The Jobs Report: Solid Growth, But Does Little to Solve Our Economic Malaise

Today the Bureau of Labor Statistics issued the March jobs report.  It shows continued solid growth:  An increase of 215,000 new jobs.  The unemployment rate stayed at 5.0% as more people worked and more people reentered the labor force.  The labor force participation rate is now at 63%.  

The graph shows the percent of the adult population with jobs according to the household survey.  It shows the economic malaise the country has suffered these last seven years. Robert Bartlett tittled his history of the Reagan period The Seven Fat Years.  These have been the seven lean years.

The employment ratio plunged during the recession and continued to fall after its official end (June, 2009.) Jobs data, revised after the NBER called the trough, show that jobs continued to fall into the first few months of 2010.  Jobs growth failed to keep pace with population growth on into 2011.  We really did not see job growth fast enough to outpace population until 2013.

Wichita's Chief Industry

On a less cheerful note, aircraft employment fell by 900.

Dipti Kapadia Asks Whether the Jumbo Jet Era Is Coming to an End.direct flight over vast distances problem.

In the 1960s, Boeing introduced the world's first jumbo jet.  This met two key needs of global travel.  The Boeing 747 could carry 450 people and it could fly vast distances such as crossing the Pacific.  For decades, the only way to connect two cities seven or more thousand miles apart wast a jumbo jet. Over time both 747s and various wide aisle twin engine planes extended their range, but jumbo jets were the only solution to the direct flight over vast distances.

Both Airbus and Boeing project global passenger growth at or near 5% a year for the next two decades. This would require both more available seat miles and airports that could accommodate the growing passenger throughput. Airbus and Boeing made different strategic decisions about how their customers, the world's airlines, would respond to meeting this growth.  Airbus decided the global air carriers would continue their hub-and-spoke systems and overcome the resulting choke points at those hubs by flying a yet bigger jumbo jet.  Thus they committed to building the A380, the world's largest jet, which, in one configuration, can seat 950 people.  Boeing figured airlines would increase their international point-to-point flights garnering more business travel with its higher revenue per passenger mile. thus they bet the company on building the boeing 737 Dreamliner, a largely composite (thus more fuel efficient and less costly) plane with a long range and 350-450 seats.

Who is winning?

in this November 9th, 2015, Wall street Journal video, the Journal's Dipti Kapadia wonders if "The Jumbo Jet Era Is Coming to an End?"







Jet Deals Fall at Dubai Air ShowConcern about slowing aircraft sales has risen in recent months

Wichita Was Lucky to Lose the Tanker Contract

There is little stomach in the West to defend democracy around the world and, as night follows day, those aging republics which constitute the West show little appetite for spending on the weapons of war.

Defense spending is falling throughout the developed world. Prudent firms and metropolitan areas desiring growth will invest in more pacific lines of businesst. There was great outrage in Wichita when Boeing shifted the dwindling jobs for the Tanker contract to Seattle and other cities to satisfy its unions.  Yet when commercial aircraft is waxing and military aerospace is waning, shifting from jobs dependent on defense spending to civilian activity is a sound investment in the future.

Reports from the world of commerce confirm this.  Peggy Hollinger, Industry Editor for the Financial Times, wrote on September 16, 2014 that Airbus will streamline defense and space division by selling or otherwise divesting itself of units.

Doug Cameron and Robert Wall predict in the Wall Street Journal that Boeing may no longer be in the fighter business as orders for F/A-18 run out.  Management shifts toward bombers, drones and trainers. Boeing's revenues from the military side fell from almost 60%  to under 40% over nine years.

As Russia becomes more adventurous and China more assertive, America has grown weary of being the arsenal of democracy.  The capitalists have taken note.

A Different Take on the Two Tier Corporate Jet Market

Michael Stothard, the FT’s Paris correspondent, reports from the Farnborough air show: Business Jets on the Rise (see the 3:51 minute August 13, 2014 video below.) After a 30 per cent fall in revenue following the financial crisis, the global business jet market is pulling out of its dive.  But as he explains in his article, there is a big difference between the market for big expensive jets and smaller ones.





