The unemployment rate in the United States is likely to remain well above 7 percent through the end of 2012 and the duration of President Obama’s current term, according to the Federal Reserve.

Ben S. Bernanke, the Fed chairman, told Congress on Wednesday that it would take “a significant amount of time” to restore the 8.5 million jobs lost in the United States in 2008 and 2009, and warned that “the economic outlook remains unusually uncertain.” He also warned that financial conditions, particularly the European sovereign debt crisis, had “become less supportive of economic growth in recent months.”

In presenting the Fed’s semiannual monetary policy report to Congress, Mr. Bernanke struck a more cautious tone than he did when he last submitted the report, in February.

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Payrolls decreased in 27 U.S. states in June, led by California and New York, signaling the slowdown in hiring is broad-based.

Employers in California cut staff by 27,600 workers last month and those in New York reduced employment by 22,500, the Labor Department said today in Washington. Tennessee, Arizona and New Mexico rounded out the five states with the biggest job losses.

The U.S. lost 125,000 jobs last month as the government cut temporary workers conducting the 2010 census and private payrolls rose a less-than-forecast 83,000, according to Labor Department figures issued July 2. The data signal companies are becoming reticent to hire as the economy cools.

“Businesses are looking at what’s going on in Europe and the stock outlook and people are becoming a little more skittish,” Marisa Di Natale, a director at Moody’s Economy.com in West Chester, Pennsylvania, said before the report. “We may see that for a couple of more months until we start to see some real momentum in some sector of the economy.”

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There may be no country on the planet more vulnerable to a massive cyberattack than the United States, where financial, transportation, telecommunications and even military operations are now deeply dependent on data networking.

What’s worse: U.S. security officials say the country’s cyberdefenses are not up to the challenge. In part, it’s due to a severe shortage of computer security specialists and engineers with the skills and knowledge necessary to do battle against would-be adversaries. The protection of U.S. computer systems essentially requires an army of cyberwarriors, but the recruitment of that force is suffering.

“We don’t have sufficiently bright people moving into this field to support those national security objectives as we move forward in time,” says James Gosler, a veteran cybersecurity specialist who has worked at the CIA, the National Security Agency and the Energy Department.

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…there is skepticism over the president’s commitment to reducing the huge and dangerous budget deficits which America now faces. A strong step toward deficit reduction next year ”” like undertaking the difficult task of trying to fix Social Security ”” would earn deeper credibility with business and with all Americans.

Another problem is that the administration’s rhetoric ”” which too often employs inflammatory words like “reckless” ”” has the effect of tarring all of business with the same brush. The White House might better distinguish between Wall Street, Big Oil and health insurers, which have all incurred public wrath, and the majority of businesses, which haven’t.

The tension between President Obama and the business community is hurting both sides and may hamper economic recovery. Closing that divide requires the business community to mute its criticism, and the administration to make personnel and policy adjustments. Neither should be hard.

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America is struggling with a sputtering economy and high unemployment ”” but times are booming for Washington’s governing class.

The massive expansion of government under President Barack Obama has basically guaranteed a robust job market for policy professionals, regulators and contractors for years to come. The housing market, boosted by the large number of high-income earners in the area, many working in politics and government, is easily outpacing the markets in most of the country. And there are few signs of economic distress in hotels, restaurants or stores in the D.C. metro area.

As a result, there is a yawning gap between the American people and D.C.’s powerful when it comes to their economic reality ”” and their economic perceptions.

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A new Time poll reveals just how hard the task is: Two-thirds of respondents say they oppose a second government stimulus package. And 53% say the country would have been better off without the first one.

The result is a White House pulled in three directions at once as it tries to repair the economy ”” and ensure that Obama and the Democrats can survive a rising tide of public anger. First, the Obama team is improvising ways to pass piecemeal spending items through a Congress where stimulus has become a toxic word. At the same time, the White House is signaling its concern about that budget deficit that has Tea Partyers raging ”” both through token gestures, like a White House contest that lets the public vote on cost-cutting ideas submitted by federal employees (the winner gets to meet Obama and see his or her idea go in the President’s next budget), and through Obama’s support for the work of a bipartisan deficit commission. And finally, the White House is trying to explain to angry liberals that it’s doing everything possible to keep the economy moving and fight Republican resistance to new spending.

It’s a delicate balancing act, on a par with Obama’s effort to pass health care reform without appearing to get too involved in the details. And just as it did in the health care battle, the future of Obama’s presidency ”” as well as the fate of the American economy ”” may hang on the outcome.

