-2,500);February (+4,000); January (-100); December (+5,400); November (+6,800); October (+25,000); September (-7,900); August (+9,700); July (-1,600); June (+7,500).

The quarterly average educational services job data has three-month averages at: April through June (+4,400); January through March (+467); October through December (+12,400).

Currently, there are 3.18 million educational servicesjobs, an increase of 34,500 from a year ago (3.15 million). In December 2007, there were 2.98 million.

Health care and Social Assistance gained 17,400 jobs in June. Previous month changes were May (+28,000), April (+34,000); March(+36,000);February (+36,200); January (+12,900);December (+27,900); November (+30,900); October (+42,100); September (+34,200); August (+31,300); July (+27,800); June (+22,600).

The quarterly average health care and social assistance job data has three-month averages at: April through June (+26,467); January through March (+28,367); October through December (+33,633).

This is one of the largest job growth fields.

Currently, there are 16.74 million health care and social assistancejobs, an increase of 353,300 from a year ago (16.39 million). In December 2007, there were 15.58 million.

Government employment (federal, state, local, U.S. Postal Service) lost 39,000 jobs in June. Previous month changes were May (-48,000); April (-24,000); March (-25,000); February (-30,000); January (-14,000); December (-18,000); November (-35,000); October (+17,000); September (-136,000); August (-144,000); July (-183,000); June (-236,000); May (+381,000).

The quarterly average government employment (federal, state, local, U.S. Postal Service) jobs have been dropping (except for the Census bubble) over the last nine months and has three-month averages at: April through June (-37,000); January through March (-23,000); October through December (-12,000).

Currently, there are 22.064 million jobs, a decrease of 659,000jobs from a year ago (22.723 million). In December 2007, there were 22.38 million.

Federal government (except U.S. Postal Service): Currently, there are 2.204 million jobs, an decrease of 324,000 jobs from a year ago (2.528 million). In December 2007, there were 1.97 million.

U.S. Postal Service: Currently, there are 626,400 jobs, a decrease of 30,100jobs from a year ago (656,500). In December 2007, there were 781,300.

State governments education: Currently, there are 2.384 million jobs, an increase of 14,800 from a year ago (2.369million). In December 2007, there were 2.33 million.

State governments (excluding education): Currently, there are 2.707 million jobs, a decrease of 57,700 from a year ago (2.764 million). In December 2007, there were 2.81 million.

Local governments education: Currently, there are 7.88 million jobs, a decrease of 159,200 from a year ago (8.04 million). In December 2007, there were 8.05 million.

Local governments (excluding education): Currently, there are 6.263 million jobs, a decrease of 103,300 from a year ago (6.366 million). In December 2007, there were 6.43 million.

Employment explained

To restore employment to the 5.5% level, 5.65 million workers will have to regain their job or start new a job.

The government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.

To get to the 8% level, 1.81 million workers need jobs. 12.273 million workers will still be unemployed under the new standard.

The Civilian labor force has decreased in the past 12 months by 263,000, but normally grows at the rate of 1.5 million new workers per year. At 8%, 120,000 workers each year will be added to the unemployed, driving that number constantly higher.

Unemployment is a moving target that can only be battled with new industries and local jobs.

Our recession history of unemployment:

Over the last 12 months, net 242,000 jobs were filled in the Civilian labor force, but if you are unemployed, the rate is 100%..

Where are the jobs?

It comes as no surprise that the occupations with the largest job growth in 2008 and projected to 2018 are in the fields of network systems and data communication and all aspects of the medical field, followed closely by financial examiners (accountants, auditors, etc.).

The largest job growth fields also include office and administrative support jobs, sales and service jobs, teachers and jobs in construction and transportation.

Education and employment go hand in hand.

The following table shows that unemployment is consistently greater for those with less education. It also shows that workers over 55 (women more than men) are more likely to remain employed).

Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey. This translates into about 110,000 individuals. All the counties and county-equivalent cities are grouped into 2,025 geographic sampling units. 824 of these units are selected to accurately represent the entire population of the United States. For a detailed explanation, see the BLS Handbook of Methods.

Each month, one-fourth of the interviewed households are rotated out. They rejoin the sample after eight months, are interviewed for another four months, and then are rotated out forever.

Each month, 2,200 highly trained Census Bureau employees conduct interviews in the sample households for information on labor force activities (job holding and job seeking) or non-labor force status of household members.

This sampling method results in a 90+ percent probability that the results will be within 290,000 of the 153.4million workers in the Civilian labor force. A monthly total census would be cost-prohibitive.

Questions are specifically formulated so that neither the interviewer nor the persons interviewed decide their labor force classification. This prevents the sample from being distorted by respondents providing answers based on their opinion or what a “right” answer should be.

The basic concepts of employment are:

The unemployment rates are extrapolated from the survey results.

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately.

Stimulus (Recovery Act):

The president credits his $787 billion stimulus package of tax cuts and increased government spending with improving employment. He hopes to create about 3.5 million jobs. Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 8%.

The Fed’s record-low interest rates, along with other moves to drive down loan rates and stimulate borrowing, have supported the economic rebound.

The president sent The Small Business Jobs and Wages Tax Cut to Congress on January 10, 2010 to try to stimulate more hiring. It focused on small businesses, because as the president stated, “Over the past fifteen years, small businesses have created roughly 65 percent of all new jobs in America.” The proposal included:

• Businesses will receive a $5,000 tax credit for every “net” new employee that they employ in 2010, capping at $500,000 per firm (and $250,000 for new firms) to ensure that the majority of the benefit goes to small businesses.

• Small businesses will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. Specifically, firms that increase wages, expand hours or hire new workers would get a credit against the added payroll taxes that result. This bonus would be based on Social Security payrolls, up to the individual taxable maximum of $106,800.

• Firms can claim the credit on a quarterly basis, returning money quickly to businesses, providing an early incentive to hire and increase payrolls.

• The Recovery Act tax incentives will be extended for depreciation of capital spending.

• There will be increased loan guarantees from the Small Business Administration (SBA), and an elimination of SBA fees.

• There will be increased investments in roads, highways, bridges and other construction, and grants to state and local governments to create jobs and avoid layoffs

President Obama noted that this proposal would be worked into the various other proposals that have already advanced in Congress, such as The HIRING Act of 2010 and The Jobs for Main Street Bill of 2010.

Because the Troubled Asset Relief Program (TARP) program (signed into law by President George W. Bush on October 3, 2008) cost much less than expected. Originally expected to exceed $300 billion, the Congressional Budget Office (CBO), as of December 10, 2010 estimates the program will cost only $25 billion, freeing up more than $200 billion to pay for other parts of the jobs program, without increasing projected federal deficits.

Stimulus spending by state

As of Jun 15, 2011,
$486,559,098,013has been awarded
$402,735,853,415 (82.77%) has been paid out to the states

Read: How the Stimulus Is Changing America

Recession histories:

Total unemployment peaked at 15.7 million (10.1%) in October 2009 rising from 7.7 million (5.0%) in December 2007 and from 11.6 million (7.6%) in January 2009.

Payroll employment decreased by 4.5 million jobs in 2009, wiping out all the jobs created in the private sector over the last decade.

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next four to five months (past performance is no guarantee of the future).

Economist William Polley made a chart that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently. Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

Recession peaks 1974-2011: 

Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later. By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:
It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”

We live in hope (past performance is no guarantee of the future).

The next Economic Jobs report will be found at:
Economic Picture: July 2011 released August 5, 2011

The last Economic Jobs report will be found at:
Economic Picture: May 2011

As a note, the 2010 count includes legal and illegal immigrants as well as citizens who call the U.S. their home.

Compared to other countries in rough percentage terms over the last ten years, Canada’s population grew by 10 percent, France and England increased by 5 percent, Japan stayed constant, and Germany decreased.

Although China grew by only 6 percent, their population grew to 1.3 billion or 20 percent of the world population. One in five of the people of the world now live in China.

Big shift U.S. population increases per 2010 Census

Michigan (-0.6)(-54K) was the only state to lose population.

In the previous census, these states were also big percentage increases with Nevada (66.3), Arizona (40.0), Utah (29.6), Idaho (28.5), Texas (22.8), Colorado (30.6), North Carolina (21.4), South Carolina (15.1), Georgia (26.4), and Florida (23.5).

This shows a big shift in population over the last twenty years to the Southeast and the West.

So why is the Census important and how does that affect our lives?

We get Representation:

There are 435 seats in the House of Representatives that are reapportioned among states with each new Census according to population. The goal is an even distribution of voting citizens across all states. In other words, the total population is divided by 435, or 710,767 as a goal for the size of a congressional legislative district starting in 2013.

From the 2000 Census, the average district population was 646,946 starting in 2003. States with population increases add new districts, and those with population decreases lose districts. And there are seven states whose population only entitle them to the minimum single district because they don’t have enough people living there for more.

District Gains:

Texas (+4), Florida (+2); Arizona, Georgia, Nevada, South Carolina, Utah and Washington (+1) each.

