The What Me Worry Presidency - Deficit? Debt? LOL & SW

The President's Fiscal 2013 Budget and broken promise on the deficit...
February 23, 2009: “today I’m pledging to cut the deficit we inherited in half by the end of my first term in office.”
February 14, 2012: "a lot of us didn't understand how bad it was going to get."

Steve Jobs on Obama, February 10, 2010...
"The president is very smart, but he kept explaining to us reasons why things can't get done. It infuriates me."

Increase In Spending, GDP, National Debt, and Deficit, Since 1999

Increase In Spending, GDP, National Debt, and Deficit, Since 1999

Tomorrow the 2012 Federal Budget is revealed. To help forecast what this will mean for the economy and the stock market, take a peek at the Figure above. The US National Debt (in blue) shows what is called "hockey stick" behavior, i. e., a sharp change in slope upward, which occurrs at the start of 2009 and continues at an accelerated rate or slope, as compared to calmer period 1999-2008.

The GDP, on the other hand, starting in 2009, pretty much runs into a brick wall, leveling off and nearly ceasing its previous steady upward climb from 1999. Most important however is the behavior of the Deficit (black line) which shows "hockey stick" on steroid behavior between 2008 and 2009, rising almost vertically.

The deficit jumped from averages of about $300-$400 billion 1999-2008, to current levels of $1300-$1500 billion, nearly tripling in value from 2008 to 2009. This is what drives the blue curve (National Debt) through the roof. The word is that the new budget tomorrow projects a 2012 deficit of $1.5 trillion, matching the highest levels since the Great Recession. Follow me on abelesnik.blogspot.com for discussion, economic predictions, and more charts and graphs on the economy, plus some Shakespeare quotes.

Top 10 Spending Pgms As % of All Spending, Since 1999

The President's budget for 2012 was released this morning, so it is appropriate to review where all that money is being spent. The top 10 budget items are shown in my below blog, as a percentage of total spending, for the years 1999-2011. This is also available to be viewed as a percentage of GDP, if you look on my blog, abelesnik.blogspot.com. (You can follow me on the  blog by going there and clicking on the "Follow" and or" Subscribe"  box).

Some things are worth noting about the way government spends, since there are some surprises there, and often the conventional understanding may differ from the actual facts, as follows:

1. Social Security (since 1999) has actually been decreasing as a percentage of all spending! However, as a percentage of GDP, Social Security has been flat through 2008, and then jumped up significantly in the last 3 years. Probably a lot of baby boomers retiring in the face of the bad economy. But it safely can be said that growth in Social Security, while it is about 20% of the spending (like Defense) is  NOT the big budget problem.

2. Interest on the debt, as a percentage of spending and also GDP, has FALLEN to halfl of the percentages in 1999. In real dollars, the interest on the debt has stayed at about $200 billion per year (5% of all spending).  We have to thank Ben Bernanke for low interest rates for this. This is a dangerous item, because when the economy recovers in about 2 1/2 to 3 1/2 years from now, interest rates will go back up, and then interest payments on the debt will double or triple or more. But again, interest on the debt is far from dangerous levels, and  not a big budget problem.

More to come.

Top 10 US Spending Pgms As % of GDP, Since 1999

State By State Trends In Unemployment: 3 Years At A Glance

State By State Trends In Unemployment: 3 Years At A Glance

The above chart updates a previous chart by adding BLS data from December of 2011. This allows observation of a possible trend in unemployment on a state by state basis, from the peak of the Great Recession, to January 2011, to December of 2011. During this period the national unemployed rate decreased from a peak of 10.1% in October of 2009 to the current January 2012 value of 8.3%.

North Dakota, South Dakota, and Nebraska continue to lead the nation with the lowest unemployment rate, about 4%, having also improved slightly over the course of 3 years since 2009. Michigan shows the greatest improvement, going from about 14% to about 7% in 3 years. Idaho, Illinois, Washington DC, Missouri, and Montana show signs of  retrograde progress, showing somewhat worse unemployment in December of 2011 than in January of 2011.

