Recession Grips the Job Market
Treasury, Fed Policies Aggravating Risks
Peter Morici

Today, the Labor Department reported the economy lost 49,000 payroll jobs in May, after losing 28,000 jobs in April. My published forecast was for a 50,000 loss.

Governments added 17,000 jobs and private sector employment fell 66,000. Businesses have become too pessimistic about the outlook for the economy, and the capacity of the Bush Administration and Federal Reserve to manage it. While exports remain strong, domestic demand is weak and shows few signs of recovering.

Prices of agricultural and non-agricultural commodities are going way up.  George Soros and others claim a flood of speculation by large institutional investors is part of the issue.  But shipping rates are also skyrocketing, which presumably could slow international trade.

The prices of wheat, soybeans and iron ore have surged in the last two years, but that is nothing next to the surging cost of shipping goods like these.

Since mid-2006, a confluence of powerful forces — from a shortage of ships to the seemingly unquenchable thirst by China for raw materials — has sent the world’s benchmark for shipping rates soaring 365 percent.

The meteoric, and at times volatile, course of shipping costs has grabbed the interest of Wall Street and focused attention on the tiny Baltic Exchange in London, where shipbrokers set the price for ferrying goods each day. As the exchange’s Baltic Dry Index of rates hovers near record highs, investment banks and hedge funds are entering the fast-growing market for financial instruments linked to the index.

Importing oil causes rougly 1/3 of our booming trade deficit.  But that's good right?  Because more "trade" is good.  Just like more "trade" with Mexico post-NAFTA is good.  Never mind that it is a spiraling bi-lateral deficit.  We take care of boatloads of problems by dealing with this issue - energy costs, a chunk of the deficit, CO2 emissions, foreign policy quagmires, etc.

Imagine an Eisenhower-like investment in energy, recalling the interstate highway system.  What would it look like?  What could we do if we spent money on smart stuff instead of stupid stuff?

From Rasmussen:  6/5/08 - Obama 43%/McCain 42%

Prior Rasmussen poll:  5/6/08 - McCain 47%/Obama 41%