Big Birds, Little Birds 

What lies behind the more horrendous drop in small plane demand (down 56%) and their continued weakness? I would argue it is yet further evidence of the root causes of America's weak recovery. The large corporations, the Fortune 500 and the next rank down have been very profitable and have gained enormously from the loose monetary policies of the Bernanke and Yellin Fed. Smaller firms have not fared well and the business climate is definitely hostile to unglamorous start-ups. Big Corporate America is buying big jets. The smaller guys are either not starting up in the first place (for the first time since the statistics have been kept more business went out of business than started up) or they can not grow to the point where a small plane would be cost effective.

In a recent Economist interview, President Obama disputes

Jet Blue Speaking Arabic?

FlyDubai Sets Out Stall with Boeing Binge

Boeing was a big hit at the Dubai Airshow, but it was not just 777s that it sold.  FlyDubai committed to buy up to 100 737 MAX 8 airplanes and 11 Next-Generation 737-800s (Boeing's single-aisle jets.)  Presumably much of these will be made here in Wichita by Spirit AeroSystems. Hubbed in Dubai like Emirates, FlyDubai's strategy is as a low cost, shorter haul flight airline as it tries to capture destinations (particularly in the Arab/Muslim world) currently not being served by Emirates Airline, the regional powerhouse. 

In this video, WSJ's Rory Jones looks at where the company is headed and what might be some of the challenges it faces:


Photo: Getty Images

What Is the 777X and Why Are the Unions Upset?

 Boeing launched its newest version of the 777, the 777X, at the Dubai Air Show yesterday (Sunday.) The 400 seat twin aisle plane is its response to Airbus's A350. Jon Ostrower gives us a peek at the plane in this Wall Street Journal video:




The 777X is the center chessboard in a match between Boeing and its unions. Boeing had built a huge new plant at the cost of a billion dollars in South Carolina. Just as it was to open it, its union brought a complaint against it before the NLRB that claimed Boeing built the plant to break the union.  With the help of a friendly NLRB, the union was able to reach a settlement with Boeing that shifted certain work to Seattle, including some from Wichita.

Now it is Boeing's move.

When it came to deciding where to build the 777X, Boeing's last big development project, it presented a deal to the State of Washington and its union with which it would build most of the 777X in Seattle.  The state offered $8.7 billion in incentives (that is a lot of money.)  It proposed a new contact to the union that would shift to a defined contribution pension plan among other concessions. However, "the 32,000 unionized members of the International Association of Machinists and Aerospace Workers, also known as the IAM, rejected the deal by a 67% to 33% margin."  With no deal, Boeing is looking around the country and the world to decide where to assemble the new jetliner and build the wings and other parts.  Molly Mullins reports in the Wichita Eagle that there is an attempt to get some of that work here in Wichita. She reported that "Greater Wichita Economic Development Coalition officials met Thursday morning to discuss going after the 777X work for Boeing’s facility in Wichita Boeing."

Read more here: http://www.kansas.com/2013/11/14/3117036/local-machinists-voted-along-with.html#storylink=cpy

Boeing says it will decide where to build the plan in the next two to three months.

Boeing Hits a Home Run With the 777X

At the Dubai airshow, Boeing launched its 777X Largest and manage the biggest launch in commercial jetliner history with over 200 orders. Emirates Airline placed a $76 billion order for 150 of the new 777X jets. In this video, the Wall Street Journal's Rory Jones reports from Dubai.

Airbus Cracks the Japanese Market

Airbus wins first ever Japan Airlines order worth $9 billion.

Three U.S. based scientists win Nobel Prize for Medicine.

Nielsen launches TV Twitter ratings.

White diamond fetches record $30.6 million at auction. Joanne Po reports.

The Paris Air Show

What's big at this year's Paris air show? 