Unemployment data seems to be based on the number of new applications for unemployment insurance, and not on the total number of people unemployed and either looking for work, or not looking for work. There doesn't seem to be any accurate data around for how many people are actually unemployed. So any presentation of this lack of data seems useless.

One Look Tells All: Unemployment State By State

One Look Says All: Unemployment State By State

The nearly universal buzz one hears these days is that both  the economy and the most important human number – unemployment - have been getting better. Have they really? Examine the record, using the below Wall Street Journal URL as a source:

http://online.wsj.com/article/SB10001424052748704823004576192642637364416.html

Extracts from the above link are displayed in the below plot, showing 1) (red line) the highest unemployment, by state, in the last 2 years (Jan ’09 to Jan ’11), and 2) (blue line) the current unemployment as of Jan ’11. Table of data also provided below.

What can we learn from this plot? Well, it turns out that fully ten states have less than 0.1% improvement over their worst case in the last 2 years. Moreover, four states actually are in worse shape in Jan ’11 than their worst case in the 2 years prior. Arizona, Arkansas, Colorado, Georgia, Idaho, Montana, New Mexico, Texas, Utah, West Virginia. That’s 20% of the states!. From an eyeball perspective, an improvement would look like a blue line consistently inside the red line. This is not what is seen. Hence the title: The “Improved” Unemployment Picture Is Unsupported By The Data

The National Bureau of Economic Research determined that the recession that began in December 2007 ended in June 2009. It is oft repeated (and true) that if one were to derive the unemployment figures the same as during the Great Depression, then the true rate would actually also be at Great Depression levels, i. e., 17% - 25%. But the Bernanke-Obama-Geithner nobless oblige bureaucratic intelligentsia cannot and will not acknowledge this. Because that would only hasten their own entry in the unemployment rolls.

The past election spoke in very loud volumes, but apparently loud enough neither for John Boehner, nor Majority Leader Eric Cantor, who are so frightened of the political consequences of a government shutdown that their ears no longer work. And Obama, who has bigger ears than any former president, is stone cold deaf on this. A tsunami of noise is coming in November 2012. The whistle on the Tea Party Express is the warning.

Are the States Doing Better Lately On  Unemployment?        Comparison (By State) of Highest  Unemployment In 2 yrs With Current (Jan '11)

 

Table: Highest Unemployment Rate (%) From January 2009 To January 2011, By State

	Highest 1-09 to 1-11	Jan '11			Highest 1-09 to 1-11	Jan '11			Highest 1-09 to 1-11	Jan '11
Alabama	11	9.2		Kentucky	10.9	10.4		NDakota	4.4	3.8
Alaska	8.5	7.5		Lousiana	8.2	7.9		Ohio	11	9.4
Arizona	9.7	9.6		Maine	8.3	7.5		Oklahoma	7	6.6
Arkansas	7.8	7.8		Maryland	7.9	7.2		Oregon	11.6	10.4
California	12.6	12.4		Massachusetts	9.5	8.3		Pennsylvania	9.3	8.2
Colorado	9.1	9.1		Michigan	14.5	10.7		Rhode Island	12.7	11.3
Connecticut	9.2	9		Minnesota	8.4	6.7		SCarolina	12.5	10.5
Delaware	9.2	8.5		Mississippi	11.6	10.1		SDakota	4.9	4.7
WashDC	12	9.6		Missouri	9.8	9.6		Tennessee	10.9	9.5
Florida	12.3	11.9		Montana	6.2	7.5		Texas	7.8	8.3
Georgia	10.5	10.4		Nebraska	5	4.2		Utah	6.6	7.6
Hawaii	7	6.3		Nevada	14.5	14.2		Vermont	7.2	5.7
Idaho	7.9	9.7		NewHampsh	7.1	5.6		Virginia	7.3	6.5
Illinois	11.5	9		NewJersey	10	9.1		Washington	9.5	9.1
Indiana	10.6	9		NewMexico	8.8	8.7		W Virginia	9.5	9.5
Iowa	6.9	6.1		NewYork	8.9	8.3		Wisconsin	8.9	7.4
Kansas	7.2	6.8		NCarolina	11.2	9.9		Wyoming	7.6	6.3