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The president, focused like a laser on the nation’s top problem, decided to give a nationally broadcast speech.

“On the basis of this simple principle of doing everything together, we are starting out on this nationwide attack on unemployment,” he said. “It will succeed if our people understand it ”” in the big industries, in the little shops, in the great cities and the small villages.”

It is time, he added, “for patience and understanding and cooperation.”

Barack Obama?

No, it was Franklin Delano Roosevelt, 77 years ago this month, in one of the most important “fireside chats” of his presidency.

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In the past few days polls have shown Republican challengers taking the lead over previously safe Democratic incumbents, such as Barbara Boxer in California and Russ Feingold in Wisconsin. Indeed, given the uniformly negative direction in the numbers, it is now quite possible the Republicans could win the Senate seats formerly held by both President Obama in Illinois, and Joe Biden, vice-president, in Delaware.

Add to that the continuing woes of Harry Reid, the Senate Democratic majority leader, in Nevada, where the Republican party’s recent nomination of Sharron Angle, a far-right and highly eccentric Tea Party supporter, appear to have had no positive effect on Mr Reid’s prospects, and the Grand Old party has a good shot at taking control of both houses of Congress. Worse for Mr Obama, political scientists say that at this stage in the calendar, there is almost nothing he can do about it.

“If you ask me where the silver lining is for President Obama, I have to say I cannot see one,” says Bill Galston, a former Clinton official, who has been predicting for months the Democrats could lose the House. “Just as BP’s failure to cap the well has been so damaging, Obama’s failure to cap unemployment will be his undoing. There is nothing he can do to affect the jobless rate before November.”

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But riddle me this, Bat-readers. If companies are so jazzed about the future, why is the economy still mired in a jobless recovery that some fear could lead to a double-dip recession?

Companies are talking a good game about the worst possibly being over for the economy. Deep down though, executives must know that the sovereign debt problems in Europe and continued signs of sluggish consumer spending and weak U.S. housing market could keep a lid on any rebound.

The sad reality is that many companies appear to be getting used to, at best, doing more with their current workforce. In some cases, they are doing more with less.

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Small businesses continue to feel highly pessimistic about the U.S. economic outlook, according to a report Tuesday that showed a monthly indicator of their sentiment turning weaker in June.

The National Federation of Independent Businesses said its Small Business Optimism Index dropped 3.2 points to 89.0 last month, more than erasing the modest 1.6-point gain it saw in May. The report, which was compiled by NFIB Chief Economist William Dunkelberg, described the decline as “a very disappointing outcome.”

In past periods following a recession, the NFIB index typically has risen back above 100 within a quarter or two of the trough in economic activity as measured by the National Bureau of Economic Research. That hasn’t been the case during this recovery. The index hasn’t broken above 93 in any month since January 2008 when the economy was in the early stages of recession, even though the NBER is expected to eventually date the beginning of the recovery in the third quarter of last year.

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It was a finely honed machine, this United States Census team, and it had a good run. But in the coming days and weeks, many of its members will experience the pain of unemployment ”” once again.

Christine Egan, a 31-year-old massage therapist, says her census job offered shelter from the economic storm last year. “The economy was terrible; there was nothing,” she says. “I’ve already gone through ”˜horrific,’ so I’m immunized.” She smiles, optimism almost extending to her eyes. “It must be better now, right?”

When the Census Bureau hired upward of 700,000 Americans over the last two years ”” most in the last six months ”” it landed more experienced workers with more sophisticated skills than any time in recent memory. This was the unintended upside of the nastiest recession of the last 70 years.

Now, its decennial work largely done, the Census Bureau is shedding hundreds of thousands of workers ”” about 225,000 in just the last few weeks, enough to account for a jot or two in the unemployment rate, say federal economists. Most of those remaining will be gone by August; a few will last into September.

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John Rotonti, Felix’s owner, would not let the bar go dry. He bought oysters from Florida and Texas to supplement the meager harvest from Louisiana.

Still, a shucker can only do so much in the face of an environmental disaster of mammoth proportions.

Close to closing time, Mr. [Keith] Chancley, who on a good day last year might have made $200 in tips, took a measly $4 out of the tip bucket after the total was split with the rookie shucker (three years on the job) and the novice shucker (a dishwasher in training).

“We’ve got to take the good with the bad,” said Mr. Chancley, a 35-year veteran. “I tell the other shuckers around town ”” we’re a close group ”” just weather the storm. Take it as a time to heal your cramped hands and your soul.”

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More than half (55%) of all adults in the labor force say that since the Great Recession began 30 months ago, they have suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers, according to a new survey by the Pew Research Center’s Social and Demographic Trends Project.

