And the Recovery That Never Was Continues to Sputter Along

U.S. employers added only 96,000 jobs last month, more evidence of just how anemic the so called economic recovery has been. The news has the potential to derail the president’s bid for reelection but will most likely matter little to his most ardent followers.

Many of the jobs were in lower-paying industries such as retail, which added 6,100 jobs, and hotels, restaurants and other leisure industries, which gained 34,000. Higher-paying manufacturing jobs fell by 15,000, the most in two years.

The unemployment rate fell to 8.1 percent from 8.3 percent in July, but that’s only because more people gave up looking for jobs. People are only counted as unemployed if they are actively looking for a job.

The economy has added just 139,000 jobs a month since the start of the year, below 2011’s average of 153,000, while 41,000 fewer jobs were created in July and June than first estimated.

Hourly pay fell, manufacturers cut the most jobs in two years and the number of people in the work force dropped to its lowest level in 31 years.

The sluggish figures make the Federal Reserve more likely to unveil a new bond-buying program at its meeting next week to try to lift the economy, said John Silvia, chief economist at Wells Fargo. The goal of the bond purchases would be to lower long-term interest rates to encourage borrowing and spending.

“This weak jobs report is going to feed into their argument that the economy is growing at a sub-par pace,” Silvia said.

No president since Franklin D. Roosevelt during the Great Depression has been re-elected with a jobless rate over 8 percent.

 

Ben Swann’s Reality Check: Do We Really Need To Audit The Federal Reserve?

Federal Reserve Officials Fear Looming Economic Crisis

Federal Reserve officials say they are open to taking further action to support the struggling U.S. economy, but minutes of the their June meeting show there is no consensus as to whether the economy needs more help now.

Some members said the economy may already need additional help, but several others said further action “could be warranted” if the recovery lost momentum, if risks became more pronounced or inflation seemed likely to run below the committee’s target.

Stock prices dropped after the Fed expressed concerns about the economy. The Dow Jones industrial average had been down nearly 40 points before the minutes were released at 2 p.m. Eastern time before falling 112 points, on track for its fifth straight day of losses.

Hiring was anemic for a third straight month as the economy added only 80,000 jobs in June.

David Jones, chief economist at DMJ Advisors, said he thinks the Fed will eventually launch a new bond buying program.

Many economists predict the Fed will hold off for one more meeting and give the job market a little longer to show improvement. If the economy doesn’t improve, the Fed could announce some new action at its Sept. 12-13 meeting.

Since the recession, the Fed has bought more than $2 trillion in Treasury bonds and mortgage-backed securities, expanding its portfolio to more than $2.8 trillion.

In the meantime, the Fed plans to keep short-term interest rates at a record low until at least late 2014. Jones said officials might push that target into 2015 to reassure investors that borrowing costs will stay low even longer than expected.

At last month’s meeting, Fed officials signaled their concern that the stagnant U.S. economy could worsen if Congress failed to avert tax hikes and spending cuts that kick in at the end of the year as well as worries that Europe’s debt crisis will weigh on U.S. growth.

More stimulus “won’t become a reality unless the recovery loses even more momentum or a more severe flare up in the euro-zone crisis raises the already elevated downside risks,” said Paul Ashworth, chief U.S. economist at Capital Economics.

The Fed lowered its growth forecast, noting that the U.S. job market had weakened and consumer spending slowed. It also said it didn’t expect the unemployment rate to fall much further this year from its current 8.2 percent.

Some members noted that defense contractors are already planning layoffs in case lawmakers don’t address the package of tax hikes and spending cuts by the end of the year.

The Fed extended a program that shifts its bond portfolio to try to lower long-term interest rates. Policymakers left open the possibility of providing further help, such as launching a new program of bond purchases.

Chairman Ben Bernanke may offer further guidance on the Fed’s plans next week when he delivers the central bank’s updated economic assessment to Congress. After the June meeting, Bernanke told reporters he was open to another round of bond purchases if the job market didn’t improve.

Employers added an average of just 75,000 jobs a month in the April-June quarter — only about a third of the 225,000 jobs a month created in the first three months of the year.

After its last meeting, the Fed downgraded its economic outlook. It now expects growth of just 1.9 percent to 2.4 percent in 2012, half a percentage point lower than its April forecast.

Federal Reserve: Middle Class Lost 40% of Wealth

The Great Depression 2.0 wiped out close to two decades of American wealth, with ­middle-class families, predictably, bearing the brunt of the losses.

According to the Federal Reserve the median net worth of families dropped from $126,400 in 2007 to $77,300 in 2010.

Over the span of three years, the progress that took almost a generation to accumulate disappeared.

“It’s hard to overstate how serious the collapse in the economy was,” said Mark Zandi, chief economist for Moody’s Analytics. “We were in free fall.”

Only about half of middle-class Americans remained on the same economic footing during the downturn. The value of assets such as homes, automobiles and stocks minus any debt suffered the biggest drops while the wealthiest families’ median net worth rose slightly.

Median income also fell by nearly 8 percent, to $45,800, in 2010. The median value of stock-market-based retirement accounts declined 7 percent, to $44,000 while the median value of Americans’ stake in their homes fell by 42 percent between 2007 and 2010, to $55,000, according to the Fed.

“Recovery from the so-called Great Recession has also been particularly slow,” the report said.

Congress sees 25% increase in wealth since economic collapse

Members of Congress enjoyed a collective net worth of more than $2 billion dollars in 2010, a nearly 25 percent increase in two years, according to a Roll Call analysis of Members’ financial disclosure forms.

Roughly 90 percent of that increase sits in the pockets of the 50 richest Congressmen.

In 08 the minimum net worth of House Members was slightly more than $1 billion while Senators had a combined minimum worth of $651 million for a Congressional total of $1.65 billion. The minimum net worth in the House has jumped to $1.26 billion, and at least $784 million for the Senate, for a total of $2.04 billion this year.

These wealth totals do not include homes and other non-income-generating property, which is likely to tally hundreds of millions of uncounted dollars.

While wealth overall is scattered fairly evenly between the two parties Democrats hold about 80 percent of the wealth in the Senate with Republicans controling about 78 percent of the wealth in the House.

The 50 richest Members of Congress accounted for 78 percent of the net worth in the institution in 2008 ($1.29 billion of the $1.65 billion total); by 2010 the share of the 50 richest had risen to 80 percent ($1.63 billion of the $2.04 billion total). The pie of Congressional wealth got bigger, and the richest Members are getting a bigger slice.

If you were to divide the total wealth of Congress by the number of Members you would get an average net worth of about $3.8 million (excluding non-income-producing property such as personal residences) for each Congressman. By comparison, for the rest of the country, based on statistics released by the Federal Reserve, average household net worth is around $500,000 this year (including personal residences), according to David Rosnick, an economist at the Center for Economic and Policy Research.

Congress is also getting richer faster than the rest of the nation. According to Federal Reserve data, from the end of 2008 to end of 2010, aggregate household worth increased 12 percent.” which is about half the increase Congress achieved during the same time period.

Alan Ziobrowski, a professor of real estate at Georgia State University, has produced studies of Congressional investment patterns indicating that lawmakers in both chambers tend to fare better in their investment portfolios than the average American, in part because “[t]here is no doubt in my mind that they are trading in some way on information that is there.”

But he also points out that the Membership of Congress has turned over since 2008, making it difficult to compare wealth over time. “You’ve got different people,” he said.

In the aftermath of the 2010 elections that swept Republicans to power, about 20 percent of the Members included in the 2010 survey were not included in the 2008 survey.