Bedrock: Killing Detroit Since 2010.

[mwilbert]

Too bad the average American [[not just the uber-wealthy or retired seniors) need decent paying jobs to survive. Those have been virtually extinct in Michigan for the last decade or so, unless you're lucky enough to be directly hired by a Big 3 Automaker and survive their cyclical mass layoffs.



We'll have to agree to disagree there. The rest of 1st quarter earnings will be coming in this week, but I did hear that GE recorded a $13 billion dollar lost for the 1st Quarter. That's certainly not what I would expect from a huge multinational company in now a 5 year economic recovery.

Also, credit application rejections have reached unprecedented levels in the last few months, surpassing the amount of rejections we saw prior to the 2007-2009 recession. That amount of liquidity tightening almost always signals a recession.

Not to mention we probably still haven't seen the full blow out of the oil crash. 100,000 job and counting have been lost so far, and again the 1st quarter earnings have yet to come out [[which will probably be a blood bath in that industry).

If I were a betting man, 2015 is going to be the beginning of a rough couple of years, and based on the fact that we never did recover much from the last recession [[considering that debt, wage and labor participation/employment numbers are still as bad as they were during the peak of the last recession), there's no doubt it's going to be worse.

There are a lot of things that are misleading or incorrect in here. Michigan has actually added a ton of jobs since the bottom of the recession, probably something like 250,000 of them. They aren't all ill-paid. Wages have risen slowly, but they have risen, and debt levels are much lower than they were at the bottom. There are different ways to look at it, but I would suggest this graph https://research.stlouisfed.org/fred2/series/TDSP is illustrative. GE made an operating profit of $2.8 billion in the first quarter; it showed a loss on the sale of its financial business, which isn't really any kind of indicator of the health of the economy.

Anyway, the great thing about predictions for this year is that we will know the answer in less than a year.

[313WX]

Michigan has actually added a ton of jobs since the bottom of the recession, probably something like 250,000 of them.

Yes and no.

Although 250,000 jobs have been created since the last recession, nearly 1 millions jobs were lost during the last recession. So we're still at a net loss. It would take at least another 5 years of this same tepid rate of recovery to get back to where we were before 2007-2009, let alone back to the era of "money growing on trees" during the 1990s.

This is assuming no additional increase in the size of working-age adults, no further offshoring/outsourcing of jobs due to cost cutting and no additional recessions [[which would all be unwise assumptions to make IMO).

They aren't all ill-paid.

Well sure, not ALL of them are ill-paid. Not ALL politicians are crooks either.

The issue is most of the jobs lost during the last recession WERE good-paying and secure with benefits, while most of the jobs that have been created in the wake of the last recession have been insecure and low-paying with no benefits.

Remember American Axle and Manufacturing? At one time, thousands of very happy UAW workers earning $20/hr+ with Cadillac health care benefits worked at their HQ in Hamtramck [[because actually AAM was once a subsidiary of the once largest company in the world, General Motors). When the bottom fell out in the 2007-2009, instead of negotiating a new contract with these workers, AAM decided to close shop entirely and move to Mexico to pay foreigners cents on the dollar to manufacture their goods. The UAW workers at the Hamtramck all subsequently lost their jobs, and no more of these jobs were being created for folks who would be entering the work force in Michigan

Several years later, they've brought SOME investment back to Michigan and have hired 600 extremely desperate people. The problem? The jobs only pay $10.50/hr in 2015 dollars and no longer offer Cadillac health care benefits. And despite the laughable compensation they're getting paid, these workers still forced to join the UAW because of a contract in place until 2017.

http://www.marketwatch.com/story/the...pay-2013-08-20

A new face of U.S. manufacturing is on display in Three Rivers, Mich., a small city south of Kalamazoo midway between Detroit and Chicago. American Axle, a major supplier to the auto industry, is in the midst of hiring 600 additional workers to produce new generation drive trains...

...The new starting wage at American Axle translates into an annual salary of under $25,000, not enough to sustain a middle-class lifestyle. Tom Lowry, Three Rivers’ mayor who runs a local bookstore, admits, “it is hard to survive on the $10 to $14 wage being offered at American Axle.” A single person, he says, might make it on that, but not a family...

Furthermore, at least 1/3 of these jobs created since the last recession are temporary or from self-employment. Out of these temp/self-employment positions, only 7% become direct hire. On average, these jobs are only paying $25K per year...

http://www.freep.com/story/money/bus...ment/20941729/

These people of course are scared to death of spending the little income they're earning [[which also prevents a true economic recovery) because they know their jobs won't be around long and they're not even making enough to cover their bills. That's not a sustainable way to build a healthy economy.

Now, is it good that, the economy has stop shrinking for a bit? Absolutely. But at the same time, I'm not going to put on blinders and assume happy days are here again either. The glory days aren't coming back, and I'm just being brutally honest in that unless you're content with having a far lower standard of living and quality of life than your parents and grandparents had in Michigan, it's not a bad idea to get out now.

[mwilbert]

Yes and no.

Although 250,000 jobs have been created since the last recession, nearly 1 millions jobs were lost during the last recession. So we're still at a net loss. It would take at least another 5 years of this same tepid rate of recovery to get back to where we were before 2007-2009, let alone back to the era of "money growing on trees" during the 1990s.

