Government Workers Feel No Economic Pain

March 12, 2010

The Washington Times

By David M. Dickson

The recession and the ongoing jobless recovery devastated much of the private-sector work force last year, sending unemployment soaring, but government workers emerged essentially unscathed, according to data released Wednesday by the Labor Department.

Meanwhile, the compensation for state and local government employees continued to easily outdistance the wages and benefits for workers in private business, a separate Labor Department report showed.

Private-industry employers spent an average of $27.42 per hour worked for total employee compensation in December, while total compensation costs for state and local government workers averaged $39.60 per hour.

The average government wage and salary per hour of $26.11 was 35 percent higher than the average wage and salary of $19.41 per hour in the private sector. But the percentage difference in benefits was much higher. Benefits for state and local workers averaged $13.49 per hour, nearly 70 percent higher than the $8 per hour in benefits paid by private businesses.

Paul Booth, executive assistant to the president at the American Federation of State, County and Municipal Employees (AFSCME), attributed the pay difference to a changing government work force that has increased its proportion of higher-skilled workers during the past 15 to 20 years.

“In government payrolls, you no longer have low-wage occupations, such as janitors, whose jobs have been contracted out to the private sector,” he said. This trend has effectively increased the average wage of those higher-skilled workers who remain, said Mr. Booth, whose union represents 1.6 million workers.

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Permanent Unemployment Benefits???

March 10, 2010

Washington Post

By Michael A. Fletcher and Dana Hedgpeth

Millions of Americans have been forced to rely on unemployment payments for extended periods as the nation struggles through its longest period of high joblessness in a generation, and critics are taking aim, saying that the Depression-era program created as a temporary bridge for laid-off workers is turning into an expensive entitlement.

About 11.4 million out-of-work people now collect unemployment compensation, at a cost of $10 billion a month. Half of them have been receiving payments for more than six months, the usual insurance limit. But under multiple extensions enacted by the federal government in response to the downturn, workers can collect the payments for as long as 99 weeks in states with the highest unemployment rates — the longest period since the program’s inception.

The unemployed say extensions help to tide them over in unusually difficult times when jobs are hard to come by. Although unemployment held steady at 9.7 percent in February, millions of jobs have been lost in the downturn, particularly in the hardest-hit sectors including real estate, construction, manufacturing and financial services. Those jobs are unlikely to return even when the economy recovers, many experts say.

But complaints that extending unemployment payments discourages job-seeking have begun to bubble into the political debate. Sen. Jim Bunning (R-Ky.) recently single-handedly held up the latest extension, a bill to keep unemployment benefits in place for 30 more days, saying Congress should find other cuts to cover its $10 billion price tag.

Sen. Jon Kyl (R-Ariz.) did not join Bunning’s effort, but he defended his colleague’s point of view. Kyl told the Senate he questioned why anyone would see unemployment benefits as helpful to the economy, or to the job market.

“If anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work,” Kyl said. “I am sure most of them would like work and probably have tried to seek it, but you can’t argue it is a job enhancer.”

Andrew Stettner, deputy director of the National Employment Law Center, says there’s a good reason people are out of work for so long. There are six unemployed Americans for every available job, he said.

“The primary reason people are out of work so long is a lack of jobs,” Stettner said.

The 14.9 million jobless Americans have been out of work an average of 29.7 weeks, just below January’s 30.2-week average. Those levels are the highest since the government began keeping those records in the 1950s, according to Stettner.

The ranks of the unemployed include Jerome Boyd, 48, a father of four who lives in Arlington. He was laid off in August from his job as a sous chef at Gaylord National Hotel at National Harbor.

He receives $1,200 a month in unemployment benefits, less than half the $3,000 a month he brought home from his job. Now he is often behind paying about $1,500 in rent, a car payment and other expenses. “I’m stealing from Peter to pay Paul,” he said, adding: “There’s the cable, the phone bill. I owe the bank overdraft fees and the insurance is lapsing a little bit. I can’t take my kids shopping for school clothes because I don’t have enough to do that.”

The checks may be meager, but Boyd does not know what he would do without them. “I depend on this money,” he said. “I’m wondering every other week if it is going to keep coming in or not. It’s stressful, and especially when you’re trying to look for a job, too.”

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New Report Ranks Health of Every County

February 22, 2010

Silver Buzz Cafe

Researchers at the University of Wisconsin Population Health Institute and the Robert Wood Johnson Foundation have released a report billed as “the first annual checkup for every county in the nation.” The results are available online, so everyone can now find out how the county they live in ranks in terms of health outcomes. It allows residents to know how healthy their county is and how it compares with neighboring counties.