All but one of the gaining states (Washington) were won by Republicans in November 2010.

District Losses:

New York and Ohio (-2) each; Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey and Pennsylvania (-1) each.

Seven of the losing states were won by Republicans in November 2010.

Knowing where people live in the country allows the federal government to channel funding down to the states in a fair manner. It would be no fun if some states got all the road and bridge repairs, all the airports, all the post offices, all the disaster and college funding and all the other things the government pays for. Knowing where people live in the state allows the state to fairly distribute the federal money it receives to the cities and towns so schools can stay open and garbage can be collected.

And that all comes from the Census.

Congress:

When the 435 congressional districts meet in Washington, they generally discuss and act on national matters and enact national laws. That representation tries to insure that every person in the country is fairly spoken for.

Each district is represented by a member of a political party, mostly Republicans and Democrats. They vote the way their party leadership tells them to vote or how they think their district will want them to vote. When there are more Republicans in the 435 seats, things go the way the Republican leadership wants. When there are more Democrats, it goes their way. The 435 all come up for reelection every even-numbered year, and they are in their job for only two years at a time.

Electoral College

Every four years, a president is elected by the Electoral College. The Electoral College is made up of representatives of our congressional representatives. There are 535 members; the number of House representatives in the state plus the two Senators from each state.

While national elections focus mainly on electing friendly party representatives for each district and redrawing districts to their advantage, the Electoral College, in most cases, is a state-by-state, all-or-nothing voting system that protects the value of the individual state by choosing its own method of electing members without interference from other states or national parties.

The job of the Electoral College is to choose the most powerful executive leader in the world across the expanse of the nation by ignoring population concentrations, contested elections and voter turnout in other states.

The Electoral College was never meant to reflect the national popular will. It was designed to vote the individual state’s choice for the presidency. It gives as much weight to rural areas as urban centers. It enhances the status of minority groups concentrated in states with large electoral vote counts. It prevents nationalization of the government and enhances the collective opinion of the individual states. It promotes cohesion of the nation by requiring a distribution of popular support to elect.

Redistricting:

As the voting population moves South and West, new legislative districts are formed in those states to keep the population similar in all districts across the country. Constitutional law says that each district must contain approximately the same number of voters.

When a state adds or loses districts, the entire state population must be redistricted by drawing new maps to include similar populations in all districts.

The task of redistricting a state is a happy opportunity for the majority party in a state. The ruling party has the final vote (sometimes subject to governor approval) on new district lines. Shrewd politicians make every effort to redraw district lines so voters favorable to them will carry elections in all districts. And they can’t help being creative to reduce the competition.

Computer-generated simulations have made this job a lot easier and much more effective.

In June 2006 the Supreme Court issued an opinion that allowed states to redistrict at any time.

Some favored techniques are:

• “packing” where district lines are drawn to pack political opposition voters into as few districts as possible
• “cracking” or fragmenting the opposition voters thinly out into different districts so their votes become minimized or ineffective
• “kidnapping” involves redrawing the district so two strong opposition candidates reside in the same district and must run against each other. No matter who wins, one strong candidate is eliminated (see “Gerrymandering” > In Pennsylvania… further down on this page)
• “spoiler effect” provides candidates that cannot win, but draw votes away from contenders
• spreading the opposition voters thinly around a large district, causing campaign coverage expenses as high as possible for opposition candidates attempting to cover wide areas.

The purpose for the ruling party is to have as many “wasted votes“ as possible.

States such as California, Florida, Georgia, Maryland, Michigan, New Jersey, New York, Pennsylvania and Texas have already reduced competition by skewing their district maps to prefer ruling party favorites so that competition for congressional House seats has been virtually eliminated.

There are still 36 states where the state legislature has the primary responsibility to create a redistricting plan. In many cases, this is subject to approval by the state governor. Seven states (Arizona, California, Hawaii. Idaho, Minnesota, New Jersey, Washington) use either a bipartisan or independent commission to create a plan. Three states (Florida, Iowa, Maine) use independent commissions to propose a plan which must be approved by the legislature.

Although the November 2010 elections put Republicans in full control of 35 state legislatures, their ability to redistrict in their favor is somewhat limited by population location (all districts must have roughly the same population and form one enclosed figure) and the 1965 Voting Rights Act which protects ethnic minorities (race or color) from voter bias.

There will still be redistricting plans that wind up in the courts.

“Gerrymandering” is the setting of electoral boundaries to establish political advantage. Some past examples are :

California’s 23^rd congressional district is an example of the packing style of districting. It is moderately to heavily democratic and confined to a narrow strip of coast so thin it is referred to as “the district that disappears at high tide.”

Illinois’s 4th congressional district is drawn like a pair of earmuffs “packing” two Hispanic areas (Puerto Rican in the north, Mexican in the south) while remaining connected (legal requirement) by narrowly tracing a small portion of Interstate 294. It completely surrounds the Illinois 7^th congressional district.

North Carolina’s 12^th congressional district is an example of “packing” a 64 percent African-American liberal majority into a single district by following Interstate 85 almost exactly in a long and thin and in some points no wider than a single highway lane. The boundaries were contested in the Supreme Court three times and redrawn. The current version has a small plurality of whites.

In Pennsylvania, the Republican-controlled state legislature used gerrymandering to defeat Democrat Frank Mascara representing the 20^th congressional district. A large portion of his district was moved into the newly-drawn 12^th congressional district including most of his neighborhood. The district split streets down the middle to form a thin tendril that ended at his house, but not where he parked his car. Mascara was “kidnapped” into the 12^th district and had to run there against another strong Democrat. He was defeated, but whoever won, Republicans eliminated a strong opposition candidate.

In Texas, the Republican majority redistricted the state in 2003, diluting the voting power of the heavily Democratic Travis County, Texas by “cracking” or distributing the voters out to more Republican districts.

The United States Supreme Court in 2006 upheld most of the Texas congressional district map engineered by former House Majority Leader Tom DeLay. The decision allowed state legislatures to redraw districts as many times as they like and not just after the Census. This allows them to protect their political parties’ standing and number of seats, as long as they don’t harm racial and ethnic minority groups voting influence.

Ed.Note: Former U.S. House Majority Leader Tom DeLay, once considered among the nation’s most powerful and feared lawmakers, representing Texas’ 22^nd congressional district from 1984-2006 was found guilty of money laundering for campaign financing, on a felony conspiracy charge to move $190,000 in corporate donations to Republican candidates in the Texas State Legislature in 2002.   He was sentenced to three years in prison for the scheme to influence elections that already cost him his job, leadership post and millions of dollars in legal fees.

How they work it:

In districts where the ruling political party is in the voting minority, districts can be redrawn to make the loyal voters the slight majority for most districts; an attempt to insure continuing congressional majority domination for the state, and the casting of all the state’s electoral votes for the presidential candidate of the ruling party’s choice.

Since any challenging candidates have little or no chance of winning, voter turnout diminishes to the point where the dominant party may run uncontested. The “wasted vote” ploy succeeds and the American citizen loses his ballot.

Partisans drawing district lines, however, face challenges between protection of their incumbents and maximizing their party’s campaign potential. Many times, the only way to increase their party’s campaign potential is to shift boundaries so reliable partisans are moved out of their districts, cutting margins of safety for incumbents, but making elections more competitive. Incumbents, finding new voters in the district, must establish their personal relationships with them if they hope to get reelected.

As a note, it has been found that when commissions or courts draw district boundaries, elections are more competitive compared to those drawn by legislatures. In 1992, statistical analysis showed that incumbents benefited from bipartisan redistricting which produced reduced competition.

How it has worked:

Favorable redistricting did not come easily. After the 1990 Census, 20 states had suits in state courts concerning redistricting plans; 28 states had suits in federal court. Eleven states had suits in both state and federal courts on the same district plan. New York had cases in four different federal courts and three different state courts.

Republicans under the leadership of House Minority Whip Newt Gingrich worked for 10 years setting up state legislatures as a basis for the 1994 Republican sweep of the congressional House of Representatives.

Gingrich worked with state party chairmen to find candidates who could win congressional districts and were aligned with favorable state and district issues such as lower business taxes, term limits, welfare reform, pro-choice and clean energy. These candidates received the most party funding, and many won their elections.

The Republican Revolution started in the 1992 elections when Republicans gained 9 congressional seats, leaving the balance at 258D-176R (+1 Independent), but it really delivered the message in the 1994 elections when Republicans gained 52 congressional seats and won two special elections, leaving the House balance at 230R-204D (+1 Independent).

Nearly one-third of those defeated by Republicans had been in office only for one term. Republicans carried the country with less than a 7 percent majority.

The “Republican Revolution of 1994″ was caused mainly by national voter discontent who showed their displeasure of Democrats, the issues they supported and their alleged corruption. Republicans built on the general voter perception that the House Democratic leadership was corrupt.

Issues causing dissatisfaction with the president was Clinton’s push for massive healthcare reforms and the 1993 tax hikes.