Bloomberg's Guy Johnson sees the show as a battle of the "wide-body" planes: Boeing's Dreamliner versus the Airbus 350.  With Airbus pushing Boeing for market leadership in the twin engine aircraft market, might that mean a price war?  On June 17th, Andrew Parker reported:
Just days before the show begins, Airbus held a public test flight of its new A350. EADS confident on profitability goal 4:46 PM From the Paris air show, EADS chief executive Tom Enders tells the FT's Andrew Parker he is confident that the group will hit its profitability targets.  Enders is bullish on the A350:

Is Boeing worried?  CEO Jim McNerney tells Bloomberg's Betty Liu he welcomes the challenge.  Boeing took orders for the 787-10, its biggest version of the Dreamliner. 

How Airbus Makes Wings

Last December 21st, FT manufacturing editor Peter Marsh visits the wing factory of Airbus/EADS at Broughton in north Wales. There he learns how the factory works on a process of continuous innovation in technology, and he assesses the impact on skills and jobs across the UK:

 

 

Would Alan Mallay Use the Verb, "Witchhunt?"

Boeing's 787, the Dreamliner, has been grounded worldwide because to fire worries with the lithium ion batteries used in it. According to the Economist's Schumpeter blog, the grounding "follows a string of safety problems, including two fuel leaks and an electrical fire aboard a domestic flight that required an emergency landing. There is particular worry about the potential for the plane’s lithium-ion batteries to catch fire."  Moreover the blog also quotes Sandy Morris of Jefferies who "points out that Airbus’s A350 (a forthcoming rival to the 787 which is already more than a year behind schedule) uses lithium-ion batteries like the ones suspected of causing some of the 787’s problems. So if they are to blame, the A350 programme may suffer too."

Jon Ostrower and JoAnn S. Lubin wrote in yesterday's Wall Street Journal that two very high profile CEOs have their names very firmly attached to the Dreamliner: Ford's Alan Mullay and Boeing's Jim McNerney, chairman and CEO since July 2005.

They write that in the summer of 2005, Boeing "hired Mr. McNerney as CEO, succeeding an interim chief after Mr. Stonecipher, who had resigned suddenly because of an affair with a subordinate. A short while later, Mr. Mulally, who had also been a contender for the CEO job, left.
"Boeing soon stumbled as a string of supply-chain and design delays pushed back delivery of the Dreamliner by 3½ years. 'We are trying to witch-hunt the issues in this program right now,' Mr. McNerney told investors in October 2006 as the problems became apparent."

I find it hard to believe Alan Mallay would have said that.  "Witch-hunt" does not sound like a word in his vocabulary.  In American Icon: Alan Mulally and the Fight to Save Ford Motor Company, Mullay's biographer, Bryce G. Hoffman, describes how he used the same techniques to turn Ford around that he used in managing projects like the 777. He built teams with his weekly "war room" meetings that thrived on a culture of both trust and accountability.  Hard bitten, cynical Detroit executives took his "aw shucks" Midwestern manners for weakness.  That did not last long. Those veterans of cutthroat corporate politics soon learned to either cooperate and be up front or play their political games somewhere else.

It would be interesting to learn how McNerney's management style differs from Mullay's.  It would be interesting to learn which style works better across the teams of engineers and managers from Boeing and its suppliers.

Hiring McNerney from the outside was forced on Boeing by the Department of Defense after successive scandals.  Military work is the other half of Boeing's business.  Such government induced changes in management can have unforeseen consequences.  Think of AIG after New York State's Eliot Spitzer forced Maurice R. Greenberg out in 2005.  It is hard to imagine Greenberg letting his trading desk get as out of hand as his successor did.  The subsequent near collapse of AIG and its bailout are now history. 

In this video from January 24th, Ostrower tells the Journal why both McNerney and Mulally have much at stake:




Spirit, as a big supplier of the Deamliner, is of course vulnerable to the plane's troubles.  we here in Wichita hope for a speedy resolution.

America's airfleet getting long in the tooth.

Carol Massar on Bloomberg TV reports the America has the oldest fleet of commercial aircraft:



The video was on Bloomberg Television's "Bloomberg Rewind," January 18th.

Nov 13 2011: Boeing Hits it Big at the Dubai Air Show.