Pat Remington, Associate Dean for Public Health at the University of Wisconsin in Madison and lead author of this new report says – “It really is a call to action, not just for public health officials, [but] for educators, employers, community organizers to come to the table and start working together to improve the health of an entire community.”

The researchers ranked states based on health outcomes, which they describe as how long people lived (mortality) and how well they feel while they are alive (morbidity). They also ranked them according to other health factors, such as:

-Access to healthy foods.
-Air pollution.
-Binge drinking.
-Health care access and quality.
-Low birthweight.
-Number of children living in poverty and unemployment.
-Obesity
-Percentage of people who smoke tobacco.

Vermont and Mississippi were ranked as the healthiest and least healthy states overall, respectively. One surprising observation is that, within a particular state, the healthiest and unhealthiest counties are often side-by-side. For example, Chester County is ranked as the healthiest in Pennsylvania, but neighboring Delaware and Philadelphia Counties rank 36th and last in that state.

The report authors hope that the new report will help change the landscape. Dr. Remington commented that after Juneau County, Wisconsin, was ranked unhealthiest in the state, the first response was anger and denial. However, rather than just accepting the results, the communities were motivated to make things better. The local health officials decided to add community access to health care, so everybody could be seen by a doctor. They also opened a free dental clinic and doctors started handing out books to improve literacy. So, the new report may spur authorities, providers and patients in poorly ranked counties to work together to improve the situation.

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8.4 Million Jobs Lost in Recession

February5, 2010

Nasdaq

By Luca Di Leo and Jeff Bater

The U.S. unemployment rate unexpectedly declined in January, but the economy continued to shed jobs and revisions painted a bleaker picture for 2009, casting doubt over the labor market’s strength.

The unemployment rate, calculated using a household survey, fell to 9.7% last month from an unrevised 10% in December, the Labor Department said Friday. Economists surveyed by Dow Jones Newswires had forecast the jobless rate would edge higher to 10.1%.

Meantime, nonfarm payrolls fell by 20,000 compared with a revised 150,000 drop decline in December. Economists had expected payrolls to be flat. The December figure was revised down sharply from an originally reported 85,000 drop.

The Labor Department’s annual benchmark revision to the survey that produces the monthly payroll report painted a bleaker 2009 picture. Last year, job losses were almost 600,000 more than previously reported, the revisions showed.

===========================================================
Jan Employment Report ! Consensus: !
Jan Dec ! Payrolls: Unch !
Payrolls -20K -150Kr! !
Unemployment Rate 9.7% 10.0% ! Actual: -20K !
Hourly Earnings $18.89 $18.84r! !
===========================================================

The January report was influenced by several special factors that may not be consistent with the underlying jobs trend. Temporary hiring for the U.S. 2010 census collection helped the employment picture in January, while the unusually cold weather probably hurt it. The interaction of a very bad employment year in 2009 with January seasonal factors clouds the picture further, analysts warned ahead of the release.

“We will be inclined to treat either a very strong or a very weak employment report — particularly the payroll portion — with a greater than usual skepticism,” Goldman Sachs economist Andrew Tilton warned in a note.

The so-called “underemployment” rate–which includes everyone in the official rate plus those who are neither working nor looking for work, but say they want a job and have looked for work recently–fell to 16.5% in January from 17.3%.

Since the start of the recession at the end of 2007, payroll employment has fallen by 8.4 million. Over the last quarter, however, employment has shown little net change as the economy’s recovery helped companies retain workers.

Although the revisions show there were more job losses in 2009 than previously reported, the moderation in payroll cuts in the second half of last year remained broadly in place. November was revised to show a 64,000 gain in payrolls from a previous reading that only 4,000 jobs were added.

Last month, employment fell in construction, transportation and warehousing, while retail trade and temporary help services added jobs. Temporary services added 52,000 jobs in January.

The Federal Reserve’s view that U.S. interest rates must remain at a record low for several months shouldn’t change following the jobs report. Fed officials have in the past warned against reading too much from just one set of monthly data.

The central bank’s rate-setting committee left interest rates close to zero last week in the face of low inflation and high unemployment. The labor market’s performance is likely to be the main driver of Fed decisions this year over if and when it is time to raise interest rates.

Fed officials have predicted the unemployment rate will remain above 9% in the fourth quarter of 2010 due to a slow recovery. The economy surged in the fourth quarter of last year, but that was driven by inventories, a factor that will fade this year.

Friday’s jobs report showed that average hourly earnings rose to $18.89 in Janaury from $18.84 the previous month. The average workweek was up by 0.1 hour to 33.3 hours.