Foretelling the Democratic trouncing were off-year election losses of heavily Democratic mayoralties (Jersey City, Los Angeles, New York) state governorships (New Jersey, Virginia), and special elections (one Texas Senate and two House).

The Southern response to Supreme Court rulings to redraw district boundaries allowed the Southern states to draw maps that concentrated black voters in districts surrounded by white voter districts, increasing by far the white Republican dominance in those districts and those states.

As a result, Republicans swept the South, formerly a Democratic haven, at congressional and statewide levels, and in gubernatorial and special elections. It remains a Republican stronghold today.

Republicans also gained 3 out of the 7 new districts in California, 2 out of the 4 new districts in Florida and 2 out of the 3 new districts in Texas.

The Republican Revolution of 1994 was based on the preparation by the minority party, choosing candidates who could win, with platforms everyone favored, redistricting and shifting blocs of voters, waiting for the majority party to alienate the voters.

And that all came from the Census forming a way for voters to vent their displeasure at how the country was being run.

Gaining and holding:

There are two major parts to control – gaining it and holding it. In the 1996 elections, Democrats made gains in 13 states, while Republicans made gains in only 9. Republicans lost the popular vote, as well as 9 of the 54 seats they had held for only one term. Republicans were still the ruling party in Congress, but Democrat Bill Clinton was elected for a second term as president with 379 Electoral College votes (270 votes elect) and 49 percent of the popular vote.

Leading up to the 1998 elections, Republicans again tried the corrupt leadership ploy against the president for his embarrassing affair with Monica Lewinsky. Newt Gingrich, now House speaker, was in the lead of the attacks. After all, it had worked in 1994.  But voters turned against the Republicans, and another 5 (net) House seats were lost.

In Florida, in the worst possible outcome of redistricting and “wasted votes,” there were only 6 races for 23 districts; 12 Republicans and 5 Democrats ran unopposed. These 17 Florida districts had their right to vote virtually eliminated. They now lived in “why bother” districts.

After the election loss, the Republicans in Congress turned against Newt Gingrich. He resigned his House seat, took his pension and went home. This was his legacy.

The 2000 Census saw Arizona, Florida, Georgia and Texas gain two congressional districts each. The rush to California had abated, and that state only gained one district but still remained the largest state with 53 districts. Republicans lost another 5 seats in California with no wins. They lost a total of 2 (net) seats in the election, were hanging on to a majority by only 9 seats and won the popular vote by only 340,000, or some 0.3% out of 93 million votes.

Florida had only 6 unopposed races. This was the last election based on the 1990 census and Republican George W. Bush from Texas was elected President.

The 2002 elections were the first election using the reapportionment from the 2000 Census. Voters were still moving South and West with two districts each added to Florida, Georgia, Texas and Arizona. Republicans gained back 8 seats to reinforce their thin majority, but mostly on national solidarity after the September 11, 2001 attacks on New York City. Most of the states saw no net change. Republicans won California’s new district 21 and the two new districts in Texas. Florida had 8 unopposed races out of their 25 districts.

In the 2004 elections, Republicans gained 5 seats in Texas, making it a solidly Republican state, with control over 21 out of 32 districts. Florida had 9 unopposed races. The partisan image of the country remained mostly red.

Voter Anger Builds:

By 2006, voters were fed up with the president and the Republican Congress. Democratic candidates fed the country’s dissatisfied voters. They campaigned against the Iraq War during its bloodiest phase. They called up fears that the country was about to fall into recession in spite of the low 4.5 percent unemployment rate which consisted of low-paying occupations. They charged that the high-paying jobs were being outsourced by big business to countries where labor was cheap. They claimed the ranks of the uninsured and those in poverty were growing, and that the anemic government response to help the powerless victims of Hurricane Katrina (2005) was too weak and too late.

The Democrats won 31 seats to take control of the House 233D-202R. Republicans still held control of most of the states, but the lead was razor-thin (25-23, 1 tie). Even with their lead, they could not have mustered enough electoral votes to elect a president if this was a presidential year, but the Democrats could.

The predictions of the economic recession came true at the end of 2007. This recession was more widespread than anyone thought, encompassing many countries around the world. Unemployment climbed to more than 10 percent nationally, and is currently locked at 9.6. Millions of Americans are out of work and many have been for more than a year. Home values have plummeted, and remain low, facing homeowners with paying a debt on a home worth half as much. Many people walked away, discouraged, with no jobs.

The Stimulus Act of 2008, valued at $152 billion and signed by Republican president Bush was the first attempt to funnel cash directly to the people through tax refund checks. This “trickle-up” effort helped the economy somewhat, increasing spending by those receiving the check by 3.5 percent.

In 2008, the first year of the recession, Democratic Senator Barack Obama was nominated to run for president. He campaigned mostly on hope for the future and bipartisanship in Washington. The historic presidential election solidified the Democratic majority with a net gain of another 21 seats (257D-178R).

But the promise of hope came while the economy was still plummeting. Job losses climbed and the government spent huge amounts of money trying to stem the flow.

In a classic example of “trickle-down” economics, banks, mortgage companies, and large businesses were bailed out to prevent bankruptcies and resulting job losses for millions more.

Mistakes were made. Businesses that were supposed to use the funding to hire workers after stability was regained, kept the money or used it to absorb struggling smaller businesses.

In a classic example of “trickle-up” economics, unemployment was extended to the long-term unemployed, jobs were created through the repair of the nation’s transportation infrastructure, states were funded to continue teacher salaries and many other examples.

The American Recovery and Reinvestment Act of 2009, also known as the Stimulus Recovery Act, valued at $787 billion included federal tax incentives, expansion of unemployment benefits and other social welfare provisions, and domestic spending in education, health care, and infrastructure, including the energy sector.

The bill was voted against by the entire Republican membership, who in later weeks appeared smiling in photo-ops handing out the checks in their districts.

The deficit got larger, and the population kept any extra money close, skeptical the economy would improve. Businesses, responding to slow sales, did not hire. Banks had money to lend but were cautious, so relatively little business expansion occurred. Layoffs slowly abated.

Unemployment continued to hover just under 10 percent, based mainly on that just under two million new people per year enter the Civilian labor force. If just those two million get jobs, the unemployment rate stays the same.

Businesses are still outsourcing jobs to cheaper locations outside the U.S. Those jobs will not come back. The solution to employment is the implementation of new industries based and dependent on American labor.

Americans just want their lives back, and are angry at the president and congress for not fixing things. Besides jobs, voters want a better economy, a repaired housing market, a smaller deficit, and no tax hikes. They want to end to the war and its enormous expense, and have the government do more about terrorism.

Approaching the 2010 midterm elections, Republicans publicly announced their main goal was to destroy the president and his programs and elect a president that will not veto their legislation. They intend to dismember and de-fund the landmark Health Care and Education Reconciliation Act of 2010 (that all Republicans voted against, in addition to many more bills benefiting our citizens).

During the 2010 election, voters expressed their anger with the size of the deficit, the lack of jobs, and the state of the economy. In the 2008 presidential election, 117.4 million votes were cast. In the 2010 election, 84.1 million people turned out, 25 percent of the voters were over 65 years old (who tend to be Republican and fiscal conservatives).

Republican red spilled across the national map for the last election based on the 2000 Census.

Where from here?

In the 2012 elections, considering the mood of the voter stays the same and giving weight to the majority party in each of the 18 states, it is likely, with redistricting, that Republicans will pick up another 3-6 seats from the Democrats, making the balance around 247R-188D (currently 242R-193D).

If all else stays the same, Republicans will seat a new president, carrying 35 states with at least 350 Electoral College votes (270 are needed to win).

Something we should remember; in 1994, Republicans swept into office promising fiscal reform and accountability. By 2000, the 95 programs they had promised to cut, all remained and increased in total cost by 13%.

What Americans are dealing with is similar to the five stages of grief. They have passed the Denial and Discouragement stages and appear to be in the Anger stage on the way to Acceptance of a new economy and way of life.

What is the future? Will the Democrats be able to erase enough of the 350 electoral votes to reelect Obama? How will the continuing shift to the West and Southeast affect the 2012 election?

Is John Boehner the new Newt Gingrich? He helped write the Contract with America in 1994.

Will John Boehner run? Will Newt Gingrich run? Will Sarah Palin run? Will Jim DeMint run?

Some people say that to disagree with the government in power is unpatriotic. I disagree. It is the highest form of patriotism in the spirit of our founding fathers, as they disagreed with England. Voters have only their vote, and they should use it.

Are politicians using the population shift for their own ends?

Today, some other indicators work in the GOP’s favor. The measurable enthusiasm gap between Republican voters and Democrats means that House districts, gerrymandered to include as many members of a single voting bloc as possible, may limit the number of seats gained in the House, but the increased voter turnout will undoubtedly affect the statewide Senate races.

