In this issue:

Jobless Rate Hits Nine-Year High; New Claims Climb; Factory Orders Slide

U.S. Infrastructure Needs 'Significant' Boost in Funding

Most Jobless Workers Use Up Federal Funds Before Finding Job

Not To Worry: BLS Creates 'Mystery' Jobs at 'Invisible' Firms

Bush Tax Cuts Will Hurt Middle Class

Delta Plans Health-Care, Pension Cuts

'Big Three' Slash Auto Production, Citing 'Incentive Burnout'

AFL-CIO: Labor Costs at Amtrak Stagnant


From Volume 2, Issue Number 23 of Electronic Intelligence Weekly, Published June 10, 2003

U.S. Economic/Financial News

Jobless Rate Hits Nine-Year High; New Claims Climb; Factory Orders Slide

The nation's jobless rate soared to 6.1% in May—the highest level in nine years—as the number of official unemployed reached nearly 9 million.

At the same time, new claims for unemployment benefits remained well above 400,000 per week: Initial jobless claims rose by 16,000, to 442,000 for the week ended May 31. The four-week average of initial jobless claims, increased to 430,500—the 14th straight week above 400,000. Continued claims fell to 3.7 million.

Further fuelling the downward depression spiral, U.S. factory orders tumbled by 2.9% in April, compared to March, to $320 billion, the biggest monthly drop since November 2001, the Department of Commerce reported on June 5. New orders for manufactured goods declined in most major categories, including sharp falls in machinery, transportation, and electrical equipment.

U.S. Infrastructure Needs 'Significant' Boost in Funding

A "significant" boost in funding is needed to repair and upgrade deteriorating infrastructure—the "backbone" of "economic vitality," warned the American Society of Civil Engineers (ASCE) in two separate "report cards" on Wisconsin and Kentucky. As a way of "increasing public awareness to the importance of maintaining our infrastructure," the ASCE followed up on its 2001 "Report Card on America's Infrastructure," which assigned a grade of "D+" and called for $1.3 trillion in nationwide spending on infrastructure programs over the next five years. "Report cards" were issued for Wisconsin (May 6) and Kentucky (Feb. 11), by the relevant ASCE state sections.

*Wisconsin: Areas evaluated (grade assigned), include:

—Roads (C-): Current funding levels are falling significantly below recommendations set by the State Highway Plan 2020, to improve safety, maintain pavement, and relieve congestion.

—Bridges (B-): Some 20% are in need of replacement or repair.

—Public Schools (C): About 50% are more than 40 years old. Some 57% report maintenance budgets as "less than adequate" to raise the school's physical condition to "good."

—Drinking Water (C+): Aging treatment facilities require more than $3.0 billion over the next 20 years.

Rivers and Dams (D): Dams are not being inspected as needed, and repair grants have been cut back due to lack of funds.

—Stormwater (C+): Half of Wisconsin's communities do not have a regular maintenance program for storm sewers and catch basins; aging sewers need to be replaced.

*Kentucky: "All areas of Kentucky's public infrastructure are in need of immediate and continued investment."

—Bridges (C-): As of 2002, about 31% were classified as structurally deficient or functionally obsolete.

—Dams (C-): Over $30 million in repairs have been identified for state-owned dams—not including the locks and dams on the Kentucky and Green Rivers.

—Transit (D): One-half of the buses used in public transportation are older than the useful life.

—Wastewater (D-): Due to the aging infrastructure, a large number of individuals are not currently served by sewers.

Most Jobless Workers Use Up Federal Funds Before Finding Job

About 60% of jobless workers receiving Federal unemployment benefits—nearly 3 million—have used up those benefits before finding a job, according to a report released June 5 by the Center on Budget and Policy Priorities, which is based on data from the U.S. Department of Labor. During March 2002-January 2003, of the more than 5 million jobless workers who started receiving Federally funded unemployment benefits when their state benefits ran out (after 26 weeks), nearly 3 million workers were unable to find a job before those Federal benefits expired (an additional 13 weeks, in all but six states).

