• Off the Charts highlights the flaws of business climate rankings.
• Martin Wolf despairs yet again about the state of the Eurozone.
• Economix reports on the newest occupational growth projections.
• The New Republic blogs on “why carried interest is a worse scam than you think.”
• Paul Krugman thinks he has spotted Mitt Romney accidentally telling the truth.

“The January employment report always is a complex one due to the inclusion of multiple annual data adjustments and methodological updates,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “Those changes mean that the January report should be taken with a grain of salt, especially since the data are not strictly comparable to those from prior months.”

In January, the nation’s employers added 243,000 more payroll positions than they cut. Gains occurred exclusively in the private sector (+257,000), while government payrolls fell by 14,000 positions due chiefly to cuts at the local level (-11,000). Additionally, the payroll employment numbers for November and December underwent upward revisions; with the updates, the economy gained 360,000 jobs over those two months rather than the 300,000 positions previously reported.

With the exception of information and financial activities, every major private-sector industry group netted jobs in January. Professional and business services added the most positions (+70,000 due chiefly to gains in the administrative and waste services sub-sector), followed by manufacturing (+50,000 due overwhelmingly to growth in durable goods manufacturing), and leisure and hospitality services (+44,000 due primarily to growth in the accommodation and food services sub-sector). Meanwhile, the information industry shed 13,000 positions, and financial activities eliminated 5,000 jobs.

“Over the past three months, the economy has gained an average of 201,000 jobs,” noted Quinterno. “The current pace of job growth is better than that recorded a year ago, but it is still modest relative to the size of the overall jobs gap. At the current level of growth, it would take until early 2015 before the economy has as many jobs as it did at the end of 2007.”

Soft employment conditions were evident in the January household survey. Last month, 12.8 million Americans (8.3 percent of the labor force) were jobless and seeking work. While the number of unemployed Americans and the unemployment rate fell last month, the share of the population participating in the labor force (63.7 percent) fell, and the share of the adult population with a job (58.5 percent) remained at a depressed level. In fact, diminished levels of labor force participation accounted for much of the drop in unemployment. Had the labor force participation rate remained at its December level of 64 percent, the unemployment rate would have been closer to 8.7 percent.

Last month, unemployment rates among adult male and female workers were the same (7.7 percent for each group). Unemployment rates were higher among Black (13.6 percent) and Hispanic workers (10.5 percent) than among White ones (7.4 percent). The unemployment rate among teenagers was 23.2 percent.

Furthermore, 7.5 percent of all veterans were unemployed in January; the rate among recent veterans (served after September 2001) was 9.1 percent.

“A variety of annual technical updates limits the usefulness of the January employment report, so it is important not to read too much into it,” added Quinterno. “That said, 2012 appears to be off to a better start than 2011, though joblessness and the attendant problems remain widespread.”

Jobs remained difficult to find in January. Last month, the underemployment rate equaled 15.1 percent. Among unemployed workers, 42.9 percent had been jobless for at least six months with the average spell of unemployment lasting for 40 weeks.

“The January employment report offers much proof that the labor market is not rebounding as rapidly as it should following a recession of the magnitude of the recent one,” observed Quinterno. “While conditions have improved in recent months, growth remains too subdued to return the labor market to pre-recessionary conditions anytime soon.”

“Interpretations of the January employment report that suggest that ‘all is well’ and that policymakers can turn their attention to other issues are fundamentally flawed ones that ignore the fact that the economy is not generating enough jobs for millions of Americans who need and want to work.”

• TaxVox points out the silliness of the debate about tax extenders.
• The Center for American progress explains the causes of this year’s deficit.
• Kevin Drum says the Obama administration has dragged its feet on the housing crisis. 
• David Callahan argues against “blaming the victims of inequality.”
• Working Economics notes that it is too soon to cut unemployment benefits.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 20,020 initial claims were filed over the previous four weeks, along with an average of 131,553 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, as was the average number of continuing claims.

One year ago, the four-week average for initial claims stood at 24,151,  and the four-week average of continuing claims equaled 147,191.

In recent weeks covered employment has increased and now slightly exceeds the level recorded a year ago (3.73 million versus 3.72 million). Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were four years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

• Economix breaks down federal government wage trends.
• Jared Bernstein thins about inequality and the middle class.
• Brad DeLong praises Neville Chamberlain, though not for what you think.
• Working Economics charts “austerity’s effects on state job growth.”