Andrew Parker reports from the Dubai airshow that Boeing has won its largest order (estimated at $26bn) in its 95 year history. (The video runs two  minutes and 20 seconds.) Emirates Airlines bordered 50 B777s.  This came on top of a big order on Monday.

From the show, Parker also analyses the ascent of Emirates, Qatar Airways and Etihad amid allegations of state subsidies.  (This video runs four  minutes and 17 seconds.)

A Dismal Employment Report, But Hope for Wichita

Unemployment Rate Up, Job Growth Nil

The Bureau of Labor Statistics issued its monthly labor report this morning.  The unemployment rate was 9.18%.  It is up for three straight months now.  The establishment survey showed only 18,000 new jobs, a number so small, it is noise.  No sensible statistician would reject the hypothesis that June's job growth was zero. May's strong job growth was even revised downward. 

The Long Slow Slide

Reviewing the data for the last year is even more depressing.  Although the establishment survey shows a growth of over a million jobs since June, 2010, the household survey shows only about a quarter million more working now than then.  That is a big discrepancy and bodes ill for the next big establishment data revision.  More depressing still is the trend in the ratios of jobs to the population.  This statistic is immune from oddities in Washington's population estimates.  The proportion of the population working appeared to have bottomed out in January, 2010 at 58.23, but now hit a new low in June, 2011 at 58.18%.  

The unemployment rate peaked at 10.15% in October 2009.  The bulk of the improvement since then came from a fall in the number looking for work (i.e., a fall in the labor participation rate.)  The economic distortions caused by the credit boom of the middle of the last decade continue to drag on growth.   Housing starts have averaged a little over a half million for more than two and a half years.  Unemployment in construction is at 15.6% despite a slowly shrinking labor force.  Conventional economic stimulus is poorly equipped to cure such distortions.

But Is Aerospace Up!

Amid all this gloom, there is good news for Wichita.  Manufacturing employment is up nationally.  Moreover manufacturing jobs are up about a percent and a half over a year ago.  

Digging under the published numbers in the BLS report, it appears aerospace employment is up by a thousand jobs in June.  This comes after a great Paris air show for commercial aviation.  Over $90 billion in orders were placed for new planes.  This is good news for Spirit.  Even general aviation is showing glimmers of life.

Wichita's Unemployment Rate Falls Compared to Last Year

The Kansas Department of Labor gave us new evidence that Wichita is continuing on its slow road to economic recovery.  Dan Voohris reported in the Eagle, "The unemployment rate in the Wichita area fell in February to 8.4 percent from 8.7 percent in January, according to the Kansas Department of Labor.
It was also below the rate of 8.9 percent in February 2010."   It is prudent to compare the new data for February with February a year ago since the data have a strong seasonal swing.

Voohris quoted Friends University finance professor and Mammon Among Friends blogger, Malcolm Harris, as saying, "'We're seeing a trend, and that trend is in the right direction'...But, he cautioned, 'we've got a long way to go.'"

This theme was taken up by the Associated Press.  Referring to Wichita, the wire service reported: "The falling unemployment rate in Wichita shows an improving jobs trend in this aviation manufacturing hub that was hard hit by the economic downturn."

Dan Voorhis found evidence that the demand for temporary workers has been strenghthening which is often a harbinger of increased demand for permanent workers.  From the Arnold Group's Phillip Hayes, Voohris learned that in February hours worked by temporary workers were up 85 compared with a year ago. "Demand started to increase in April and continues to do so." He learned from Hayes that "The conversion of those temporary workers to full time, though, is just beginning."  Naturally enough, "Employers are reluctant to convert temps to regular employees in case demand drops."  

Particularly encouraging is that Hayes "is seeing the strongest demand for manufacturing workers."  Is that a further sign that the aircraft industry is reviving or might this be a sign that other sectors are taking the lead?  The data are not telling. Boeing and Airbus have both increased their production rates for their single aisle mainstays.  Nationally aerospace employment has gone up more often then not these last eight months. While that may be a straw in the wind and the wind seems to be blowing in the right direction, but it is a pretty wimpy breeze by Kansas standards.