In an article from ChattahBox Political News

“October 27, 2010– Senate Minority Leader Mitch McConnell (R-KY) admitted in a National Journal interview that the Republican Party has no intention of finding solutions to America’s many problems. And the Party of No has no intention of legislating to make the lives of ordinary Americans easier. What is on the top of McConnell’s to do list for the next two-years? Besides rolling over for special interests and giving their rich friends tax breaks, McConnell plans to lead his party on a campaign to destroy the presidency of Barack Obama, to ensure a return to power in 2012. And he has no problem saying it out loud. The Democratic National Committee released a video today shining a light on McConnell’s plan for America, asking the question “What does that mean for you?”

When asked by the National Journal to name the top Republican legislative strategies for the next two-years, McConnell responded that he has his sights set firmly on toppling the Obama administration.

“The single most important thing we want to achieve is for President Obama to be a one-term president,” McConnell said, adding, “Our single biggest political goal is to give [the Republican] nominee for president the maximum opportunity to be successful.” ”

And I learned all that from the Census.

The importance of this election goes beyond controlling national legislation; the controlling party also has charge of the redrawing of congressional districts for fair representation of voters, but many times resulting in attempts to manipulate district lines that favor the re-election of the ruling party (gerrymandering). 

The exit polls show that voters are not happy with the economy as it is or the slowness of its growth.  And many are not happy with the extensive unemployment in the country. 

Some candidates tried TV ads that painted their opponent in an extremely negative light, or tried to paint Latino immigrants as menacing invaders.  Many times these ads backfired and the candidate lost. 

The anti-incumbent feeling ran high.  Voters in this country are mostly swing voters.  They will swing to the candidate who promises the most and away from the one who has not performed miracles in the last two years.  An example is Wisconsin, who unseated an 18-year incumbent and elected a senator who was so new he was unclear as to what he would do because he had not even studied the issues. 

Many states showed displeasure with the mandated health care act.  Some legislators lost their seats because of their support of health care in Congress.  Some states passed state amendments to their constitutions prohibiting mandated health insurance.  The Supreme Court will certainly visit the constitutionality of the state amendments especially Article Six. 

What was the impact of the Tea Party on the election?  It drove people to vote, and that is a good thing even if they didn’t vote the way some readers wanted. 

Some exit poll findings for voting Republican for the House and GOP gains from 2008:

Overall, in a voter population of 47% men and 53% women, 57% of men voted Republican, up by 10%; 51% of women, up by 8%. 

By race and ethnicity, in a voter population of 78% white, 10% black, 8% Hispanic and 1% Asian, the Republican vote was 62% white, up by 8%; 41% Asian, up by 8%.

Blacks are still high at 91% Democratic; Hispanics are at 66% Democratic. 

By voter age (adjusted for those too young to vote in the last election), 42% of those 18-29 voted Republican (58% voted Democratic), up by 7% and steadily rising to 58% of those 65+, up by 10%.

First-time voters were evenly split.

By voter location, 61% of those in the south (31% of the population) voted Republican, up by 10%.

By religious preference, in a population of 54% Protestant, 61% voted Republican (up by 7%). 

By family income for the 18% voter families earning less than $30,000, 43% voted Republican, up by 11%; steadily rising to 57% for families earning more than $100,000, up by 6%. 

By financial situation, in a population where 63% have a family income of $50-100,000, and 41% said their family situation had worsened over the last year, 65% voted Republican, up by 37%.  In contrast, the 57% who said their family situation was better or had stayed the same, 46% voted Republican, down by 8.5%.

By ideology, in a population where 42% claim to be conservative, 86% of them voted Republican, up 9%. 

By location population, rural areas voted 64% Republican, up by 15%.  Voters in areas having more than 500,000 people, 34% voted Republican, up 7%. 

Comparing 1994 and 2010 elections, Republican votes by women (53% of the population) went up from 2% to 8%; Hispanic votes (8% of the population) went up less than 1994, from 11% to 4%; voters 60 years and older (34% of the population) went up from 7% to 10%; college grads (28% of the population) went up from 1% to 9%; voters in the south (31% of the population) went up from 6% to 10%; people with family incomes less than $30,000 (18% of the population) went up from 6% to 11%; people whose financial status is better than last year (14% of the population) went down from -26% to -22%; union households (17% of the population) went up less than 1994, from 7% to 3%; and people in rural communities (13% of the population) went up from 8% to 15%. 

There were some interesting excerpts from interesting states in the exit polls. 

AL:  Republicans also took all but one of the state’s seven seats in the House.  Republicans won a majority in the State Legislature for the first time in the 136 years since Reconstruction.

AK: The fiercest political battles in Alaska in recent years have not been across party lines but within the Republican Party.  The majority vote went for Senate write-in candidate Lisa Murkowski-R (41%).  The victory by Murkowski was a stunning upset, as no senator has won a write-in campaign since 1954. It also represents a significant setback for Republicans, who took her off the ticket and Sarah Palin, the former Alaska governor who strongly backed Joe Miller-R.  Miller’s conservative stance on issues like the growing budget deficit worried many Alaskans, whose economy is highly dependent on federal spending. 

Even though write-in incumbent Lisa Murkowski is claiming victory in Alaska’s Senate race, Republican tea party candidate Joe Miller is not giving up until all the absentee ballots have been counted and the write-in votes have been reviewed.

 AZ: Passed a state constitutional amendment preventing mandated health insurance.  Governor Jan Brewer has agreed to eliminate a health insurance program for low-income children. 

AR: A Republican will represent Arkansas in the Senate for only the second time since Reconstruction.  Defeated Sen. Blanche Lincoln-D appears to have lost due to her support of the president’s health care bill. 

CA: Meg Whitman’s-R personal $140 million went for nothing as her negative ads turned off independent voters and elected Jerry Brown-D as Governor by 13 points, along with a host of Democratic veterans instead of Republican newcomers.  Voters said they were not eager to make huge changes and a majority said they supported the job President Obama is doing.    A majority of voters early in the day said, in general, they preferred “an insider who knows how to get things done” rather than an “outsider who would shake things up.” 

Whitman’s personal unlimited wealth worked against her as she overdid it in ads and began to annoy voters.  How she turned against her undocumented immigrant housekeeper and said she should have been deported was the killing blow.  Didn’t she think that comment would affect the votes of 13.4 million Hispanics that make up 37% of the California population?  Personality is a large part of election, and Whitman failed.   

CO: Exit polls showed that the economy was a central issue for the state’s voters, with 4/10 saying their family’s financial situation had worsened in the previous two years. A majority of voters disapproved of President Obama’s job performance, and about half said that Congress should repeal the new health care law.  After a tight race and a recount, the incumbent Michael Bennet-D claimed victory.

CT: Connecticut voters defied the national trend by electing Democratic candidates in several close races.  Worries over the nation’s economy drove Senate support for Richard Blumenthal-D.  According to exit polls, 9/10 of voters expressed concern about the country’s economic future, with a clear majority of those voters backing Blumenthal.  The seat became open when Christopher J. Dodd, a Democrat, announced his retirement. 

The race for governor was too close to call as of Wednesday morning.  The Connecticut Secretary of State declared that Dannel P. Malloy-D had won, while Thomas C. Foley-R declined to concede.

DE: Chris Coons-D won a closely watched race on Tuesday. The contest became a national sensation after Christine O’Donnell-R, who has tried several times for elected office, defeated the mainstream Republican candidate, Michael N. Castle, in the primary election. Republicans had been counting on Castle to win the DE seat as part of the party’s strategy for gaining a Senate majority. 

As it turned out, Mr. Castle’s former Congressional seat — the state’s only House seat went to Democrat John C. Carney Jr.  Exit polls suggested that Coons won easily, thanks in part to the continued popularity of President Obama and Vice-President Joe Biden, the native son. Two-thirds of those surveyed said they had a favorable view of Biden, and nearly 60 percent said they approved of the job that Obama is doing as president. 

Surveys showed that Sarah Palin’s enthusiastic support for O’Donnell may have hurt more than it helped: 46% of the state’s voters expressed opposition to the Tea Party, and two-thirds held an unfavorable impression of Palin.

FL: Marco Rubio-R, a Tea Party favorite, rode a wave of voter concern over the economy to win a three-way race for the Senate.  In the waning days of the race, many Democrats, including Bill Clinton, had urged Kendrick Meek-D, a distant third in the polls, to drop out to improve the chances of Charlie Crist-I. But Meek stayed in the race, and exit polls showed that Crist and Meek hurt each other’s results as the votes split between them. 

25% of those surveyed said they were angry at the government, and 75% of these respondents voted for Rubio, according to the surveys. More than 8/10 respondents who described themselves as Tea Party supporters voted for Rubio.

HI: President Obama’s birth state gave him a rare sweep of Democratic victories.

ID: Republicans swept Idaho and unseated Walt Minnick-D, one of the most conservative Democrats in Congress.  He had backed away from his party’s agenda on economic issues and voted against the health care overhaul and the federal stimulus package.  And ads against his opponent seemed to have backfired.  Even some Democrats found them unfair.

IL: Voters narrowly elected a Republican to the Senate seat vacated by President Obama and three Republicans to House seats currently held by Democrats.  The Senate race held symbolic meaning for both parties because it was for Mr. Obama’s former seat.