The survey also finds that the recession has led to a new frugality in Americans’ spending and borrowing habits; a diminished set of expectations about their retirements and their children’s future; and a concern that it will take several years, at a minimum, for their family finances and house values to recover.

Not all survey findings are bleak. More than six-in-ten (62%) Americans believe that their personal finances will improve in the coming year, and a small but growing minority (15%) now says the national economy is in good shape.

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The United States added just 83,000 private sector jobs in June, according to the monthly statistical snapshot released by the Labor Department. The unemployment rate declined to 9.5 percent, from 9.7 percent in May. But that was a largely illusory decline, as 652,000 Americans left the work force.

Over all, the nation lost 125,000 jobs in June, but those losses came as temporary federal Census workers headed for the exits.

With the economy slowing ”” housing sales plummeted, while earnings and hours worked ticked downward last month ”” the stakes grow larger, economically and politically. The next few monthly unemployment reports will unfold during the run-up to the midterm Congressional elections this fall. Incumbents feel particularly precarious, and major economic decisions about financial reform, unemployment benefits, and aid to states still sit on their desks.

“We may have seen the best of employment for some time,” said Paul Kasriel, chief economist at Northern Trust. “In general the economy is downshifting, maybe to stall speed, or just above stall.”

Read it all, and for those of you so inclined David A. Rosenberg’s detailed analysis is very fine (9 pages of the pdf).

Working Americans aged 60-69 have slightly better emotional health than those who do not work, according to the Gallup-Healthways Well-Being Index. This relationship is primarily evident among the relatively small numbers of Americans aged 60-69 who have fair or poor health. Among the 75% of the 60- to 69-year-old population who have excellent, very good, or good health, however, there is virtually no difference in emotional health by work status.

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The rebellion against the 1930s fiscal and monetary policies of the Euro-complex is gathering pace.

Il Sole has published a letter by 100 Italian economists warning that the austerity strategy imposed by Brussels/Frankfurt risks tipping Europe into a self-feeding downward spiral. Far from holding the eurozone together, it will cause weaker countries to be catapulted out of EMU. Others will leave in order to restore sovereign control over their central banks and unemployment policies.

At worst it will blow the EU apart, leading to the very acrimony that the European Project was supposed to prevent.

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As cash runs low in government coffers around the country, politicians are ratcheting up the intensity of their search for revenue and new areas to regulate. Small businesses are in their cross-hairs in a mammoth, nationwide shakedown. They are the nation’s critical engine for growth, innovation and job creation, yet they are being starved for credit and slammed with more taxes, government directives and litigation exposure. This spells weaker profits and fewer jobs, risking a fundamental deterioration in America’s private sector.

The federal government’s response to the crisis is to build up Washington’s small-business dependency apparatus. Of the $3.6 trillion in federal spending planned in 2010 (overruns likely), many crumbs will find their way to small businesses through government loan programs and complicated tax credits. Politicians are addicted to spending and can trumpet their ability to bring home the pork while ignoring the devastating net outflow from small businesses to Washington.

Washington’s expansion does nothing to create a robust small-business environment. Businesses with fewer than 250 employees provided most of the net job growth in the 2002–07 expansion yet are still in the starting blocks in the current recovery. The 2,300-page health care bill will take months and years to decode and will weigh heavily on small-business decisions. New regulations are mushrooming from the constant string of thick “stimulus” bills, the coming law on new financial regulations and the sure-to-be-bad tax bill toward year’s end.

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According to the Pew Center on the States, state pensions and other retiree benefit programs are underfunded by $1 trillion. And that estimate was made before the stock market swoon of 2008.

That number is an aggregate of all states, some of which are in relatively decent shape, and some of which are courting disaster. Too many states and localities created pension plans that are way too generous, allowing some workers, particularly those in law enforcement and other emergency response areas, to retire as early as their 40s, to “double dip” by collecting a salary and pension at the same time, or to manipulate pay in a way that inflates their pensions. In New Jersey, for example, a local lawyer and Democratic Party official cobbled together some part-time work for local government to claim a pension of more than $100,000.

The shortfall is made worse when cash-strapped governments make unrealistic projections about investment returns or underfund their plans by failing to make adequate annual contributions.

Read the whole thing.

There are many adjectives one can use to describe legendary investor Robert Arnott, but “bullish” is not one of them. Arnott, who is chairman of Research Affiliates and manager of several successful Pimco portfolios, was a Cassandra of the subprime crisis. He correctly predicted in early 2008 that the housing market along with consumer spending would crumble.