Boeing Co. unveiled its new 747-8 passenger jet

Feb. 14 (Bloomberg) -- Boeing Co. unveiled its new 747-8 passenger jet to customers, employees and investors yesterday in Everett, Washington. Boeing has targeted the end of March for the first flight of the aircraft, which it calls the Intercontinental. Bloomberg's Maryam Nemazee reports in this video:

Related Story:

• Boeing 747-8 Passenger Jet Gets Lift Toward Delivery From Freighter Tests      

The "Scarbus" 380: Rolls Royce Engine Explodes Forcing a Quantas Jet to Land In Singapore

Quantas Grounds its A380s

Airbus touts the A380 as the plane of the future. In this News Corp. video you can see the first Qantas airbus A380 touch down in Sydney, October 2008:

Quantas is quite proud of its safety record. What other major airline can brag of never having lost a jetplane? Keen on keeping that reputation, Quantas grounded its A380s after the emergency landing of its "scrabus" flight QF32.

According to News.Com.Au "Qantas made it clear it will keep its six superjumbos grounded indefinitely and has rearranged flight schedules using substitute aircraft.

"'The specific checks mandated by the directive were already being carried out by Qantas in conjunction with Rolls-Royce,' it said.

"'Qantas's A380 aircraft will not return to service until there is complete certainty that the fleet can operate safely.'"

Thus the planes of the future is having problems in the present.

News on Airbus's big one, the A380, first. Singapore Airlines found oil leaking from its Rolls Royce engines (courtesy of News Australia):

And yet more on SKYNews:

The Fallout for RollsRoyce:

In the Financial Times, Pilita Clark, its Aerospace Correspondent, reports "Rolls-Royce is preparing to cannibalise several half-built A380 superjumbos on production lines to obtain more than a dozen new engines to help its stricken airline customers such as Qantas.

"The engine maker has taken the rare step of negotiating with Airbus, the A380’s manufacturer, about raiding engines from three or four superjumbos due to be delivered next year from its Toulouse and Hamburg assembly plants, according to people familiar with the situation."

In an FT video, Pilita Clark, explains how the spotlight will now fall on Rolls-Royce, the maker of the engine.

Business Jets and Elections

Molly Mullins reports on a talk by Michael Scheeringa of Signature Flight Support, which operates 103 fixed base operations around the world. At the today’s Wichita Aero Club meeting, Scheeringa reassured her that “It’s a very resilient industry.”  She blogs, "The good news is that the market has begun to recover, although recovery has been muted.


"But Fortune 200 companies are flying as much today as they did in 2008, he said. It’s the small business owners who are not using business aviation as much."

That sounds like good news, but we need to see the orders before we know the rebound is truely here. Wichita needs a business jet revival.

Furthermore, she relates his judgement that "The political climate has caused uncertainty in the tax structure of smaller businesses. And that leads to uncertainty about income and generates a lack of confidence." Moreover, "That lack of confidence impacts the business aviation industry in Wichita and elsewhere."

Which brings us to the mid-term elections. The pundits are predicting big Republican gains, perhaps recapturing the House, picking up a half dozen Senate seats, and assorted governorships and state ledgislative seats. The latter is especially important given the redistricting that follows the decinimal census.

The economy hit bottom in June, 2009, but the unemployment rate is actually above where it was at the trough. Economic growth ahs resumed, but Americans are still mired in misery.

Comes November 2nd, the President will be blamed.

But is it just?

President Obama campaigned on the need to fix the economy. That created expectations among the voters. Not surprisingly, the voters wanted those expectations to be met.

What happened?

The nation's economic problems were essentially long term in nature (huge and chronic trade imbalances, lack of domestic saving, misallocated resources from the credit boom.) Yet the President focused on short term solutions: fiscal stimulus. Worse, he delegated the job of designing the solution to Congress.

Then, with the economy being far from fixed, the President switched his priority to changing the health care system and its financing. Reallocating resources for a sector equivalent to 17% of the whole economy (four times the size of the auto industry) predictably set off a debilitating dog fight between the winners and the losers. To make matters worse, the President delegated the design to Congress.  Will Rodgers once predicted that "no one's wallet is safe when congress is in session."

