The Labor Department reported that nonfarm payrolls declined by 54,000 in August and the unemployment rate rose to 9.6 percent. The overall decline was driven by the departure of 114,000 temporary 2010 Census workers and private sector payrolls rose by 67,000.
The increase in private payrolls was more than the consensus estimate of 40,000 and, coming after an upwardly revised gain of 107,000 in July, eased some fears that higher jobless claims might lead to renewed job losses for U.S. companies.
The unemployment rate ticked one-tenth of a percentage point higher due to more workers entering the labor force and the broad measure of U6 underemployment – including those accepting part-time work instead of full-time work and those who have stopped looking for work – rose from 16.5 percent to 16.7 percent.
By category, it was a familiar story in August as the health care industry continues to be a steady source of job growth with a net gain of more than 40,000 jobs and temporary hiring (within the Professional and Business Services category below) bounced back from a modest decline in July with a gain of 16,800.
At odds with the latest manufacturing surveys where employment was seen expanding, the Labor Department reported that manufacturing payrolls were lower by 27,000, the third decline in the last four months.
The biggest losses, however, came from the government sector, all but 7,000 of the net payrolls decline of 121,000 coming from laid off Census workers. State governments saw payrolls decline by 14,000, but local governments added 4,000 jobs.
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[...] Tim Iacono [...]
Much household debt is contractual interest to financial institutions that have been rescued by the taxpayer, and much of this debt is at interest rates that are usurious in comparison to the cost of funds. Consumers are trapped by barriers to refinance (bank approval, redundant and bogus closing costs, negative equity that banks will not mitigate), and yet the Treasury can borrow for 10 years at 2.6% and short term rates are a joke. If you want real stimulus, let the US Government adopt a program of direct refinance of housing with the Fed buying the MBS thus created. Place the rates for USG refi mortgages at 1 to 1.4 percent over the 10 year Treasury, with the difference being used to pay servicers and compensate the Fed for realized losses on higher rate MBS. You expand the balance sheet at the Fed and realize significant rapid deleveraging. Increased household disposable income will provide demand-side stimulus, possible support for housing, and private sector jobs as consumers return to the marketplace. Of course, this deleveraging will affect the balance sheets of GSEs, but we’re on the hook for that already. This kind of action will require some political courage that I’m not certain either President Obama or Chairman Bernanke possess. But it beats the hell out of the financial misery that overhangs this country and threatens future generations.
That argument does not consider the source of govt/Fed funds needed for refi. It must come from increased taxes and/or further currency devaluation. Stimulus is doublespeak for more govt spending and its net effect is the exact opposite. If you want real stimulus, put more money back in the hands of people who figured out how to earn it in the first place. End the colonial wars, eliminate > 1/2 of the govt and allow institutions to fail that actually did fail. That should be more than enough to drop income taxes to zero. This strategy would fade the grab going on in the rest of the developed world and encourage large external investment flows to return. Of course, I’d bet on the former scenario instead.