“December was the weak end to weak year for most of North Carolina’s local labor markets,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “In 59 counties, at least 10 percent of the labor force was unemployed in December, up from 57 counties a year ago. Similarly, the size of the labor force fell in 29 counties, which suggests that joblessness is more widespread than captured in the official unemployment statistics.”

Since the economy fell into recession in December 2007, North Carolina has lost, on net, 7.1 percent of its payroll employment base (-295,300 positions) and has seen its unadjusted unemployment rate climb from 4.7 percent to 9.8 percent. In December, the state shed 4,400 more payroll jobs than it added. Since bottoming out in February 2010, the state’s labor market has netted an average of 1,300 jobs per month, resulting in a cumulative gain of just 27,700 jobs.

Between November and December, unemployment rates rose in 93 counties and were at or above 10 percent in 59 counties. Individual county rates ranged from 6.1 percent in Orange County to 17.5 percent in Graham County. Compared to a year ago, unemployment rates were higher in 68 counties, unchanged in 5 counties, and lower in 27 counties.

“Non-metropolitan labor markets remained weak in 2011,” added Quinterno. “In December, 10.9 percent of the non-metro labor force was unemployed, compared to 9.4 percent of the metro labor force. Over the year, the rural unemployment rate held steady. Compared to December 2007, the non-metro labor force is 3.5 percent smaller. Similarly, the number of employed rural residents has fallen by 9 percent, while the number of unemployed rural persons has grown by 90.8 percent and now numbers 141,741.”

Last month, unemployment rates rose in 13 of the state’s metropolitan areas and fell in one metro (Burlington). Rocky Mount had the highest unemployment rate (12.9 percent), followed by Hickory-Morganton-Lenoir (11.9 percent). Durham-Chapel Hill had the lowest rate (7.5 percent), followed by Asheville (7.9 percent).

Compared to December 2010, unemployment rates were higher in 69 counties and 8 metros. Moreover, 29 counties and 3 metros had smaller labor forces. Among metros, Wilmington recorded the largest decline in the size of its labor force (-2 percent), followed by Hickory-Morganton-Lenoir (-1.9 percent). Fayetteville posted the largest increase (+3.3 percent), followed by Greensboro (+1.9 percent) and Greenville (+1.6 percent).

In the long term, any meaningful recovery will hinge on growth in the state’s three major regions: Charlotte, the Research Triangle, and the Piedmont Triad. Yet growth remains sluggish. Collectively, employment in these three metro regions has fallen by 4.2 percent since December 2007, and the combined December unemployment rate in the three metros equaled 9.1 percent. Of the three broad regions, the Research Triangle had the lowest unemployment rate (8 percent), followed by the Piedmont Triad (9.8 percent), and Charlotte (10.5 percent).

“North Carolina’s local labor markets ended 2011 little different than they started the year,” said Quinterno. “Statewide job growth has been anemic at best, and as a result, nearly a half million North Carolinians are jobless and actively seeking work. The same basic dynamic is playing out to differing degrees in communities throughout the state.”

The analyses discussed here suggest that weak labor demand is the primary explanation for prolonged unemployment duration observed in the recent recession and recovery. The weak recovery of employment is similar to the jobless recoveries that followed the 1990–91 and 2001 recessions. This suggests that the labor market has changed in ways that prevent the cyclical bounceback in the labor market that followed past recessions. The shift towards jobless recoveries probably reflects a reduction in temporary layoffs during cyclical downturns. Stricter market incentives to control costs in the face of stiff domestic and international competition may also be factors. In addition, anecdotal evidence suggests that recent employer reluctance to hire reflects an unusual degree of uncertainty about future growth in product demand and labor costs. These special factors are not readily addressed through conventional monetary or fiscal policies. But such policies may be able to offset the central obstacle of weak aggregate demand.

• Marshall Auerback sees “Anschulss economics” at work in Europe.
• Robert Frank argues that “higher taxes help the richest, too.”
• Robert Kuttner asks if the administration’s financial investigations are serious.
• An op-ed in The Washington Post wonders if working less would  benefit Americans.

The long and short is that there was likely little change in the underlying rate of growth from the third quarter to the fourth quarter. The winding down of the stimulus, coupled with the negative impact from the Japan earthquake brought growth to a near halt in the first half of the year.
…
Now that the stimulus has almost fully unwound we are back on a growth path of around 2.5 percent — pretty much the economy’s trend rate of growth. This means that we are making up little or none of the ground lost during the recession. That is a really bad story.