IN: Indiana was a surprise victory for Barack Obama in 2008, and Republicans set their sights on bringing the conservative-leaning state back to them.  They succeeded in part, winning the Senate seat vacated by Evan Bayh-D. Republicans also took two House seats from Democrats, that left Democrats with control of only three of Indiana’s eight Congressional districts. 

KY: A majority of voters in this state want the federal government to get out of the everyday lives of its citizens and let the private sector create jobs and provide health care to workers, and they elected Rand Paul, to take its message to Washington.  Paul ran as a Republican, but he made it clear that his allegiance was to the Tea Party.

LA: Voters chose prostitution involement over presidential policies as they elected Incumbent Senator David Vittner-R to a second term.  Vitnner’s number showed up on telephone logs of a Washington prostitution ring. 

 ME: Paul LePage-R, a conservative favorite of Tea Party activists, won as governor in a three-way race whose outcome was uncertain until Wednesday morning.

MD: Republicans barely touched this increasingly Democratic state.  Senator Barbara A. Mikulski-D won a sweeping victory, for her fifth term. In January, she will become the longest-serving woman in the history of the Senate.  Democrats won six of the state’s eight House seats.

MA: Tuesday’s results served as a sobering reminder that Democrats still have the advantage in Massachusetts.  Governor Deval Patrick-D held off his Republican challenger and Democrats retained an open House seat in the 10th Congressional District.  The state is overwhelmingly Democratic.  Republicans had hoped to gain ground in Massachusetts after Scott Brown-R won the Senate seat long held by Edward M. Kennedy-D. Voters in many low-income, heavily Democratic areas turned out in far greater numbers than they had in Brown’s special election.

MI: Rick Snyder-R, a moderate and former CEO of Gateway computer, won the race for governor by talking more about jobs than about divisive social issues. 

MN: After a seven-month recount after a deadlocked 2008 Senate election elected Al Franken-D voters face more uncertainty. The governor’s race remained undecided on Wednesday, with Mark Dayton-D clinging to a narrow lead.  A recount is likely as Dayton’s 9,000-vote lead was less than half of 1 percent of the 2.1 million votes cast.  A frequently debated issue in the governor’s race was how to lessen the $6 billion deficit. Dayton said he would raise taxes on the wealthy, while his opponent pledged to cut government spending.

MS: Two of the state’s House representatives were ousted, perhaps in reaction to the Gulf oil spill since Gene Taylor-D was well liked and had held the office since 1989 and his opponent, Steve Palazzo-R was not well known. 

MO: Vicky Hartzler, a Republican backed by many Tea Party members and endorsed by Sarah Palin, scored a stunning victory over Representative Ike Skelton, a 17-term Democrat, chairman of the House Armed Services Committee.  Hartzler said Skelton had lost touch with the district. She criticized him as an ally of President Obama and House Speaker Nancy Pelosi. 

NV: In a heavily Latino state that elected a Latino governor, defeated Senate challenger Sharron Angle-R was a loud voice against big government, against high taxes and against illegal immigration.  She ran negative ads portraying Latinos as menacing invaders which pushed 2/3 of Latinos to vote for Senator Harry Reid-D.  Reid promoted his support of  immigration legislation and economic recovery of housing which employs many Latinos and led a big push to register Latinos to vote. 

NH: There is reason NH is known as a swing state.  After swinging heavily Democratic four years ago, Republicans won both House seats and kept the Senate seat.

NM: Susana Martinez-R drew great support from Hispanics who usually vote Democratic.  She will be the first woman governor in this state. 

NY: In a survey of voters leaving polling places, 6/10 New Yorkers described the economy as the top issue.  Although NY remains a strongly Democratic state, Republicans took 5 Congressional districts away from Democrats, tying with Ohio for the biggest shift in House seats.  Andrew Cuomo-R won the race for governor by one of the widest margins in history (61.4%-34.1%).  Both incumbent Senators won strongly; Charles Schumer-D (65.4%) and Kirsten Gillibrand-D (62.0%) who was appointed in 2009 to replace Hillary Clinton and will finish out the two-years remaining in the term.  Despite facing ethics charges, Congressman Charles Rangel-D was re-elected by a wide margin (79.9%).

NC: Senator Richard Burr was re-elected to a seat that has not had a two-term member since 1967.  In House races, Bob Etheridge-D was the only incumbent to lose, but is asking for a recount of the 2,000 votes separating him from Renee Ellmers-R who was endorsed by Sarah Palin and helped by ads featured a mysterious video showing Etheridge grabbing a young man, demanding “Who are you?” 

ND: The state shifted parties as the popular governor, John Hoeven-R was elected Senator (76.2%).  The race for the only House seat saw Earl Pomeroy-D, seeking a 10^th term, defeated, just two years after he was re-elected by 24 percentage points. 

OH: The defeat of Governor Ted Strickland-D was one of the most painful outcomes of the election forth Democrats after campaigning by the president, vice president and former president Bill Clinton.  Democrats also lost 5 out of the 10 seats held in the House delegation.  Republicans are looking forward to redrawing district boundaries to their favor as well as suing to block health care. 

OK: The state elected their first female governor, Mary Fallin-R.  Voters also approved a constitutional amendment to prohibit “forced participation in health care systems” and another to prohibit state courts from considering international or Islamic Shariah law when deciding cases.  A Muslim group has already filed suit.

PA: Registered Democrats outnumber Republicans in swing state, but it swings with national trends.  People voted Democratic in all five presidential elections from 1992 to 2008 but swung Republican this year with voters concerned over joblessness, the economy and the health care overhaul.  Republicans won the governorship, Senate seat, five seats in the House, and too control of both state chambers. 

RI:  The state elected its first Independent governor, Lincoln Chafee-I.  Democrats held on to both House seats.  The president withheld his support from Democratic candidate Frank Caprio-D as a favor repaid to Chafee who had endorsed him in 2008.  Caprio announced that the president could “take his endorsement and really shove it.”  In a state where Obama’s popularity is really high, it cost him the election. 

SC: The state elected its first governor who is not a white male.  The election went to an Indian-American woman, Nikki Haley-R.  Tim Scott-R will be the first black Republican to represent SC in more than a century.  The election affirmed Republican rule in SC.  All but one successful candidate were Republicans.  SC is now a one-party state. 

SD: The anti-incumbency wave swept the state, voting in all Republicans. 

TN: Republicans gained control of the state legislature and governor’s office for the first time since Reconstruction and gained a majority in the state’s Congressional delegation.  The results underscored a distinct political shift in the state as the Republicans turned the election into a referendum on the economy. 

UT: Although largely Republican, the state shifted sharply to the right.  Senator Robert Bennett-R was defeated in the Republican state convention, leaving a Tea Party candidate, Mike Lee-R who won the Senate seat (61.6%). 

VT: In a razor-thin victory, the state elected Peter Shumlin-D as Governor. The prior governor was a Republican.  The state has alternated governorship parties for nearly 50 years. 

VA: Democrats lost to Republicans in 8 of the 11 Congressional districts.  One district is still undecided. 

WS:  Anti-Incumbent sentiment unseated three-term Senator Russ Feingold-D, defeated by Ron Johnson-R, a first-timer selected by the Republican party, who admitted that he couldn’t be specific on the issues because he hadn’t studied them very well. 

A foreclosure sale is the result of a mortgage foreclosure.  When a homeowner cannot keep up with payments to the mortgage holder, the mortgage holder has the right to grab title to the property and protect their investment. 

Mortgage holders (mostly banks) are in the business of lending money.  They are not in favor of holding real estate.  Cash makes the bank’s bottom line; the value of assets like houses must be estimated and varies with market conditions.  Their one objective is to recover their investment. 

Their investment is the outstanding balance of the mortgage amount plus any profit they can recover.  However, with a foreclosure and an empty house, that investment grows every month the house is vacant, with taxes, insurance, maintenance and security expenses. 

Many angry homeowners, being evicted from their homes trash the house before leaving, and add to the bank’s expense. 

The current home mortgage crisis has hit banks like a growing tsunami since the start of the recession.  The loss of the homeowner’s employment, coupled with the plummet of the home’s value due to the glut of available homes was the reason many homeowners walked away from their mortgage.  This just added to the surplus of available homes, leaving the remainder of struggling homeowners holding on with only their pride. 

Bank foreclosure staffs were expected to handle any and all foreclosures coming to their notice, but as the tsunami grew in intensity, the process was bent on speed and quantity rather than fairness and quality. 

Republican President George W. Bush signed the TARP (Troubled Asset Relief Program) into law by on October 3, 2008.  The purpose of the bill was to buy assets and equity from private financial institutions to strengthen their positions, maintain American financial sector stability (avoid a financial meltdown crisis), and to offer five-year favorable loan modifications to homeowners whose loans were owned by Freddie Mac and Fannie Mae.   