These data were also revised by the Labor Department, which started to report hours and earnings for all employees, instead of just for production and non- supervisory workers.

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Jobless Rate Falls to 9.7%; US Sheds 20,000 Jobs

February 5, 2010

Reuters

The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. Annual benchmark revisions to payrolls data showed the economy has purged 8.4 million jobs since the start of the recession in December 2007. * Analysts polled by Reuters had forecast payrolls gaining 5,000 and the unemployment rate to edge up to 10.1 percent. Median estimates from the top 20 forecasters expected payrolls to be unchanged last month. * A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.

COMMENTS:

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL

RESEARCH.COM, SHREWSBURY, NEW JERSEY:

“It indicates a certain form of stabilization but there’s not a bounce that everybody was looking for. Going into this with the ADP data, the Challenger data, and the initial claims data people were kind of negative.

“What is throwing people off is probably the 9.7 percent unemployment rate — the drop in the unemployment rate –, which is positive but is not coming from new jobs created its coming from people dropping out of the work force.

“It’s a series of conflicting data … The positive take is basically it wasn’t a total disaster, but the flip side of it is you’re not seeing a recovery.”

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“The excitement is the unexpected drop in the unemployment rate. Both hiring and the number of people looking for work rose. That increases the sense that the unemployment rate peaked a couple of months ago. You won’t see much improvement in the unemployment rate for the rest of the year because more people will start looking for jobs, but it appears the unemployment rate is on, at worst, a flat path.

“Payrolls lost 20,000 jobs, pretty much as expected. Revisions to the prior two months offset each other. November job growth was much better but December was much worse.

“Manufacturing jobs finally grew, but that was masked by another big drop in construction jobs — which probably was related to the weather.

“On the services side, a decrease of 48,000 jobs was led by retail trade which might be a problem of seasonal adjustments after Christmas.

“The market will probably conclude that the payrolls number should have been positive.

“Another large gain in temporary help was positive because that eventually will lead to more gains in permanent hiring.

“The workweek increased and average hourly earnings appear to be stabilizing with a gain of 0.2 percent.

“That said, when the market looks at what happens to weekly jobless claims, it still will argue that the February payrolls number will not be any better than January. You can’t say there is a lot of forward momentum, at least on the payrolls side of the ledger.

“The drop in the unemployment rate does have implications for the Fed. If the Fed sees the unemployment rate stabilizing, it’s obviously closer to lifting short-term interest rates than it would be otherwise. Everyone knows the Fed will be extraordinarily unwilling to hike rates until the unemployment rate starts to move lower.

“I would not characterize this report as in any way strong. On a scale of one to 10, it’s still a three or four.”

JOHN KILDUFF, PARTNER, ROUND EARTH CAPITAL IN NEW YORK

“The jobless data is neutral at best for energy prices. There continues to be job losses, and that will continue to translate into anemic gasoline demand.”

TOM SOWANICK, CHIEF INVESTMENT OFFICER, THE OMNIVEST GROUP,

PRINCETON, NEW JERSEY:

“The drop in the unemployment rate should be viewed in the context not that it is not a shocker but that this is the second monthly decline. The trend may now be established and that’s probably why the bond market was not reacting at first and now under pressure. Was January stronger than anticipated? The answer is yes because December was much weaker. Looking at the revision 85,000 to 150,000 last month and today it is 20,000…is that bigger than expected improvement? Absolutely. Average hourly earnings were both up month over month. In the detail, things are probably better.”

KURT KARL, HEAD OF ECONOMIC RESEARCH, SWISS RE, NEW YORK:

“It is an interesting set of numbers. Disappointment with the downturn in non-farm payrolls, but interesting that the unemployment rate ticked down quite substantially. It could mean some good news is coming soon. That is why the unemployment rate went down — you had a very small increase in the labor force and a huge jump in household employment.”

JAY MUELLER, PORTFOLIO MANAGER, WELLS CAPITAL MANAGEMENT,

MENOMONEE FALLS, WISCONSIN:

“Last week’s gross domestic product number was largely a reflection of inventory, but actual demand is clearly not strong enough to get businesses to start hiring.

“We’re probably still at least six to 12 months away before we start to see a strong hiring trend. At the same time today’s numbers weren’t far enough away from expectations to be a major (Treasury) market mover.”

AMELIA BOURDEAU, SENIOR CURRENCY STRATEGIST, UBS, STAMFORD,

CONNECTICUT:

“Overall, we showed a relative improvement in payrolls today. Although we didn’t return to positive payrolls growth, we are still within expectations. The dollar had been bid before payrolls and now it has been weakening a little bit because I believe the benchmark revisions were a little more than expected. That might be a temporary reaction to revisions. Going forward, I think sovereign risk will continue to dominate and weigh on the euro versus the dollar since this payrolls number was within expectations.”