Now Arnott, 55, is bearish once again. He said in a telephone interview with Reuters that the global markets are in “the very early stages” of a sovereign debt crisis which could lead to another recession in the fourth quarter of 2010. “People should not worry about is not the Greeces and Hungarys of the world, but contagion to the Italys and Spains and, heaven forefend us, the United States,” Arnott says.

Arnott isn’t sure how long the recession will last. “I would not expect it to be as deep,” he predicts. “But if it’s even a modest recession from this starting point, it will feel deeper.”

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The chart above captures the takeaway point of David Autor’s new report, “The Polarization of Job Opportunities in the U.S. Labor Market,” published by the Center for American Progress and the Hamilton Project.

Professor Autor ranks occupations by mean wages (using these as a proxy for skill). Between 1999 and 2007, growth took place primarily at the low end. Between 1979 and 1989, the share of high-wage jobs grew fastest. Between 1989 and 1999, the share of low-wage jobs began to grow, but high-wage jobs continued to expand. Between 1999 and 2007, growth took place primarily at the low end.

The cumulative effect is polarization and increased inequality, intensified by job losses during the recent recession that also hit the middle-wage group particularly hard.

Read the whole blog entry (and take a careful look at the chart).

“My best guess is that we’ll have a continued recovery, but it won’t feel terrific,” Ben S. Bernanke, the Fed chairman, said at a dinner at the Woodrow Wilson International Center for Scholars on Monday night. “And the reason it won’t feel terrific is that it’s not going to be fast enough to put back eight million people who lost their jobs within a few years.”

One could almost envision the winces in the White House as Mr. Bernanke observed that the unemployment rate “will stay high for some time.” He went on to note that even if the economy grew at 3 percent, which would be considered a healthy pace, it would do little more than keep pace with the normal rate of growth of the work force.

Virtually every day of late, White House officials have struggled to explain how their strategies to provide economic stimulus to bring down the unemployment rate square with Mr. Obama’s oft-expressed commitment to tackle a record budget deficit. They talk about spending this year ”” in modest amounts ”” while waiting for the prescriptions of the president’s commission on debt reduction, which reports, conveniently, a few weeks after the midterm elections.

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Among the primary forces putting upward pressure on the deficit is the aging of the U.S. population, as the number of persons expected to be working and paying taxes into various programs is rising more slowly than the number of persons projected to receive benefits. Notably, this year about 5 individuals are between the ages of 20 and 64 for each person aged 65 or older. By the time most of the baby boomers have retired in 2030, this ratio is projected to have declined to around 3. In addition, government expenditures on health care for both retirees and non-retirees have continued to rise rapidly as increases in the costs of care have exceeded increases in incomes. To avoid sharp, disruptive shifts in spending programs and tax policies in the future, and to retain the confidence of the public and the markets, we should be planning now how we will meet these looming budgetary challenges.

—Federal Reserve Chairman Ben S. Bernanke in his testimony before the Committee on the Budget in the U.S. House of Representatives today

That said, I think part of the business community’s complaint about Obama has merit. Although there are many “innovation” initiatives ongoing in this administration, they are not well coordinated or a top priority or championed by knowledgeable leadership. This administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product. And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation ”” not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness don’t seem to float Obama’s boat. He could use a buoyant growth strategy.

What might that include? I asked two of the best people on this subject, Robert Litan, vice president of research and policy at the Kauffman Foundation, which specializes in innovation, and Curtis Carlson, the chief executive of SRI International, the Silicon Valley-based innovation specialists.

Carlson said he would begin by creating a cabinet position exclusively for promoting innovation and competitiveness to ensure that America remains “the world’s new company formation leader.” “Secretary Newco” would be focused on pushing through initiatives ”” including lower corporate taxes for start-ups, reducing costly regulations (like Sarbanes-Oxley reporting for new companies), and expanding tax breaks for research and development to make it cheaper and faster to start new firms. We need to unleash millions of entrepreneurs.

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By the time she graduated from Vanderbilt Divinity School in May 2009, the Rev. Kara Hildebrandt could translate a passage from the Greek New Testament with relative ease, write a sermon like a pro and pass her ordination exams with flying colors.

Finding a job as a pastor?

That was a bit more difficult.

A combination of many preachers, too many small churches and a bad economy have led to one of the worst job markets for ministers in decades. That has led to the so-called clergy glut. According to the Yearbook of American and Canadian Churches, there are more than 600,000 ministers in the United States but only 338,000 churches. Many of those are small churches that can’t afford a full-time preacher. Among Presbyterians, there are four pastors looking for work for every one job opening.