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.
…
What an utter disaster.

• Andy Kohut says economic unfairness is what angers Americans.
• Felix Salmon sees Lawrence Summers get bottled up.
• Matt Taibbi wonders if “Obama’s ‘economic populism’ is for real.”
• Fed Watch sees the zero interest rate policy as “pushing on a string.”

As of 2000, there were 10 counties in North Carolina that fit the definition of persistently poor: Bertie, Bladen, Columbus, Halifax, Martin, Northampton, Pitt, Robeson, Tyrrell and Washington counties.
…
All of North Carolina’s persistently poor counties are located in the eastern region of the state. This area is part of the northern tip of the Black Belt, a crescent of economically distressed communities that stretches south to Louisiana. The challenges for these communities can be traced back to the economic oppression of slavery and the economic exclusion of segregation and discrimination. As a result, these communities have long struggled with a lack of connection to the opportunities that generate improved economic outcomes such as education, employment, infrastructure, and technology. More recently, these communities have been impacted by economic restructuring—the dramatic decline in the state’s manufacturing employment base and the rise of low‐paying service‐sector jobs—and the need to adapt to today’s highly competitive economy.
…
The lack of employment opportunities has meant these communities have little to offer residents in terms of good jobs and opportunities for advancement. Often, those residents who achieve middle‐class status leave the Black Belt to continue their post‐secondary education or seek higher‐paying jobs.

• The NY Times reports on Apple’s labor relations with Chinese suppliers.
• Bill Moyers and Michael Winship watch the spinning of the revolving door.
• Policy Shop asks “what job training can-and cannot–fix.”
• Brad DeLong points out the terrible shape of the British economy.
• Paul Krugman explains the advantages of economic clustering.

…As Mitt Romney’s tax returns show, wealthy Americans have the rules rigged in their favor from day one. And that’s assuming they obey the rules. Unlike the poor, they can mostly cheat with impunity. In these circumstances, it’s unsurprising that US inequality is so deeply entrenched. The only surprise is the suddenness with which the facts have become common knowledge.
…
It remains to be seen how this will play out electorally, but there are at least some promising signs. Eight months ago, the situation in the US, seemed if anything even worse than in Europe. Obama seemed determined to capitulate to the Repubs, with the support of the entire centrist establishment, still committed to the idea of bipartisanship. Political discussion was dominated by the claims of the Tea Party, essentially identical to those of the European Austerians. The debt-ceiling debacle, the success of Occupy Wall Street and the recent Romney revelations have changed that. First, the fact that the Repubs are extreme reactionaries, uninterested in any kind of bipartisan compromise, has finally sunk in to all but the most obtuse centrists. Second, the point that the rich play by different rules from the rest of us has been made glaringly obvious.

• TaxVox worries about government by tax cut.
• Public Citizen says it is time to break up BofA.
• The NY Times reports on the Fed’s bleak view of the economy.
• Felix Salmon sees “fear in Davos.”
• Elise Gould notes that job creation is the best way to help families.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 19,380 initial claims were filed over the previous four weeks, along with an average of 129,096 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, as was the average number of continuing claims.

One year ago, the four-week average for initial claims stood at 22,567  and the four-week average of continuing claims equaled 142,397.

In recent weeks covered employment has increased slightly and has returned to the 3.7 million level recorded a year ago. Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were almost three years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

Service sector activity continued to improve overall in January, according to the latest survey by the Federal Reserve Bank of Richmond. Retail sales accelerated, despite a sharp fall in big-ticket sales and declining shopper traffic. Retailers’ inventories grew more quickly this month. Revenues at non-retail services providers also advanced, although somewhat more slowly than a month ago. Retail merchants were generally more cautious in their outlook for sales over the next six months, while services providers expected increased demand for their services.
…
In service sector labor markets, hiring slowed slightly at non-retail firms and retailers cut workers. Average wage growth slowed at services businesses. At retail establishments, average wages declined.
…
Price change in the overall service sector slowed slightly, compared to a month ago. Survey participants expected slightly faster price growth in the next six months, compared to their expectations in December.

• Robert Johnson sees economics as “a profession at sea.”
• Economist’s View weighs in on the (economic) State of the Union.
• Working Economics points out the importance of exchange rates.
• Rortybomb graphs changes in income and wealth.
• Robert Reich sees “a state of disunion.”