The initial $350 billion was released immediately and the remaining $350 billion was released on January 15, 2009.  Although it was projected to cost $356 billion, it is estimated (October 2010) that it will cost only $30 billion (and may yet yield a profit) since almost most of the institutions that received funds have repaid or are repaying their obligations plus interest.  

The TARP program ended October 3, 2010 and all unspent and returned funds will go to reduce the federal deficit.  But the forclosure flood continues.  In 2009, 2.8 million homes were foreclosed, with 3 million expected in 2010.

The legal issues:

–Is the bank the current mortgage holder?  Banks often sell their mortgages to other institutions including Freddie Mac and Fannie Mae.  Do they actually own the mortgage they are foreclosing on?

–Did the foreclosing bank employees actually read and review the paperwork associated with the mortgage?   They are required to do it by law.  Were there errors or false data associated with the loan? 

–Was the loan simply “robo-signed” by bank employees interested in simply processing the record number of foreclosures and in the process violating the rights of the person holding the mortgage?  One Wells Fargo executive admitted signing as many as 150 foreclosure affidavits a day without checking any of the underlying facts.  How could they check the facts?  That volume in an 8-hour day means signing a document every 3 minutes.

Several large mortgage lenders have admitted that tens of thousands of legal affidavits were processed without reading or verifying the facts in the affidavits as required by law.  This lays a shadow of illegality on the process and opens the lenders to fraud and other broken laws; most banks stopped the foreclosure process in the 23 states that have a “judicial foreclosure” process that can be prosecuted by the courts. 

Bank of America, followed by several larger banks have stopped their foreclosure process in all 50 states, although the remaining 27 states have a non-judicial foreclosure process between borrowers and lenders.  

President Barack Obama vetoed a bill last week that would have made it easier for banks to approve foreclosure documents, that the White House said could hurt consumers. 

Banks might save money and recover some money but turning owners into renters until the house is sold.  Collect a large deposit from the former homeowner and offer occupancy for rent and maintenance like an apartment rather than leave the house empty.  The large deposit is insurance that the former owner will take care of the house for the bank.  The displaced family will no doubt go to a rental.  Why not make the rental good for both parties?

We consumers now have a few more credit protections than we did before, but to get the Act passed, Congress had to water down the wording somewhat.  It would not do to pass a law that would put many of Congress’s biggest campaign contributors out of business. So, there are still a few areas left for issuers to extract profits. 

Students

Before this law went into effect, students were sent credit cards that they ran up like free money while the parents got stuck with the bills, since they were under age.  Now, students under 21 years of age cannot qualify for a card without a co-signer.  How will the issuer know the applicant is a student?  They will likely only have income from summer employment.  The real qualifiers are the applicant’s age, and their income. 

Interest Rate Hikes

The new law does not protect consumers against interest rate increases.  It does protect them against increases on existing balances, but as long as the card issuer notifies the consumer at least 45 days in advance, interest on new purchases can jump considerably. 

This is supposed to give the consumer the option of jumping to another card for new purchases.  The consumer has three billing cycles to decline the new terms, close the account to future purchases, and pay off their balance at the old rate and payment schedule. 

Payment Allocation

If you have separate interest rates in force for old balances and new purchases, be aware that the CARD Act requires the card issuer to apply the minimum payment amount to the greater balance, which most likely has the lower interest rate. 

The CARD Act requires payments to be applied to the highest-rate debt on the account, so watch carefully that any payments exceeding the minimum payment are “accidentally” applied to the lower rate balance.    

Universal Default

Under the old shell game, issuers could raise a consumer’s interest rate if they were late on a totally unrelated account, like a utility bill.  This is now prohibited under the new law. 

But card issuer’s legal wizards have left some language in some offers that will activate a penalty APR.  Some of the reasons are exceeding credit lines, credit report information, and bounced or late payments.  Some catch-all language might be “market conditions”, or “at any time for any reason.” 

Read the small print. 

Penalty Rate

If a consumer is more than 60 days late on a payment, the card issuer can initiate a penalty rate, which averages nationwide slightly less than 30 percent.   That means for every thousand dollars that remains on your credit card by the end of the year, you will owe another $300 in interest, or nearly an additional one-third of your balance.  This is the way card issuers generate cash flow and keep consumers imprisoned in their cycle of debt. 

The new law provides a way back down the interest ladder.  It is meant to require the credit issuer to return the customer to their previous interest rate after six consecutive months of timely payments.  In reality, the law states that the card issuer is “supposed to” review and reduce a cardholder’s rate after six months of consecutive on-time payments. 

The law also states that this review must include market conditions (what others are charging) and the creditworthiness of the card holder.  This gives the card issuer an out if you caught up on the penalty account but your other accounts are still behind. 

Another method card issuers have been known to use is a technique known as “pigeonholing” where your payment arrives on time, and due to the card issuer’s workload, it is not posted until after the due date.  Remember one late payment will result in a lot more income for at least six months for the card issuer while you straighten things out. 

It is more important than ever to keep records of the exact dates payments are made.  Sending a check in the mail has no basis for verifying the date it was received, since the card issuer will discard the envelope with the postmark proof as quickly as possible, and the date on a check can be any date. 

Paying a bill by electronic banking will issue recordable dates of payment receipt.  Remember that many banks still issue a bank check that is mailed, and the process can take up to four days until the check is in the mail.  Be sure to add the four days plus a comfortable mail delivery time for your payment to be received.

The language of the new law is loosely worded.  Expect some creative moves when it comes to the card issuer backing off penalty rates.

Mail Notification

The highest court has judged that putting a notice in the U.S. Mail is proof of delivery, whether or not the addressee receives it. 

The new CARD Act requires payments to be accepted as timely when paid before 5pm EST on the due date or mailed at least 7 days before the due date. 

That concept seems to work fine for businesses that say they notified you, but doesn’t work that well for consumers mailing payments. 

Discontinued Cards

The 45-day rule will “probably” apply if the card issuer decides to discontinue your card.  The law is not clear about this circumstance, but issuers will most likely notify the consumer 45 days ahead to avoid running afoul of the law.  That’s good news for a consumer standing at a register with a big purchase.   

Added Fees

Credit card issuers have lost a bundle of expected revenue with this new law.  Estimates put the loss at around $12 billion per year.  It comes at a time when banks are already in bad shape because of the housing market, double the number of defaults from unemployed workers and others, and consumers cleaning up their balances. 

It is predictable that inventive fees not mentioned in the new law will surface.  There are countless fees that can be added to your bill, and interest rates can soar, if everyone in the credit market does the same and they notify you 45 days ahead. 

Although the prime rate for banks is low now, as it cycles upward, consumers can expect 45-day notices from their fixed-rate card issuer that they will be switched to a variable rate, tied to the prime rate.  Variable rates rise and fall with the economy and will not require the 45-day notice as the prime rate climbs. 

Be careful of ordering merchandise online.  If the merchandise comes from a foreign retailer or American territories, you can incur foreign transaction fees, even if the merchant allows you to pay in U.S. currency. 

Fee Avoidance

Be your own consumer advocate.  Consolidate your credit to one or two widely accepted cards with the lowest interest rate (beware of the balance transfer fee).  Join a credit union (lower interest rates).  Drop annual fee cards.  If you want to keep some cards, reduce your credit used to below 10 percent of your available credit to preserve your credit score.  For cards with inactivity fees, swipe them at a convenience store once a year (check the inactivity period).  If one of your issuers offers a rewards program, take the cash-back option. 

Pay your bills on time.  Read the fine print.  Read each piece of mail from your card issuers.  Stand up for your rights.  Play hardball.  Speak to supervisors.  Threaten to take your business elsewhere if they don’t retract an unjust fee, and do it if they don’t (I also like emails to the president or CEO,  factually detailing why you left).

The CARD Act was a big step in the right direction, but there will always be loopholes discovered by highly-paid legal eagles working against you.

It should be clear that the bank that issued the original mortgage in many cases no longer owns the investment; they only service the debt.  They accept payments from the homeowner, pay taxes and other obligations, and forward the remainder to the debt owner. 

 However, for mortgages owned by the two government homeowner-financing agencies, Fannie Mae and Freddy Mac, the Treasury Department started a Making Homes Affordable initiative with two components, the Home Affordable Refinance Program (HARP), and the Home Affordable Modification Program (HAMP). 

HARP allows homeowners relief who have remained current on their mortgages by allowing them to refinance their mortgage up to 125 percent of the appraised value of their home at current mortgage rates. 

HAMP encourages any investor or servicing company to participate with financial incentives for loan modified through reduction of interest, extension of term to a maximum of 40 years, and forgiveness of balloon payments.  The goal is to bring principal, interest, insurance, association dues and PMI to below 31 percent of the verifiable household income.  There is a 90-day trial period before permanent modification is granted. 
 

Now, Fannie Mae has announced a new program for those homeowners on the brink of foreclosure who do not qualify for the HAMP plan.  In exchange for transferring ownership to Fannie Mae, the homeowner will be allowed to rent their homes and lessen the credit rating impact of foreclosure.  Fannie Mae will make available to the homeowner a 12-month lease with month-to-month extensions when it expires and will not market the house until after the initial 12 months. 

