The 3.5% GDP jump had everyon cheering “recovery is here!”  As Paul Krugman notes in this post, past recoveries show more is needed before we put the recession behind us.

Note the stock market seemed to agree — although let’s not get too tied to translating day to day market changes as strategic signals of anything.

Mark Zandy of Moody’s has this chart. And remember that hours worked per week is at a historic low — about 33, as I recall, down from 44 or so.

Gloomy picture in the UK.  Expecting the 3rd quarter data to show a bit of growth signaling the technical end of the recession, the turnaround wasn’t there as noted by the Telegraph’s economics editor. This despite ‘quantitative easing’ (massive gov’t. spending) paralleling our huge stimulus efforts.  Here’s his chart.

London Times editors note that our economists are having a hard time forecasting — one more worry.

And click to continue to see a British comparison of this recession/depression with others since the 30s. Read the rest of this entry »

The Wall St. Journal’s “Real Time Economics” blog, carries this interactive chart showing the Fed’s balance sheet  — a look at what the Fed has been doing to fight the finance system freeze and our recession.

Here is the blog post with the chart — an example of what the hybrid newspaper can do to use on-line graphics on concert with a printed (and edited!) story.

Source: Dismal Scientist (economics blog)

headed down?

Not necessarily says Washington Post columnist Robert Samuelson — see this sobering column.

His main points:

1. our youngest generations seem to be headed for a worse economic future, partly because
2. health care reform generally transfers resources from the healthier younger to the sicker older.

Samuelson sees signs of overall downward mobility — hitting our young generations hardest and lasting for a generation:

Downward mobility is possible. Expanding health spending would raise taxes (to pay for government insurance), lower take-home pay (to pay for employer-provided insurance) or increase out-of-pocket medical costs. Other drains also loom: higher energy prices to combat global warming; higher taxes to pay for underfunded state and local government pensions and repair aging infrastructure; higher federal taxes to cover deficits and payments to retirees (much of which reflect health spending). The pressures will undermine private living standards and other public services (schools, police, defense).

The young’s future has been heavily mortgaged. Taken together, all these demands might neutralize gains in per capita incomes, especially if the economy’s performance, burdened by higher taxes or budget deficits, deteriorated. One study by Steven Nyce and Sylvester Schieber of Watson Wyatt Worldwide, a consulting firm, examined just health spending. The continuation of present trends would result in “falling wages at the bottom of the earnings spectrum and very slow wage growth on up the earnings distribution. These dismal wage outcomes would persist over at least the next couple of decades.”

See the item below for more on the jobs-health connection.

In our interconnected world everything is connected to everything — that goes double for health care.

So a win in health care reform — more people covered, costs going down — is tied tightly to economic recovery.  That means a jobs recovery.

And that means we’re in trouble.  See this analysis by the Christian Science Monitor — “What will it take to bring back 7 million jobs?”

Here’s a back-of-the-envelope calculation: If jobs could grow at a mid-1990s pace of 3 million a year, it would take about five years. If jobs grow at a mid-2000s pace of 2 million a year, it would take a lot longer.

In the past, steep job losses have often been followed by strong rebounds in jobs. What’s different today is a historic erosion of household wealth: households amassed record levels of debt in the past decade, and then saw the value of homes and stock portfolios tank.

Against this backdrop, economists say the number of jobs needed is more than the government can afford to engineer.

A constant drive to create jobs will be part of the “new normal.”  How can health care reform help — and vice versa?

can I afford this?

Noted on the Truthout site, this McClatchey story reports a Consumers Union study of how people are cutting back on their health care costs.

The Consumers Union survey of 1,002 adults from Sept. 17 to 20 found that among the ways people have tried to cut back on health care costs:

• 28 percent put off doctors’ visits.
• 25 percent have been unable to afford medical bills or medication.
• 22 percent put off medical procedures.
• 20 percent declined medical tests.
• 20 percent skipped filling prescriptions.
• 15 percent took expired medication.
• 15 percent skipped scheduled dosages of prescriptions.

The problems were more prevalent among households with incomes of less than $50,000, in which about two-thirds said they’d cut back on health care because of costs. Even where income topped $100,000, however, about one-third made similar decisions.

Notice how the cutbacks are made by people way up the income scale.

And consider the implications: lowered overall public health, rising taxpayer costs in social safety net services when thoise cutbacks translate into increased sickness and job losses, lower productivity, etc.

Patrick Hagen, CEO of Seattle Children’s Hospital writes in the Washington Post that they’ve actually cut costs and increased quality by attacking “waste.”  Hagen defines waste rather broadly:

…only 5 percent of what we do actually provides value. The other 95 percent? Waste. While this figure may seem absurdly high, waste includes everything in health care that does not directly address a patient’s health. Some waste is necessary: registering patients, keeping records, moving a patient. However, most is unnecessary: errors, waiting time, unneeded complexity and avoidable complications.

Hagen says this “transformational approach is a blueprint for fixing the nation’s healthcare system. He found part of his answer at Toyota, on car-production assembly lines:

Here at Seattle Children’s Hospital, we were burdened by a costly, inefficient health-care model, and we had to look outside the health-care sector to find a way to provide patients better access, better care and better service at lower cost. We found it, of all places, in the automotive industry; the hospital adapted the principles of the Toyota Production System into a program called Continuous Performance Improvement (CPI). Improving overall quality is the goal — reducing waste is the means.

From the beginning, variation in care processes was the greatest source of waste. By standardizing and error-proofing, the quality of care was improved while costs were lowered.

The estimable Robert Fisk reports in the London Independent that a group of nations — the Arab oil-exporting states joined by China, France, Russia, Brazil and others — have been secretly talking about replacing the dollar with a basket of currencies for global oil trading.  OMG to the max for the US.

Fisk notes the ramifications of this self-protective move away from the volatility and declining value of the dollar not only are a blow to the already-reeling US economy but possibly portend increased US-China conflict.

The independent editorializes “the end of the dollar spells the rise of a new order.”

But the significance of this development goes much further. Since the end of the Second World War the dollar has been the bedrock of world trade. The pre-eminence of the American currency flowed naturally from the economic dominance of the US. Virtually everyone traded with America so it made sense to use their currency.

But the US is not the dominant power that it once was. The financial crisis has left it hobbled with significant government and household debts and sharply reduced prospects for growth. Developing nations such as China, Brazil and India, on the other hand, have weathered the economic storm significantly better. So while this latest proposal is born of financial calculation, it is also a reflection of a new economic world order.

Mark this day on your calendar.  If these folks succeed we’re in for another huge blow to our economy — a fundamental reset.  One more reason to get our financial house in order — most especially including health care reform — faster than asap.

Update: Here is the Washington Post following with a useful survey of the pressures on the dollar. This underscores how precarious is our situation.