Manufacturing activity in the central Atlantic region advanced somewhat faster in January after firming somewhat in December, according to the Richmond Fed’s latest survey. All broad indicators — shipments, new orders and employment — landed in positive territory, with manufacturers noting their first increase in worker numbers since September 2011. Most other indicators were also positive, including capacity utilization. Only backlogs inched lower. Delivery times were virtually unchanged, while finished goods inventories grew at a slower rate.
…
Looking forward, assessments of business prospects for the next six months were more optimistic in January. Contacts at more firms anticipated that shipments, new orders, backlogs, capacity utilization, and capital expenditures would grow more quickly during the next six months.

• Nancy Folbre discusses “the best states to grow up in.”
• Martin Wolf lays out “seven ways to fix the system’s flaws.”
• Paul Krugman sees some evidence of a healing economy.
• Calculated Risk previews the Federal Reserve meeting.
• Tapped sees an “Atlas slugged.”

“December’s job market performance was a disappointing end to a disappointing year,” said John Quinterno, a principal with South by North Strategies, Ltd., a research firm specializing in economic and social policy. “The total number of jobs in the state was essentially flat, rising by just 0.5 percent in 2011. Despite the net addition of 19,600 jobs, North Carolina has 295,300 fewer jobs than it did in December 2007.”

In December, North Carolina employers shed 4,400 more payroll jobs than they added. Net losses occurred exclusively in the private sector (-5,900, -0.2 percent), while the public sector netted 1,500 jobs (+0.2 percent). Within the private sector, professional and business services lost the most jobs in absolute terms (-3,900, -0.8 percent) with the losses divided almost equally between the administrative and waste management and professional, scientific, and technical services subsectors. The trade, transportation, and utilities sector cut 1,800 positions (-0.3 percent). Meanwhile, manufacturing netted 500 jobs (+0.1 percent), while leisure and hospitality services added 300 jobs (+0.1 percent). In the public sector, a loss of 1,900 jobs within state government offset a gain of 2,800 local government and 600 federal positions.

A positive revision to the November data found that the state gained 4,100 more jobs than first reported (+7,900 versus +3,800). With that data revision, North Carolina has lost, on net, 295,300 positions, or 7.1 percent of its payroll base, since December 2007. Since bottoming out in February 2010, the state has netted an average of 1,300 payroll jobs per month, resulting in a cumulative gain of 27,700 positions (+0.7 percent). Put differently, the state’s labor market has replaced just 8.6 percent of the number of jobs lost at the height of the “Great Recession.”

“Compared to December 2007, North Carolina has fewer payroll jobs in every major industry group except for educational and health services and leisure and hospitality services,” noted Quinterno. “Despite experiencing some consistent growth in the private sector in recent months, losses in the public sector have negated much of the modest private-sector gain. Since February 2010, local government employment has fallen by 2.5 percent, and state government employment has contracted by 5.4 percent. Over that span, declines in the public sector have offset 45.6 percent of the gains in the private sector.”

Between December 2010 and December 2011, North Carolina gained, on net, 19,600 jobs (+0.5 percent). Net public-sector losses (-9,800, -1.4 percent) offset 33.3 percent of the net private-sector gains (+29,400 positions, +0.9 percent). In terms of individual private industries, trade, transportation, and utilities grew the most in absolute terms (+9,200, +1.3 percent), while information lost the most jobs (-1,100, -1.6 percent). In the public sector, net losses stemmed from drops in state (-6,500, -3.4 percent) and local (-4,500, -1 percent) employment.

The household data for December also were weak. Last month, the size of the labor force rose slightly (+4,339, +0.1 percent) to 4.51 million. While the total number of employed individuals rose (+9,532, +0.2 percent) and the number of unemployed individuals fell (-5,193, -1.1 percent), unemployment remained at an elevated level of 9.9 percent.

Between December 2010 and December 2011, the size of the labor force increased by 45,822 individuals (+1 percent). Over the year, the unemployment rate rose by 0.1 percentage points, climbing to 9.9 percent from 9.8 percent. The monthly statewide unemployment rate has been at least 9.7 in every month since February 2009.

“North Carolina’s labor market ended 2011 on a flat note,” observed Quinterno. “Minimal progress in closing the job gap was made during the year, and the unemployment rate is higher now than it was a year ago. Especially alarming is the fact that the share of working-age North Carolinians with a job remains near the lowest level recorded since 1976. In December, only 55.6 percent of working-age North Carolinians had jobs, down from 62.4 percent in December 2007.”