This is assuming no additional increase in the size of working-age adults, no further offshoring/outsourcing of jobs due to cost cutting and no additional recessions [[which would all be unwise assumptions to make IMO).



Well sure, not ALL of them are ill-paid. Not ALL politicians are crooks either.

The issue is most of the jobs lost during the last recession WERE good-paying and secure with benefits, while most of the jobs that have been created in the wake of the last recession have been insecure and low-paying with no benefits.

Remember American Axle and Manufacturing? At one time, thousands of very happy UAW workers earning $20/hr+ with Cadillac health care benefits worked at their HQ in Hamtramck [[because actually AAM was once a subsidiary of the once largest company in the world, General Motors). When the bottom fell out in the 2007-2009, instead of negotiating a new contract with these workers, AAM decided to close shop entirely and move to Mexico to pay foreigners cents on the dollar to manufacture their goods. The UAW workers at the Hamtramck all subsequently lost their jobs, and no more of these jobs were being created for folks who would be entering the work force in Michigan

Several years later, they've brought SOME investment back to Michigan and have hired 600 extremely desperate people. The problem? The jobs only pay $10.50/hr in 2015 dollars and no longer offer Cadillac health care benefits. And despite the laughable compensation they're getting paid, these workers still forced to join the UAW because of a contract in place until 2017.

http://www.marketwatch.com/story/the...pay-2013-08-20



Furthermore, at least 1/3 of these jobs created since the last recession are temporary or from self-employment. Out of these temp/self-employment positions, only 7% become direct hire. On average, these jobs are only paying $25K per year...

http://www.freep.com/story/money/bus...ment/20941729/

These people of course are scared to death of spending the little income they're earning [[which also prevents a true economic recovery) because they know their jobs won't be around long and they're not even making enough to cover their bills. That's not a sustainable way to build a healthy economy.

Now, is it good that, the economy has stop shrinking for a bit? Absolutely. But at the same time, I'm not going to put on blinders and assume happy days are here again either. The glory days aren't coming back, and I'm just being brutally honest in that unless you're content with having a far lower standard of living and quality of life than your parents and grandparents had in Michigan, it's not a bad idea to get out now.

The question isn't whether Michigan is, relative to other states, a lot poorer than it was 40 or 50 years ago. There is no doubt that is true. The median Michigander might even be poorer now than 40 years ago on an absolute basis, at least if you look strictly at real wages. Our differences are not on that point.

You seemed to be claiming three things:

1) That staying in Michigan was tantamount to martyrdom.

2) That there had been no improvement since the bottom of the recession.

3) That another recession is imminent.

I don't agree with 1), but I guess that is a matter of opinion. 2) is wrong, for the reasons I gave. 3) is also a matter of opinion, but your supporting argument about GE losing money isn't correct, because that is just accounting for money they lost long ago and does not reflect current conditions. 3) will no longer be matter of opinion in eight months or so, and perhaps we can revisit this at that time.

[313WX]

The question isn't whether Michigan is, relative to other states, a lot poorer than it was 40 or 50 years ago. There is no doubt that is true. The median Michigander might even be poorer now than 40 years ago on an absolute basis, at least if you look strictly at real wages. Our differences are not on that point.

Fair enough

You seemed to be claiming three things:

1) That staying in Michigan was tantamount to martyrdom.

Perhaps the issue you have is you think that claim is harsh, but it's accurate for the reasons you described.

If the state is poorer and offers people a far lower standard of living before, wouldn't one more or less be a martyr by trying to sick around, especially if they have the choice to be in a place where they can most certainly have and do better?

2) That there had been no improvement since the bottom of the recession.

The improvements have been marginal at best, and really the only ones who truly think these marginal improvements mean things are back to pre-recession norms are those who are either out-of-touch or benefit politically.

In the grand scheme of things, despite 5 years since the last recession, there are still a record number of people out of the workforce, far fewer good-paying jobs and a record number of people dependent on the government. Again, none of the aforementioned should still be the case in a 5-year economic recovery in America.

3) That another recession is imminent.

Yes, I do believe another recession is imminent. Besides the reasons I listed above, the stock market bubble we're in has tripled in value since 2009 without any crashes. The last time there was an economic "growth" period that lasted longer than 7 years without a correction was 1903. Otherwise, a correction has always happened every 7 years.

Could the "rally" we're in now continue beyond 2015? Anything's possible, but that's doubtful.

Much of the thanks goes to the FED with it setting the interest rate so low and its multiple rounds of money printing. Even it admitted the markets would likely drop at least 50% if not for its assistance. The thing is, QE has finally ended and the FED is now contemplating raising the interest rate, since it can't stay at record lows forever.

[Bham1982]

The improvements have been marginal at best, and really the only ones who truly think these marginal improvements mean things are back to pre-recession norms are those who are either out-of-touch or benefit politically.

The markets are at near-record highs [[most households have a stake in the markets), home values are at record highs [[most Americans are homeowners) salaries are up, unemployment is down, household debt is lower. Certainly things are far from ideal, but it would be hard to argue that, on average, Americans aren't feeling somewhat more prosperous than a few years ago.