That has left many good pastors out in the cold, waiting before finding a new job or finding alternative employment, denominational leaders say.

Read the whole article.

Heavy rain hampered an evening rally through the city’s streets.

Spanish unions said 75-80% of public sector workers had joined the day-long strike.

The labour ministry, however, put the figure at 16%.

“We are very angry because this is not only an attack to our rights and to our salaries – there is an attack to the welfare,” protester Elisia Deoran told the BBC.

“It’s an attack on all the public services.”

Read the whole thing.

The Broward school district on Monday delivered pink slips to 1,305 teachers, secretaries and maintenance workers as the school district struggles to close a $130 million budget shortfall.

Two days before the school year ends, the district notified 568 teachers and 737 noninstructional employees that they will not have jobs when classes resume in the fall.

“This is the worst possible scenario coming true,” School Board Chairwoman Jennifer Gottlieb said.

Read it all.

I’ll reiterate that from our perspective, the essential difficulty of the market here is not Greece, it is not the Euro, it is not Hungary, and it is really not even the slow pace of job growth in the latest report. The fundamental problem is that we have not, as a global economy, accepted the word “restructuring” into our dialogue. Instead, we have allowed our policy makers to borrow and print extraordinarily large band-aids to temporarily cover an open wound that will not heal until we close the gap. That gap is the difference between the face value of debt securities and the actual cash flows available to service them. The way to close the gap is to restructure the debt. This will require those who made the bad loans to accept the associated losses. By failing to do that, we have failed to address the essential problem faced by the world, which is that we have created more debt than we are able to service.

A few observations. First, I remain convinced that the other shoe to drop is not Greece or Spain or Hungary, but rather a second wave of major credit strains here in the U.S. related to fresh delinquencies from exotic adjustable rate mortgages.

Second, it is a delusion to interpret economic statistics suggesting an economic turnaround over the past year without factoring out the extent to which that has been driven by unsustainable levels of deficit spending.

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We are drifting. We take comfort in bits of good news, but we are in dangerous waters; the Great Recession is being starkly revealed as a global crisis with the US, the traditional engine of recovery, sputtering on every cylinder. The US government responded with dramatic financial support by transferring money to the household sector. But outside of these transfers the personal income of Americans is still declining; the residential market remains stagnant at best; consumer growth is nominal. The only real energy in the economy has come from the cessation of inventory liquidation, which is now the main factor in rising industrial output and any modest improvement in the economy.

The mood of US households is despondent. In May only 11.3 per cent believed they would see their income rise in the following six months, while 16.6 per cent thought they would see it decline. This is the first time in over four decades that more people believe they will be worse off than better. Any massive fiscal and monetary stimulus that might reverse the trend is likely to be politically unsustainable given the growing concern over the exploding national deficit.

Wherever you look the scene is bleak. Leading economic indicators fell in April ”“ unusual at such an early stage in the up-cycle. Jobless claims were up by 25,000 to 471,000. And up again above expectations in the first three weeks of May ”“ raising the four-week moving average to a level consistent with 100,000, or more, net job losses. For the past several months, claims have been nowhere near the levels of 400,000 and less that in the past were consistent with sustained job creation. We are not enjoying the normal cycle of economic improvement.

Read it all.

Overall, the job creation picture is still bleak. Poor sales and uncertainty continue to hold back any commitments to growth, hiring or capital spending. Job creation plans have been running far below comparable quarters in the recovery from two other major recessions.

Read the whole thing.

Almost everything Congress has done in recent months has made private businesses less inclined to hire new workers. ObamaCare imposes new taxes and mandates on private employers. Even with record unemployment, Congress raised the minimum wage to $7.25, pricing more workers out of jobs. The teen unemployment rate rose to 26.4% in May, and for those between the ages of 25 and 34 it rose to 10.5%. These should be some of the first to be hired in an expansion because they are relatively cheap and have the potential for large productivity gains as they add skills.

The “jobs” bill that the House passed last week expands jobless insurance to 99 weeks, while raising taxes by $80 billion on small employers and U.S-based corporations. On January 1, Congress is set to let taxes rise on capital gains, dividends and small businesses. None of these are incentives to hire more Americans….

It’s always a mistake to read too much into one month’s jobs data, and we still think the recovery will lumber on. But if Ms. Romer wants this to be more than a jobless recovery, she and her boss should drop their government-creates-wealth illusions and start asking why so many private employers remain on strike.

Read it all.