“The December employment report suggests that North Carolina’s labor market posted almost no progress over the course of the year. Four years after the onset of the Great Recession, little suggests that the job market has made—or is about to make—significant strides in putting sizable numbers of displaced Tar Heels back to work.”

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.

While the article is wroth reading in full, it doesn’t clearly show the policy choices–choices made by governments in both the United States and abroad–that shape the location of manufacturing sites and instead gives the impression that the choices made by firms like Apple somehow are inevitable.

Dean Baker immediately pointed out one dynamic missing from the story:

Remarkably, the piece never once mentions exchange rates. This is a major determinant of relative prices. If the dollar rises by 30 percent against other currencies, as it did in the late 90s, then it becomes 30 percent more expensive to produce goods in the United States relative to other countries. This rise in the value of the dollar was the major factor behind the explosion in the trade deficit at the end of the 90s and at the beginning of the last decade.
…
The dollar is also supposed to be the mechanism through which trade is rebalanced. Large trade deficits are supposed to cause currencies to fall in value. This leads their deficits to move back toward balance. This has not happened to any significant extent with the United States in the last decade in large part because foreign governments have placed a high priority on accumulating large amounts of dollars, buying up trillions of dollars of U.S. government debt and other dollar denominated assets. If the dollar were allowed to fall to a level consistent with more balanced trade, then many manufacturing jobs would return to the United States.

Naked Capitalism, meanwhile, identified a number of other omissions, including the following:

The problem with using the microcosm to illustrate the macrocosm is you need to choose the right microcosm. The danger in using the iPhone example is that (as I have discussed at length in prior posts) there are quite a few industries in which the case for offshoring and outsourcing is not compelling, particularly if you allow for the increased risk of extended supply chains, as Apple itself learned in the wake of the Fukushima nuclear disaster. But even in those cases, it still has the effect of transferring income from middle level and factory workers to the top brass. Thus the iPhone/consumer electronics example will have the effect of giving other businesses a free pass.

In a much more supportive analysis of the piece, Free Exchange noted the aggressive policy role in supporting manufacturing played by Asian countries like China–a role that the United States government ceased playing many years ago:

It’s not necessary to talk about this as an entirely organic process. Unquestionably, Asian governments aggressively pursued manufacturing and subsidised it heavily, both directly and through advantageous exchange rates. As the story points out, Asia has capitalised on other advantages, as well. Cheap labour is one. More flexible land-use, labour, and environmental rules are another; China can erect a massive operation in no time at all, staffed with compliant labour and with little concern about the impact of the factory on watersheds, air quality, and traffic. Skill supply seems to matter as well. China is churning out engineers with basic technical competence (but less, it appears, than a bachelor’s degree) by the hundreds of thousands. It would be incorrect to point to any one of these characteristics as the driving force behind the global shift. Rather, these are self-reinforcing factors within a global economy that has multiple stable equilibria. After some level of Asian development and integration, it became more attractive for manufacturers to locate there as more manufacturers located there.

• Uwe Reinhardt asks if  healthcare spending is coming under control.
• Naked Capitalism debunks the “it take forever to foreclose meme.”
• Off the Charts grades the Jobs Council’s corporate tax proposal.
• Policy Shop looks at the challenges of employment in the retail sector.
• Paul Krugman runs down the state of “taxes at the top.”

Career pathways – “a series of connected education and training programs and student support services that enable individuals to secure a job or advance in a demand industry or occupation”– can be one effective response to this disconnect. Career pathways focus on easing and facilitating student transition from high school and low-skill occupations into community college or vocational training programs, and then to consecutively higher skill and higher-wage employment. In doing so, career pathways create structured avenues for workers to increase their skills through credentialed training programs that in turn allow these workers to move into higher-paying, more skill-intensive employment opportunities within their industry or occupation. In North Carolina, the legislature actively pursued career pathway programs as part of welfare reform in the late 1990s in an effort to help move program recipients into employment and self-sustaining careers. After some initial interest, the legislature stopped funding these programs in the early 2000s, but local workforce boards, nonprofit workforce intermediaries, and community-based organizations picked up the mantle from the state and began experimenting with various models of career pathways targeted toward different populations and industries.

