Ruminating Out Loud

Based on data from Bureau of Labor Statistics, the following graph was constructed to show the number of states with seasonally adjusted unemployment rate above (red bars) and below (green bars) the national average of 8.1% (as of the February 2009). The numbers on the y-axis indicate the unemployment rate for a given State minus the national average. Twenty states have unemployment rate above the national average with Michigan leading the way at a rate of 12%. On the other hand, Wyoming has the lowest rate at 3.9%.

Unemployment rates for States minus the national average (8.1 %).

Here is another graph, via a reporting from The Boston Globe,  to make sense of the dramatic worsening of the economic climate in the U.S. It shows the month-over-month net change in non-farm jobs, which culminated in the rise of the unemployment rate to a 25-year high of 8.1 percent in February.

The recession as seen county by county, via NY Times. The highest unemployment level is found at Imperial County, California (22.6 %)

Gone are the days when the states are divided between blue and red states. When it comes to what really matters in the lives of millions of citizens, the right distinction to be made is between the red and green states -  those that are financially solvent (green) and those that are not (red) in their ability to continue to provide unemployment benefits. You will notice that this color demarcation does not discriminate between the various states, be they blue or red in their political tendency. It is curious that almost the entire eastern half of the country is in the red.

The proportion of women who are working has changed very little since the recession started. But a full 82 percent of the job losses have befallen men, who are heavily represented in distressed industries like manufacturing and construction. Women tend to be employed in areas like education and health care, which are less sensitive to economic ups and downs, and in jobs that allow more time for child care and other domestic work…”

Via, The Wall Street Journal, below is a  state-by-state unemployment data from the Bureau of Labor Statistics, with year-over-year change in percentage points for December. The west coast, the great lakes region, and the southeast corner seem to be affected the most.

Unemployment data in year-over-year change in percentage points for December

I failed utterly in my attempt to locate it now. It is hidden in the vast confines of the Null Information. It was an advertisement for the city of Chicago. The narrator in the ad says something to the effect of: most cities like to measure growth in charts and graphs. We like to use something more concrete; like concrete. Then, the ad spans through the multitudes of high rises gracing the sky of Chicago that are, needless to say, made of concrete.

Now, you may ask what does that have to do with wealth itself. Well, the answer is concrete. The essential message of the ad that remained stuck with me is the connection made between prosperity and advancement with a more tangible measure of wealth, like the one made of concrete. Starkly contrasted against this message, suddenly I was reminded of the recent news about the big debacle in the stock market which robbed the populace in wealth amounting to $7 trillion dollars within the past year; a presumed wealth and capital on paper that somehow evaporated into thin air. It is bewildering as to how one year a country could be rich by the tune of trillions of dollars (that is half the GDP of the U.S.!), then lose it the next year. Where did that money ginormous money go? How did it seize to exist?

It is the thought about and answers to those questions that brought flashes of that ad flooding back from memory and the desire for a more substantive look into what is the stock market.I have neither the expertise nor the inclination to write a treatise on the working principles of the stock market. Here, I will just attempt to put down my reflections about it and tie it to the message of that Chicago ad and the big debacle.

Frequently, we hear that the stock market went down by this many percentage points and up by another. In fact, it was reported that since Lehman Brothers filed for bankruptcy in September 2008, “the S.& P. has moved more than 5 percent in either direction on 18 days. There were only 17 such days in the previous 53 years, according to calculations by Howard Silverblatt, an index analyst at S.& P.” Well, that may represent an extreme form of fluctuation in recent past, which by itself is worthy of another exploration and will not be covered here. However, the underlying susceptibility for fluctuation is what I find intriguing. Let alone well informed economists, even the lay (wo)men by now know that the U.S. economy is under significant duress. The structural issues that are causing the recession have been gathering strength over the years and will most likely take years to be corrected. During this time period, all sorts of statistics are released every now and then describing the symptoms of a slowed down economy that is in recession. And there goes the stock market wildly swinging all over the  place as if no body knew that unemployment numbers are going to be grim at best, company profits, if any, are going to be significantly curtailed, and dept and bankruptcies rates are going to be rising. Every time a new piece of information comes out describing the illness in the economy, everyone acts surprised and the stock market takes a nose dive. Then, there are also cases of an up swing out of no where that are based on flimsy developments that have little effect in addressing the fundamental problems with the economy; only to be wiped out again at the next announcement of a bad news. That fluctuation and the inherent capability for the stock market to be swung one way or another are what give me grief about it. As a measure of wealth, it is completely intangible and vaporous. I suspect that is also why such an astounding amount of “wealth” can be wiped out in such a short period of time. That leaves one to wonder as to whether the yardstick for measure of prosperity and wealth is misplaced or not. Is the hope of a better future or a retirement age based one a rosy scenario analysis of long term and sustained growth in the stock market completely misguided? I think it is. One only needs to look at the persons who are nearing or at retirement age now and are in desperate need of using the hard-earned income that they have been pouring into the stock market and are finding that it has evaporated. Is it any way for, let alone individuals, for institutions to be relying on and hope to draw their sustainability from the stock market? I think not.

Part of me yearns for more concrete. The stubborn thing about concrete is that it remains where you left it, barring some unforeseen natural disaster, which by the way can potentially be overcome by employing smart building codes. It is there in the good times and bad. It is there in sickness or health. It does not suddenly evaporate one day and seize to exist. It is indeed as lasting a measure of wealth and prosperity as one can get. The Colosseum in Rome, the obelisks in Axum, the Parthenon in Athens, the pyramids of Giza, and many others are historic truths that have proclaimed and shall remain to tell about the state of advancement of a people. The message of that Chicago ad harkens back and, I think, is in desperate need to be applied not just to Chicago, but the U.S. and the global economy at large. Would it not be nice if we had a more concrete way to measure wealth instead of charts and graphs of the latest ups and downs in the stock market? Would it not be great if only we used more concrete? I would say yes!

Here is an interesting statistics about the unemployment rate for workers with different educational background. As of November 2008, the rate among workers with:

College degree or higher: 3.1 %

Without a high school diploma: 10.5 %

(National average: 6.7 %)