If voters are angry with the President's economic policies, their anger is understandable.

After they express that anger on November 2nd, the President should address the source of that anger and ask the American people for a second chance. He should warn them that our problems are long term and there are no quick fixes. We must realistically face America's secular economic decline before it is too late and put forth the painful policies that will reverse our strategic decline. The tea party activists who are focusing on the size of the federal deficits have unwittingly brought to fore a very real problem. The U.S. can only use deficits to attack weakness of demand if the dollar remains the world's reserve currency. And the more it uses the deficits to stimulate the economy the closer we are to losing the dollar's reserve status. When foreigners stop taking our dollars, our options close and we start looking more like Greece and Spain.

Moreover, without significant policy changes there is a very real threat in the medium term. The perceived erosion of the rule of law (think of the treatment of GM's bondholders), the costs of the healthcare system reengineering, and the prospect of tax hikes if the Bush tax cuts expire have eerily recreated the conditions of 1936. These set the stage for the Roosevelt recession of 1937. We avoided the financial collapse that trasformed the recession of 1929 into the Great Depression. Now we have recreated the conditions for the 1937 recession, a recession whose severity was exceeded only by the contractions of 1929-33 and 1920.

President Obama should take advantage of his party's upcoming defeat to embark on a new program of economic leadership.

Economic Update: Wichita and the World

1) The world economy is eighteen months into an economic recovery. The U.S. economy lagged six months behind. Employment lagged another six months behind that and Wichita lagged yet further behind.  The most recent news is mixed.  the Commerce Department reported Housing starts were up.  Alan Rappeport writes in the Financial Times that "That was stronger than economists expected and marked the third month running that starts increased."  The Fed reported that September industrial production was down.  Rapeport tells us that "US industrial production fell for the first time in more than a year last month."

2) The U.S. unemployment rate is still at 9.5% reflecting the enormous dislocations caused during the bubble years of 2004-7. The administration's two top economists Larry Summers have retreated to academia.  CNN interviewed Peter Diamond the new Nobel Laureate who seems to see it differently.  He told CNN’s Fareed Zakaria GPS: "The central focus of the problems in the economy right now is not that the labor market is working badly but the demand for labor is way down. ... I view the US economy as extraordinarily adaptive . . . I expect the economy to adapt this time as well."

3) Wichita and Kansas are seeing signs of recovery. Wichita's August unemployment rate at 8.2% is down a percentage point from a year ago. (August is the worst month each year.) For four straight months we have seen an improvement over the year before. A new state study shows job openings up and up relative to the number out of work. The Kansas Department of Labor reported, "There are more job vacancies in Kansas this year than last year, according to the 2010 Job Vacancy Survey. The survey, completed by employers during the second quarter of 2010, found there were an estimated 32,091 job vacancies statewide. This represents a 24.5 percent increase in vacancies from 2009." World trade is vital for Kansas and the world economy is pulling up the Kansas economy.

4) As for the aviation industry, it is a three legged stool: commercial, military, and general aviation. Commercial aviation is reviving. The lessors are back. The other two legs are weak.  Most countries are cutting military spending around the world. General aviation (business jets and private planes) is still in a big slump.

5) The business aviation industry has its big show in Atlanta while we speak. In connection with that, Honeywell's new forecast shows a 10% increase over the next decade, but tough slogging over the next two years. For 2010, Honeywell Aerospace estimates deliveries of 675-700 new business jets, down 16-17 percent from 849 in 2009 mainly due to continued global economic weakness as well as overarching concerns about government debt, austerity programs, export growth, financing costs, and general availability. Rob Wilson, President, Business and General Aviation, Honeywell Aerospace said "The industry should begin another period of expansion by 2012"  Molly Mullins reports on Hawker's new business jet, the 200 and on Cessna's new version of the Citation, the Citation X.

