Prepare yourself for disappointment and political finger pointing.
Analysts at Citigroup are warning customers that the unemployment rate could surge to 10 percent in the coming months, up from the current 7.9 percent.
It’s quite unusual — not to mention refreshing — for anyone in the financial community to make such a daring, negative prediction. Wall Street is the charter member of the everything-is-always-great club.
Tom Fitzpatrick, one of the Citi analysts who made the prediction, told me he’s basing his insight on the recent spike in initial claims for unemployment insurance. The latest weekly claims number is being released this morning.
“Nothing is ever the same in history,” said Fitzpatrick. “But sometimes you see repeating themes.”
And the pattern of recent initial jobless claims figures looks similar to that of the first quarter of 1978. Fitzpatrick says this is an omen that the jobless rate is going to spike.
Fitzpatrick says the four-week moving average of first-time jobless claims is 412,000 — sharply higher than the 360,000 to 380,000 range earlier this year. He says there’s typically a lag of a few months before a spike in these figures shows up in the unemployment rate.
And, he says, you can’t blame Hurricane Sandy for the jump. A storm would have caused claims to drop during the weather activity and rise once people could again get to the claims office — equaling out the moving average.
But remember what I’ve been telling you: The unemployment rate is a terribly flawed figure. It will rise, for instance, if discouraged people suddenly get hopeful of finding a job and start looking for work.
And it will decline if people find they can’t get full-time work, and settle for part-time employment. In that case these workers fall out of the headline unemployment number and are only counted in a less-watched figure called the U-6 by the Labor Department, which will report the November employment figures next Friday.
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How much you wanna bet that the deduction for mortgage interest payments isn’t one of the things changed during the so-called “fiscal cliff” negotiations?
And how much will you wager that, if mortgage interest is no longer deductible, the housing market — which has been as dead as Judge Crater for five years —will go two feet deeper into the grave?
The real-estate lobby, of course, will argue that doing away with this cherished tax deduction will collapse a housing market that is only showing signs of life because investors can’t find anyplace other than real estate to put their money.
And while I don’t often side with the real estate industry, in this case its view would be correct.
I also wanted to mention a funny thing that happened yesterday: The Commerce Department made a substantial downward correction to its new home sales figure for September. That original estimate was released right before the election.
(Let’s see how many more economic numbers get revised downward now that the Obama administration isn’t seeking votes.)
Leave the mortgage deduction alone or there will be huge economic ramifications. And just in case you are wondering, I don’t have a mortgage and do not benefit from this deduction.
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When will the fiscal cliff talks get serious? About an hour after the stock market collapses from worry.
Why will rich people have to pay more taxes? For the same reason Willie Sutton said he robbed banks. That’s where the money is. Everyone else is broke.
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Rutgers will soon become the 14th team in the Big Ten conference.
Fourteen teams don’t equal 10, so a name change is needed. I offered this one before. The realigned conference needs to be called The Bigger Ten. Or the Big Ten+ or the Big Ten Plus Four Other Schools That Need Money.
Glad to help.
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As you probably heard but didn’t care much about, Mary Schapiro is leaving as head of the Securities and Exchange Commission.
I have an idea: Why doesn’t Washington shut the SEC down as part of the fiscal cliff budget talks. Washington will save a few billion and the SEC will no longer have to pretend to be preventing securities fraud.
The SEC can’t file criminal charges; it can just fine people.
And the amount of those fines is too small to prevent big operators from breaking the law. Million-dollar fines don’t work on people making hundreds of millions who might get caught once in a lifetime.
If you can’t throw people in jail and disrupt their comfy lives, you can’t be effective. The SEC is a joke.
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I’d like to update you on the Sears Swindle, which is what I’m calling that store’s successful effort to overcharge me by $150 for a garage-door opener installation.
I’ve mentioned before that I asked Sears to investigate one of its contractors.
I have still heard nothing, although the company did promise me two weeks ago that it would call me back in an hour.
Admittedly, this is micro-economics and not more important than anything else in this column — including naming the new Big 10.
But Sears is pissing me off. And one of the joys of being a columnist is being able to air even penny-ante disputes until the alleged offending party returns a phone call.