Rents will be determined by a private management company and market conditions.  Former homeowners will have to qualify to stay with rent set at 31 percent of their pre-tax income or less.

Freddie Mac already has a similar program in place, but foreclosure must be completed and only month-to-month leases are offered.

Both these programs are designed to allow the homeowners to stay in their homes for a reasonable period and stabilize neighborhoods.  The thinking is that it is difficult to market homes in neighborhoods with scores of empty and sometimes vandalized homes.   Even though people are renting, they will tend to care for the home they used to own.

In our jobless recovery, some landlords are offering big incentives to retain their tenants. 

The national unemployment problem has driven some renters to seek roommates, or move into cheaper quarters.  Some are moving in with family. 

The national apartment-vacancy rate is now at a 23-year high. 

The worst thing for a building or house owner is an empty living space.  They can minimize utilities, but mortgage payments and taxes remain in force, and there is less to collect to pay the bills. 

When an apartment or house is vacated, it can remain empty for months, exposing it to vandalism, and requiring painting, marketing and commissions to attract a new occupant.

Landlords are offering incentives and becoming easier on requirements for occupancy.  In a tight market, landlords would deny prospective tenants with living space credit issues like foreclosure or eviction, but in today’s market they are more open-minded.   

New tenants on average are paying roughly ten percent less than previous tenants.  Renewing tenants are being offered items like free months, waived pet deposits, flat-screen TVs, cash, new carpet, painting, or upgraded appliances. 

Landlords generally are not initially offering incentives to renewing tenants.  Since tenants can easily check the Internet for comparable rents in their area, landlords will respond to negotiation and many times offer incentives or match rents to renew.

Lower rents nationwide are pressuring house prices as well as the CPI (Consumer Price Index).   This will keep inflation down.  However, the good news for renters will be offset by more apartment complex defaults, and in turn, losses for small local banks.

So if you are in the market to rent, renew or buy, this is the ideal time to exert pressure on landlords and sellers for concessions. 

Don’t be greedy.  Negotiation involves both parties calculating how much it will cost the landlord or seller to wait for and attract the next prospect.  In the case of landlords, they are losing the rental amount each month.  Sellers will have to pay their mortgage payments and taxes until the property is transferred. 

It is not taking advantage.  It is business. 

Rental Vacancy Rates from 1956

Existing Home Sales from 1987

New Home Sales from 1963

Images posted by CalculatedRisk on 11/01/2009

Jobs:

Nonfarm payroll employment continued to weaken this month (down 263,000 in September) ending a slowdown trend (201,000 in August (revised), 304,000 in July (revised), 467,000 in June, 345,000 in May, 539,000 in April and 633,000 in March). 

After the lowest level of job losses in a year, employment slipped by about 50,000 jobs from last months level. 

The average 3-month job layoff figure of 256,000 for July through September 2009 dropped 21 percent from the same average last month, when it was 324,000 for June through August, and 57 percent from the previous 3-month period (April through June) when it averaged 450,333 (also down from 505,667 for March through May). 

Although the unemployment slowdown has lost its momentum this month, the numbers still indicate that companies are approaching their maximum “leanness” and sustains perceptions that the economy gradually will swing to recovery.

Unemployment has increased steadily by 0.4 or 0.5 percent every month from December 2008 through May 2009.  August was the first month the increase was 0.3 percent.  September is similar.

The number of unemployed persons increased in September by 214,000 (August by 466,000, a decrease in July of 267,000, increases in June of 218,000, May of 787,000, April of 563,000 and March of 851,000.  Since the start of the recession in December 2007, 7.8 million workers have lost their jobs. 

Total unemployment has risen from 11.6 million (7.6%) in January to 12.5 million (8.1%) in February, to 13.2 million (8.5%) in March, 13.7 million (8.9%) in April, to 14.5 million in May (9.4%), 14.7 million in June (9.5%), 14.46 million in July (9.4%), and 14.9 million in August (9.7%).

The current rate is 9.8% and the number unemployed is at 15.1 million. 

Unemployment is the highest since June 1983 and has doubled since the start of the recession in December 2007.  In a healthy economy, around 125,000 jobs a month must be added and filled just to keep the unemployment rate stable.

There is little doubt at this point; we will hit 10% unemployment in the near future. 

The number of persons working part time for economic reasons (sometimes referred to as involuntary part-time workers) rose to 9.2 million from the 9.1 million in August (8.8 million in July, and 9.0 million in June).  These persons had their hours cut back or were unable to find full-time jobs.  Since the start of the recession, the number of such workers has increased by 4.4 million, and has remained relatively constant since March 2009. 

The unemployment numbers look to be peaking.

Long-term unemployed persons (jobless for 27 weeks and more) has tripled since the start of the recession to 5.4 million since December 2007, adding 450,0000 to that number in September.  One in three (35.6%) unemployed persons are in this category. 

Ed.Note: It is possible that as consumer and business confidence is improving, more workers are starting to look for jobs again, returning to the workforce in anticipation of better employment conditions.  This drives the unemployment rate higher.

Construction job losses led the month (down 64,000 for September, 65,000 for August, 76,000 for July, 79,000 for June, 59,000 for May, 110,000 for April and 161,000 for March) with a total of 1.5 million since December 2007. 

Manufacturing was a close second (down 51,000 for September, 63,000 for August, 52,000 for July, 136,000 for June, 156,000 for May, 149,000 for April and 161,000 for March) with widespread job losses totaling 2.1 million since December 2007. 

Education and health services continued to add jobs, with payrolls increasing by 19,000 (52,000 in August and 21,000 in July).  Government employment fell by 53,000 (18,000 in August and 28,000 in July).

Retail trade employment dropped by 39,000 (9,600 for August, 44,00 for July, 18,000 for June and 47,000 for April). 

Service-providers stayed relatively the same after cutting 80,000 workers in August, while the goods-producers lost 136,000 jobs.

Professional and business service also stayed relatively the same after decliningby 22,000 in August, less than the 38,000 in July, 118,000 in June, 51,000 in May, 122,0000 in April and 133,000 in March. 

Unemployment spreads stayed relatively the same with the highest among teenagers (25.9%), followed down by African-Americans, then Hispanics.  The lowest unemployment started with Asians (7.4%) followed up by Adult women (7.8%), Whites, then Adult men (10.3%). 

The good news from this data, is that the job losses seem to be lessening.  It is perhaps due to fewer jobs available to lose, but the lower figures are an encouraging sign. 

The average workweek edged down by 0.1 to 33.0 hours in August.  This figure closely correlates with overall output and gives clues on when firms will start hiring. 

Average hourly earnings (reflecting the recent increase in the legal minimum wage) edged up to $18.67 ($18.65 in August, $18.59 in July), rising for a fifth straight month.  

 Workforce:

The total Civilian labor force stands at 154.0 million (down 571,000 from August).  There are nearly a million fewer workers in the work force than in June.   There are now 15.1 million people unemployed putting the rate at 9.8% of the available work force, last reached in June 1983. 

The Civilian labor force usually grows as a recession winds down and optimism about finding work grows.  But as long as Americans remain anxious about their jobs, consumer spending is not expected to grow enough to power an economic rebound. 

The employment population ratio, at 58.8 percent, has declined by 3.9 percent since the recession began in December 2007.

Comparing now with the final month of the last major downturn in November 1982, the total Civilian labor force then stood at 111.1 million.  In that month, there were 11.9 million people unemployed accounting for 10.8% of the available work force (average for the year was 10.6 million unemployed with the rate at 9.7%). 

Looking at jobs needed to reduce unemployment
with the total Civilian labor force at 154.0 million:

.
To restore employment to the 5.5% level of 2008, about 6.6 million people will have to regain their job or start new jobs.  It is a tall mountain to climb. 

Ed.Note:  Government and economists foretell that the “normal” unemployment rate will move up to 8% from its current 5.5% level.  With the current Civilian labor force, that means that on a permanent basis there will be roughly 12.5 million people unemployed — more than 4 million more than at the “normal” level today. 

Update: October 5:  The U.S. service sector grew in September for the first time in 13 months.  The Institute for Supply Management (ISM) reported that its service index hit 50.9 last month, up from 48.4 in August.   A reading of 50 is the dividing line between growth and contraction. 

Other encouraging signs were that the new orders index rose to 54.2, climbing over the dividing line for the first time in a year.  New orders are an indicator of future activity.  In addition, business order backlogs rose for the first time in 14 months.

Five industries grew in September; wholesale trade, retail, construction, utilities and health care.  In addition to healthcare and educational services, support services for companies added jobs, another encouraging sign. 

 Data collection:

The Census Bureau surveys 60,000 households across the country to insure an accurate demographic survey.  The unemployment rates are extrapolated from the survey results. 

The quoted unemployment rate excludes people who have stopped looking for work because they believe no jobs are available (discouraged workers) and others outside the labor force.  They are counted separately.  Their number has nearly doubled in the previous 12 months.