… This is because college graduates (those with bachelor’s degrees only) have not fared well in the labor market for at least 10 years—real wages are no higher than 10 years ago—while those with advanced degrees have seen their wages grow strongly. I have covered this ground in Education is Not the Cure for High Unemployment or for Income Inequality. In fact, those economists who argue that employment and wages are polarizing, such as Larry Katz of Harvard or David Autor of MIT, are pretty clear that employment outcomes for about half of college grads are part of the “middle” that’s faring poorly. That’s why it is misleading to use those analyses to argue that having more people go to college is the answer to growing wage inequality or middle-class wage stagnation; getting onto the better wage track requires either getting an advanced or professional degree (not just a college degree) or joining a clear subset of college graduates. That being the case, the arguments of those seeing “polarization” in the data lay out a very narrow track to good earnings and, in my view, further raise the issue of the need to make sure that those without college degrees, and many with college degrees, have good quality jobs.

• Naked Capitalism points to the lack of action in housing policy.
• Economix discusses gaps in household wealth.
• Mark Weisbrot comments on the sad state of economic analysis.
• Martin Wolfe says Europe’s “Super Marios” need help.

Letting states divert UI funds for other purposes would start the UI system down a slippery slope, even if those other purposes might benefit some unemployed workers, such as providing additional job training.  Among other things, states could replace state or local funds now used for job training or other such purposes with diverted UI funds and then shift the withdrawn funds to other uses, including tax cuts.  The net result could be a reduction in unemployment benefits with little or no offsetting increase in employment services.
…
Similarly, waiving the prohibition against excessively burdensome administrative obstacles would enable states to reduce UI benefit costs and tax rates by making it harder for eligible people to participate in the program — a less overt way to cut costs than shrinking benefit levels or the number of weeks of benefits.
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Finally, the House provision could also allow states to impose new eligibility requirements not directly based on workers’ employment history, such as requiring UI recipients to have a high school diploma or GED.

The Fed’s errors can be placed into two broad categories, the failure to ask the right questions before the crisis, and the failure to act quickly and aggressively enough once the crisis began. The first problem had a lot to do with economists’ undue faith in their own models and abilities – the financial meltdown problem had been solved so no need to worry about that – while the second problem is at least partly due to the way in which the public interest is represented on the Fed.
…
I don’t know how to insulate economists from themselves, every few decades we seem to have the need to declare that we have solved important problems only to be spectacularly wrong, but the representation of the public interest in policy decisions can certainly be improved. That won’t fully overcome the Fed’s tendency to hesitate and take small steps when bold action is needed, but better representation would certainly give more weight to the public’s desire for the Fed to do its utmost to bring an end to the many problems that households face when the economy is operating at subpar levels.

• E.J. Dionne wonders why it is bad to learn from European experiences.
• Fed Watch wonders if the Eurozone is about to unravel.
• Robert Reich argues that Mitt Romney has capitalism upside down.
• Bruce Bartlett mulls the proposal to reorganize the US Dept. of Commerce.
• The Washington Post reports on the state of high-speed rail.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 18,380 initial claims were filed over the previous four weeks, along with an average of 125,385 continuing claims. Compared to the previous four-week period, the average number of initial claims was higher, as was the average number of continuing claims.

One year ago, the four-week average for initial claims stood at 21,747  and the four-week average of continuing claims equaled 139,061.

In recent weeks covered employment has increased slightly and has returned to the 3.73 million level recorded a year ago. Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were almost three years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

Bottom line here is that the benefits of increasingly specialized financial intermediation are questionable, and the role of government in financial intermediation and development is often overlooked. Privatized financial intermediation often means privatization of gains and socialization of losses, as we have recently seen. More critically, though, absent vigorous regulation, it easily dissolves into a system of profit über alles, in which rules of fair play (and we can debate just what those should be) are disregarded as inconvenient. For capitalism to work in a democracy, it is necessary that everyone play by the rules of the game.

• AlterNet debunks the economic principles espoused by Adam Davidson of NPR.
• Crooked Timber rounds up arguments about the ideal length of the work week.
• The Center for American Progress rounds up inequality statistics.
• Nancy Folbre explains the tax system’s marriage penalties and bonuses. 
• Felix Salmon is skeptical of for-profit colleges.

Click here to listen to the 15-minute segment.

• E.J. Dionne points out the need for a debate about capitalism.
• Economist’s View notes that Democrats really aren’t anti-market.
• Jeff Madrick worries about economists practicing politics.
• Paul Krugman says that “America isn’t a corporation.”
• Nouriel Roubini is not optimistic about 2012.