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Ron Paul: Legalize Competing Currencies

January 26, 2010

Campaign For Liberty

by Ron Paul

Much has been made recently about the supposed economic recovery. A few blips in a few statistics and many believe our troubles are all over. Of course, they have to redefine recovery as “jobless” to account for the lack of improvement on Main Street. But the banks have money, Wall Street is chugging along, and the administration would like to get on with other agendas.

They have even set up a commission to investigate the crisis as if it were all in the past.

The truth is that Americans are still losing jobs, the Fed is still inflating, and more regulations are in the works that will prevent jobs and productivity from coming back. We are on this trajectory for the long haul. The claim has been made many times that this administration has only had a year to clean up the mess of the last administration. I wish they would at least get started! Instead of reversing course, they are maintaining Bush’s policies full speed ahead. They are even keeping the Bush-appointee in charge of the Federal Reserve! They are not even making token efforts at change in economic policy. And for all the talk of transparency, we hear that some powerful senators will do all they can to block a simple audit of the powerful and secretive Federal Reserve.

We have been on a disastrous course for a long time. The money supply has doubled in the last year, our debt is unsustainable, the value of the dollar is going to continue its drop, and those Americans who understand where we are headed feel helpless and held hostage by foolish policy makers in Washington. When the bills finally come due and the dollar stops working we are in for some real social, economic and political chaos. That is, unless we take some major steps now to allow for a peaceful transition in the future. These steps are laid out in my legislation to legalize competing currencies.

First of all, no one should be compelled by law to operate in Federal Reserve notes if they prefer an alternative. We should repeal legal tender laws and allow Americans to conduct transactions in constitutional money. Only gold and silver can constitutionally be legal tender, not paper money. Instead, it is illegal to conduct business using gold and silver instead of Federal Reserve notes. Simply legalizing the Constitution should be a no-brainer to anyone who took an oath of office. Consequently, private mints should be allowed to mint gold and silver coins. They would be subject to fraud and counterfeit laws, of course, and people would be free to use their coins or stay with Federal Reserve notes, as they see fit. Finally, we should abolish taxes on gold and silver, which puts precious metals at a competitive disadvantage to paper money.

The Federal Reserve is a government-sanctioned banking cartel that has held far too much power for far too long and is in the end stages of running the dollar into the ground, and our economy along with it. The very least Congress can do, if they are not willing to abolish the Fed, and perhaps not even conduct a serious audit of it, is to allow citizens the freedom to defend themselves from being completely wiped out by their monopoly power.

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Why Did The “Stimulus” Fail To Help The Economy?

January 26, 2010

Campaign For Liberty

by William Anderson

When Congress was debating President Obama’s proposed “stimulus” last year, two of the watchwords for the near-trillion-dollar boondoggle were “jobs” and “shovel-ready.” Now, given what comes out of Washington, one needs a shovel to clean up the muck, and I appreciate the politicians and the media telling us we needed to have our shovels ready.

Now that the numbers are in, however, it seems that money spent had no appreciable effect on lowering unemployment:

A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

Keynesians, not surprisingly, have an answer: The government did not spend enough. They reason that economic growth can occur only if “aggregate demand” is great enough to prevent an overall “glut” of unsold goods. (Like the mercantilists before them, Keynesians believe that recessions occur because businesses cannot sell all the goods they produce. Socialists similarly claim that workers are “unable to buy back the products” they make.)

Therefore if government is to prevent the recession-causing “glut,” it must spend whatever is necessary to cover any “shortfall” in private consumption and investment spending. Out of this “theory” we get the present “stimulus,” complete with the blessing of Ivy League economists (who seem to perform the role of the High Priests in today’s political economy).

Such a “theory,” however, is doomed to fail every time, and I wish to give some reasons why.

•Individuals are purposeful creatures, so their spending also will reflect their own purposeful behavior. (It is interesting that many people who endorse the “aggregate demand” terminology also decry what they see as “mindless consumption of the masses.”)
•The economy is not a blob into which one stirs in money the way one stirs in an ingredient into a cake. In other words, the economy does not have a “just add money” in a recipe. It is driven by people making purposeful decisions.
•An economy has a structure of production that when working well directs resources, labor, and capital toward those areas of production that reflect the desires and needs of consumers.
•When governments expand money through the central bank, the rush of new money distorts the production structure and changes the relative value of assets and factors of production. In the early stages of this government-inspired boom, the malinvested assets (the ones that become more valuable as a result of the artificial boom itself) expand relative to other assets.
•The credit-fed boom ultimately cannot be sustained, and it becomes painfully clear that malinvested assets (see the housing-real estate bubble) quickly lose their value relative to other assets. This is the beginning of the recession, which is a period in which the economy begins to reassert the “consumer-preferred” value of economic assets.
Attempts to “stimulate” the economy through massive government spending may put money into the pockets of politically connected people, but it does nothing to restore the economic factors to their proper balances. Instead, the “stimulus” only serves to further distort the economic fundamentals and prolong the downturn.