 Stimulus (Recovery Act):

The president’s $787 billion stimulus bill signed into law hopes to create about 3.5 million jobs.  Lower estimates put that figure at 2 to 2.5 million jobs by the end of 2010, reducing the unemployment rate to 7+%. 

The White House Council of Economic Advisers released a report showing the plan would save or create 1.5 million jobs by the end of 2009 and 3.5 million by the end of 2010. 

A senior White House official stated that the Obama administration’s fiscal stimulus plan will meet their previous estimates to save 3.5 million U.S. jobs by the end of 2010, but the unemployment rate at that time may be higher due to further deterioration in the economy.  White House officials have been careful to point out that estimated jobs created and saved have merely slowed continued job losses.

 Stimulus spending by state: 

As of September 30, 2009, of the
$241,105,531,529 announced
$214,964,917,646 (89%) has been made available
$90,402,704,572 (37.5%) has been paid out to the states

http://www.recovery.gov/?q=content/funding-notification

 Recession histories:

With Nov 1982 unemployment at 10.2%, and the government taking aggressive action, it was still more than five years (April 1988) from the peak before unemployment receded to 5.4%. 

The approach that time, however, was to fix the economy at the expense of the worker.

Some compare the the fall in employment to 1974-1975 and 1981-1982. If the comparison is accurate, the peak in unemployment may be reached within the next five to six months (past performance is no guarantee of the future).

Economist William Polley made a chart  that includes every recession since World War II.  It makes the chart pretty hard to read, so he simplified it with selected post-WWII recessions.

William Polley’s chart shows how the recovery from the 2001 recession took four years for employment to return to its February 2001 peak. 

Using the Department of Labor unemployment tables of unemployment rates and 5.5% as the “normal” rate of unemployment, I have analyzed things a little differently.  Of course, along the way, the Civilian labor force increases, so the percentages represent ever more workers.

The following table shows unemployment start dates, peaks and returns to the normal rate of 5.5%, Civilian labor force in millions of workers for that year, and the lengths of times from the start date in months:

 Recession peaks 1974-2009 

 Note that the unemployment peak period that started in 1974 and ended in 1979 (lasting nearly five years) was followed immediately by another peak period ending nearly nine years later.  By the end of that period, the work force had increased by more than 32%, meaning overall, almost 30 million new jobs had to be created.

 The aggressive increase in the Civilian labor force in that period can likely be attributed to post-World War II babies reaching adulthood, with some entering the labor force after secondary school and the rest entering the workforce after further education.

The periods from 1988 to 1990 and 1995 to 2008 were periods of prosperity, with low unemployment (but a building bubble). Here is the same data in graphic form:

Unemployment rates:

It is interesting to recognize that in most cases, unemployment peaks roughly one-third of the timeline for unemployment to return to its “normal” rate, so we can double the number of months from the Start to the Peak to expect to arrive at an approximate return to “normal.”

We live in hope (again, past performance is no guarantee of the future).

The next Economic Jobs report will be found at:
Economic Picture: October 2009

The last Economic Jobs report will be found at:
Economic Picture: August 2009

Full text: http://schotline.wordpress.com/2009/05/01/south-carolina-stimulus-funds/#comment-4339

Although Treasurer Chellis disagrees with the United States Congress in its method of throwing money at the problem (he’s a Republican in a Republican state), he is also a realist.

The realism is that the state allocated money from Congress may be either accepted or rejected.  However, the state is still obligated to repay it, even if they reject the funds.

Treasurer Chellis wrote, “Millions of dollars appropriated in the Recovery Act have already begun flowing into South Carolina to many different entities.  If the decision is made to not accept the $700 million in question for our state, those funds will go elsewhere and South Carolina taxpayers will still be obligated to pay that money back.”

Governor Sanford does not want to accept the money (perhaps on Republican principles).  If he accepts the money, he says it should be used to pay down the state’s debt.  Treasurer Chellis points out that the state debt is not “bad” debt like high credit obligations, but “good” debt spent for improvement projects.  The debt is  manageable and tracking to have 50 percent repaid in five years and 90 percent repaid in ten years, as per plan.

Treasurer Chellis advocates using the money for job creation and education, rebuilding the personal wealth of the citizens.  This is what the stimulus is all about.

A parallel may be drawn to the stimulus payment currently being delivered to working and retired citizens.  What will we do with the money?

Almost all of us have “bad” debt that is loading us down.  The temptation is to take the extra money from each paycheck and pay down the charge cards.  Will that stimulate the overall economy?  One argument says that paying down debt releases money to be lent out again by the banks we owe.  That only holds true if the bank lends out the money, but many are using it for their own paydown of bad debt, and reducing your limits.

Can you invest it in a tiny business operating from your own home that will generate future income?  Can you invest it in your own education that will enable you to get a higher paying position?  What can you use the money for to give you a brighter future? That’s what the stimulus is for, yours and mine.  Take a hint from Treasurer Chellis.

Think about it.

These are impressive numbers, since January 20 is only 77 days behind us. 

Optimism, according to Merriam-Webster online dictionary, is an inclination to put the most favorable construction upon actions and events or to anticipate the best possible outcome.

Of course, the most difficult people to convince that things are getting better are the millions of unemployed, the millions who are paying “upside down” mortgages, where their equity is in the minus.  As a special note, credit goes out to the homeowners who are staying the course with their homes and paying what they owe.  These are the true optimists.

Americans who have had their 401(k) savings reduced to minimal amounts have the hardest job to be optimistic.  Credit also goes out to those who are employed and staying the course, continuing to contribute with each paycheck.  My wife recently had her company share of contributions terminated as her company struggles to remain viable, but she is an optimist, happy to have a paycheck.

The stock market is again showing signs of life.  The strongest companies are surviving, even though their earnings are miserable.  This shows there is light on the horizon for them.  The weakest companies have breathed their last, or been absorbed by others, both camps leaving their excessed employees to fend for themselves.  The market thrives on optimism and hope, and that is what is providing the plus days.  Will it rise to former heights?  Yes.  In our lifetimes? That is a question answered differently by optimists and those who are not.

Home sales are also showing signs of life, even if most of the sales are foreclosures.  As banks rid themselves of the “toxic” assets and begin to lend again to other than those with an 800 credit rating putting down 80% of the purchase price, houses will rise in value as demand for ownership increases.  Unfortunately, there is wreckage there as well.  People who have walked away, people who have foreclosed, and investors who bought those packaged mortgage loans that went bad will suffer.

Such is the fate of the speculator.  We have become used to deriding speculators of mortgages, commodities like oil and other areas, so that we have forgotten we are all speculators.  Definitions of speculation include a conclusion or opinion reached by contemplation, conjecture or surmise, and engagement in business transactions involving risk but offering the chance of large gains in the hope of profit.

Were we invested in the stock market and 401(k) with the hope it would go down or stay even?  Did we purchase our home with the hope it would depreciate in value?

We had great hopes.  It was easy to be optimistic when everything was going up.  It’s hard to be optimistic when everything has crashed and we feel we have to start building again.  But that is what makes us Americans – optimism and hope.  Our optimism is being reborn.  We look beyond tomorrow and see the light on the horizon.  Today we survive.  Today we build for the future.  Today we survive so tomorrow we may thrive.  Our optimism carries us forward, eyes on the horizon, eyes on the light.

998 adults is a small sample on which to base the optimistic outlook.  How do you feel?  Are you optimistic?

In an optimism test formulated by Queendom.com (the land of tests), questions ranged from keeping in touch with family and friends, and feeling you can rely on them in time of crisis, to finding good in most people and something positive in difficult situations, dealing with whatever life throws at you, your outlook on finding solutions to a crisis, and whether you will ever give up.

Some of my highest choices in answer to these questions:

• I can find some good in even the most disagreeable people.
• I can find something positive in even the most difficult situations.
• I actively keep in touch with friends and family.
• When I’m feeling down, I remind myself to focus on the good things in my life instead of the bad.
• When I have a difficult problem, I try to look at it from different angles in order to come up with a solution.
• I refuse to give up, no matter how tough things get.
• No matter what life throws at me, I believe that I can deal with it.
• I know how to calm myself down and relax when my life gets too hectic.
• I think that it’s important to maintain a sense of humor when life is particularly rough.
• Given the choice, I think that the majority of people would choose to do good rather than evil.

And my optimism test results were:

“According to your responses, you seem to be the type of person who believes strongly in the goodness of humankind.  You give almost everyone the benefit of the doubt, and accept what people say and do at face value instead of making conjectures about their motives.  You try to find the good in even the most difficult of people, and are much more willing to place your faith in others.  Although your trusting and accepting nature is refreshing, you may benefit from a more balanced perspective.  Unfortunately, believing that everyone you meet has good intentions leaves you open to being taken advantage of.  This doesn’t mean that you should be suspicious of others or their motives, but a little skepticism couldn’t hurt.”

I guess I’m a little too optimistic.  Ok scammers, come get me.