This year is set to be even worse. It is possible, of course, that the United States will solve its political problems and finally adopt the stimulus measures that it needs to bring down unemployment to 6% or 7% (the pre-crisis level of 4% or 5% is too much to hope for). But this is as unlikely as it is that Europe will figure out that austerity alone will not solve its problems.   On the contrary, austerity will only exacerbate the economic slowdown. Without growth, the debt crisis – and the euro crisis – will only worsen. And the long crisis that began with the collapse of the housing bubble in 2007 and the subsequent recession will continue.

Thank you for your interest in the blog.

• Harry Payne describes a “loss of civility” in the NC legislature.
• Jared Bernstein depicts the likely “fiscal drag” on the economy.
• Paul Krugman notes that business success doesn’t qualify someone as a policymaker.
• The New York Times reports on a slowdown in the German economy.
• McClatchy Newspapers reports on the details of the Countrywide Mortgage collapse.

Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 14,777 initial claims were filed over the previous four weeks, along with an average of 118,495 continuing claims. Compared to the previous four-week period, the average number of initial claims was lower, and the average number of continuing claims was higher.

One year ago, the four-week average for initial claims stood at 16,890  and the four-week average of continuing claims equaled 130,453.

In recent weeks covered employment has increased slightly and has returned to the 3.73 million level recorded a year ago. Nevertheless, there are still fewer covered workers than there were in January 2008, which means that payrolls are smaller today than they were almost three years ago.

The graph shows the changes in unemployment insurance claims measured as a share of covered employment in North Carolina since the recession’s start in December 2007.

Both new and continuing claims appear to have peaked for this cycle, and the four-week averages of new and continuing claims have fallen considerably.  Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.

The fact that we have had a job-seekers ratio above 4-to-1 for 152 weeks underscores the crucial need for continuing extended unemployment insurance benefits, which now last a maximum of 99 weeks. There are currently 5.6 million people in this country who have been unemployed for more than half a year, up from 1.2 million in 2007.  As the job-seekers ratio shows, what’s happening is not that millions of workers have become lazy, unskilled, or unproductive; it is that there are not enough jobs available. With the Congressional Budget Office projecting an unemployment rate of 8.5 percent at the end of this year, continuing federally funded unemployment insurance benefit extensions through 2012 would extend a lifeline to the families of millions of long-term unemployed workers, and generate spending that would support well over half a million jobs.

• Robert Kuttner writes about “Obama’s populism.”
• Bruce Bartlett thinks about “the tax gap.”
• Off the Charts looks at the state of state budgets.
• The Wall St. Journal reports on Mitt Romney’s investment career.
• James Surowiecki describes the “year of the yo-yo.”

The concentration of wage‐theft complaints by industry in North Carolina aligns with national trends. Wage theft complaints are more likely to occur in low‐wage industries. Importantly, those industries with the highest incidence of wage theft – retail and home health‐care services –are also among the industries with the strongest job growth in North Carolina.
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As North Carolina’s economic recovery and projected job growth remain concentrated in industries and occupations where the most complaints of wage violations are made, the need for monitoring and enforcement of wage and hour laws will grow.

• Martin Wolf worries about the 2012 recovery.
• The Nation points out five lessons about poverty learned in 2011.
• The NY Times revisits “the myth of Japan’s failure.”
• Free Exchange points out problems with job stats.
• Naked Capitalism takes on “the TARP made money” claim.

Proponents of austerity claim that as nations take control of their finances businesses become more convinced that interest rates will not rise and that growth will resume. Their reasoning has been abetted by the financial markets, which drove up rates on Greek debt and soon enough on the debt of nations like Portugal, Spain and Italy. Should these nations not be able to pay their debts, bond buyers wanted a high enough interest rate to compensate for the risk.
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But this is pre-Great Depression economics. How could the EU so misread history and treat with contempt the teachings of John Maynard Keynes, who argued that during recessions governments must expand economies through spending and tax cuts, not the opposite? In practice, making large-scale budget cuts or raising taxes, as Keynes showed, will reduce demand for goods and services just when an increase is needed. Faltering sales will undermine the confidence of businesses far more than fiscal consolidation will embolden them. By ignoring this, European policy makers will deepen, not solve, the financial crisis and millions of people will suffer needlessly.
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Indeed, austerity economics has not worked in one single case in Europe in the last two years.