That’s right. The stimulus has not staved off a major depression; instead, it has ensured the greater likelihood of a major economic collapse by keeping the factors unbalanced and distorting the structure of production.

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WH Aides Split on Stimulus Stats

January 25, 2010

Politico

By Politico Staff

White House advisers appearing on the Sunday talk shows gave three different estimates of how many jobs could be credited to President Obama’s Recovery Act.

The discrepancy was pointed out by a Republican official in an email to reporters noting that “Three presidential advisers on three different programs [gave] three different descriptions of the trillion-dollar stimulus bill.”

Valerie Jarrett had the most conservative count, saying “the Recovery Act saved thousands and thousands of jobs,” while David Axelrod gave the bill the most credit, saying it has “created more than – or saved more than 2 million jobs.” Press Secretary Robert Gibbs came in between them, saying the plan had “saved or created 1.5 million jobs.”

Their remarks in context:

Axelrod, on CNN’s State of the Union: “But understand that, in this recession that began at the beginning of 2007, we’ve lost 7 million jobs. Now, the Recovery Act the president passed has created more than — or saved more than 2 million jobs. But against 7 million, you know, that — that is — it is cold comfort to those who still are looking.”

Jarrett, on NBC’s Meet the Press: “The Recovery Act saved thousands and thousands of jobs. There are schoolteachers and firemen and— and— teachers all across our country, policemen, who have jobs today because of that recovery act. We’re investing in infrastructure. We’re investing in public education so that our kids can compete going forth into the next— generation.”

Gibbs, on “Fox News Sunday”: “Well, Chris, let’s take for instance the example you just used of the stimulus package. We had four quarters of economic regression in terms of growth, right? Just last quarter, we finally saw the first positive economic job growth in more than a year. Largely as a result of the recovery plan that’s put money back into our economy, that saved or created 1.5 million jobs.”

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Obama to Announce Bank Fees to Cover Billions in TARP Losses

January 13, 2010

Reuters

By Alister Bull

President Barack Obama will announce plans on Thursday to raise up to $120 billion from major U.S. financial firms to cover expected losses from a taxpayer-funded bank bailout, a senior administration official said on Tuesday.

Obama’s announcement will come as U.S. unemployment is stuck in double digits and public anger is growing over big bonuses that some financial firms are poised to resume paying, barely a year after the height of the global financial crisis that made the bailout necessary.

The Obama administration official said the amount of money raised from the fees would not exceed $120 billion since this was the higher end of conservative estimates of the cost of the Troubled Asset Relief Program, or TARP.

U.S. Treasury officials expect TARP losses to be much lower than that sum, and over the course of years the fee will pay back any costs of the $700 billion taxpayer bailout, the administration official said.

TARP was created by President George W. Bush’s administration to shore up the financial system during the financial meltdown, which plunged the United States into the worst recession in 70 years and has pushed unemployment to 10 percent.

The proposal of a TARP fee has been under discussion since August and Obama felt it was important to find ways to make sure taxpayers got all the money back sooner than was required under the law, the administration official said.

A number of big U.S. banks have already repaid the capital they received under TARP. The legislation that created TARP calls for taxpayer losses to be recouped by 2013.

A financial industry source in Washington told Reuters that many options on how to structure such a fee were being discussed, including basing it on the amount of a financial firm’s liabilities.

The source, speaking anonymously because the fee has not officially been proposed, said government officials are also discussing exempting automakers and insurer American International Group from the fee, even though these companies are expected to represent a large chunk of the bailout losses.

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America Slides Deeper into Depression

January 11, 2010

Telegraph.co.uk

By Ambrose Evans-Pritchard

The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody’s Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck’s Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor “harsh, repugnant, shocking and repulsive”. We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or “Farm Holidays”. Such flexibility innoculated America’s democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of “option ARM” contracts due to reset violently upwards this year and next.

US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. “If the 2008 and 2009 loans go bad, then we’re back where we were before – in a nightmare.”

David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and “auto-buying intentions” are the lowest ever.

The Fed’s own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.

Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.

His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller “10-year normalized earnings basis” – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks.

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