Moreover, about 1.1-1.4 million workers have exhausted their 39 weeks of jobless benefits, but remain unemployed, the CBPP estimates. Of those unemployed for nine months or longer, about 62% have substantially depleted their savings, and over 50% have borrowed money to meet living expenses, according to an April survey by the National Employment Law Project.

That this breakdown is another proof of the urgent need for LaRouche's jobs-vectored economic recovery, through an FDR-style infrastructure program, is denied by the CBPP, which calls merely for an extension of Federal unemployment benefits, under the delusion that the unemployed would be able to find a job in the additional time frame.

Even when received, unemployment benefits only replace about 30-50% of a worker's previous wages—forcing recipients to slash spending, postpone medical or dental treatment, or borrow.

Not To Worry: BLS Creates 'Mystery' Jobs at 'Invisible' Firms

The Bureau of Labor Statistics is counting "mystery jobs" at "invisible" companies, charged the New York Post's John Crudele June 5. Under a "benchmark" revision, the BLS will quietly remove 313,000 jobs from its employment report, jobs that it fraudulently claimed existed last year—but those 313,000 jobs do not show up in the May data released on June 6. Plus, the BLS counts jobs that it believes are being created by companies that it can't prove exist, something called the "bias factor." In the past three months the BLS has added 354,000 "mystery" jobs to its data from these "invisible" companies.

Bush Tax Cuts Will Hurt Middle Class

Cumulative tax cuts will result in the middle class paying a greater share of Federal tax burden by the end of the decade, than they did before the 2001-03 tax cuts were passed. The Citizens for Tax Justice found that for taxpayers earning between $45,000-$337,000, taxes would fall by 7%—less than half the tax cut reaped by the very wealthy. The Tax Policy Center, found that for families earning between $22,955-$80,903, their share of Federal taxes would rise from 25.5% currently, to 26.1%.

Delta Plans Health-Care, Pension Cuts

Delta Airlines plans to slash employee health-care and pension benefits by the end of 2005, as part of its plans to cut an additional $2.5 billion in costs, Reuters reported June 5. A company spokeswoman claimed that there were no immediate plans to eliminate any jobs. The airline had already reduced costs by $1.5 billion, as of the end of 2002.

'Big Three' Slash Auto Production, Citing 'Incentive Burnout'

The "Big Three" U.S. automakers will slash production due to weak sales—despite the huge buyer incentives of the past couple of years. U.S. auto sales in May came in at a seasonally adjusted annual rate of about 16.1 million vehicles, below April's pace of 16.4 million, reflecting, in newly coined lingo, "incentive burn-out."

Ford, the world's second-largest automaker, said it would cut vehicle production during July-September by nearly 15%, as sales in May fell 5.8% compared to a year ago; it had cut second-quarter output by a similar amount. GM, the number-one automaker worldwide, said it plans to scale back third-quarter production by 6%, despite an 4% increase in sales from a year earlier, as it spent an average $3,916 per vehicle on rebates and incentives to attract buyers. Chrysler plans to slash costs by $1 billion this year, by cutting production and other measures.

DaimlerChrysler warned of a $1.17-billion loss this quarter at its U.S. Chrysler unit because incentives (averaging more than $3,500 per auto) led to reduced revenue, while sales fell 3% in May. Standard & Poor's, citing the "staggering" loss, lowered its outlook on DaimlerChrylsler's debt to negative, an indication the company's credit rating is likely to be cut.

AFL-CIO: Labor Costs at Amtrak Stagnant

Amtrak's total labor costs showed no increase in 20 years, and declined in real dollars. Total labor costs at the national passenger railroad, including wages and benefits, have remained constant as a percentage of operating costs, over the past 21 years, and have actually declined in real dollars.

Further, Amtrak employees earn 22% less than the prevailing rates of freight railroad workers. Amtrak's labor costs account for 47% of its total operating expenses, well below the same costs associated with commuter and urban rail systems like the Long Island Railroad and Philadephia's SEPTA.

Since 1980, Amtrak wages have fallen in real terms, increasing between 82.8% and 83.1%, compared with the 103% increase in the Consumer Price Index.

All rights reserved © 2003 EIRNS