6) Hawker-Beechcraft's two lines of business are military and business jets: not a pretty picture. Kansas has put together a package to keep it from moving to Louisiana, but the union has now rejected the firm's proposed labor contract. This cloud remains over our economic horizon.

Wichita's Unemployment Rate Rises Seasonally to 8.4 Percent; GDP Grows at 2.4 Percent; and Europe's Mercedes Reves Up

The Stock Market Falls Again

Here it is Friday afternoon and the U.S. Stock Market is down some more after a 144 point plunge yesterday. The Fed of Philadelphia's activity index took a dive and new claims for unemployment jumped over a half million. That latter is one statistic economists do not want to see rise and it is one of the Conference-Board's leading indicators. Yesterday's plunge turned a nicely developing  global rally into a global route.

Markets have been particularly spooked since the Commerce Department issued its GDP report a week a go.  The economy grew at a 2.4 percent rate in the second quarter.  This was seen as lack luster growth.  However the deceleration was not due to a lack of demand but to an over appetite for imports.  Real, domestic final demand grew at a 4 percent annual rate.  More economic stimulus would further aggravate our current account balance.

Its Bureau of Economic Analysis revised the last two and a half years of national income accounts estimates showing, as I expected, that the recession was deeper and the recovery stronger than previously reported.

Good News From Germany

The global rally had been fueled by news that the Bundesbank had increased its forcast of German economic growth. Germany is the Eurozone's engine. Moreover the strength in the world economy is reflected in the new resource M&A boom according to Javier Blas and William MacNamara in the Financial Times. They report, "The rise of China and India has sparked a renewed surge in aggressive dealmaking in the resources sector, with more than $50bn in proposed take­overs this week alone wagering on continued strong commodities demand."

The American stock market is focused on the possibillity of a "double-dip recession."  As I said yesterday, "I don't see a double-dip recession, either here or nationally...It's too late for one to start. They need to happen within 12 months."  We had a  double dip recession in 1973-75.  The economy fell in response to the oil shock of the arab oil embargo.  The economy recovered in the first half of 1974, but as inflation artificially inflated manufacturing order books, firms soon found their perceived demand to be ephemeral.  Industrial activity plunged after June in the "second dip."  The recession of 1982 followed closely (fourteen months) on the heels of the 1980 reession leading some economists to argue it was really one double dip recession not two separate recessions.

There real recession threat for the U.S. is more medium term.  When tax hikes and the supply side effects of the new health care legislation hit in 2011 and 2012, we could see something like the "Roosevelt Recession" of 1937-38.

Wichita's Good Bad News.

Dan Voorhis of the Wichita Eagle reported, "The July unemployment rate in the Wichita area hit 8.4 percent — worse than June, but much better than the 10.3 percent in July 2009."   That compares with 8 percent in June.

The rise is seasonal.  As Voorhis points out, "The unemployment rate typically rises in July as thousands of students and school staff enter the work force looking for jobs."   Chris Moon in the Wichita Business Journal notes that "metro [Wichita] had 26,669 people who were out of work, up from 25,184 a month ago."

To look past the seasonal effects, compare July's unemployment rate to the same month in 2009 (10.3%.)  That is a big drop.   This is the third straight month that the unemployment rate improved compared to a year ago and that provides grounds for optimism.   The Eagle quotes this Friends University professor as seeing "encouraging economic trends that will soon translate into better employment.  'I can see the unemployment rate in the fall closer to 7 percent than where it is now.'
[and the] strength in commercial aircraft construction and a general demand for Wichita-made products in other parts of the globe.."

Kansas

Seasonal factors drove the state unemployment rate up for July to 6.9 percent.   Kansas Department of Labor economist Tyler Tenbrink said "Kansas continued to see steady but slow job growth in July. An increase in goods producing jobs, like construction, are very important. We are still seeing a decline in some service providing jobs, like information services and financial activities. A bright spot this month within those declining industries was administrative and support services, which includes job placement services for temporary workers. We are particularly interested in job gains in this area because employers tend to use these services before hiring permanent workers. This industry saw its first over-the-year job gain since June 2008, a positive indicator that we may continue to see growth in other industries in the coming months."