At his meeting-house on an industrial estate in Kano, northern Nigeria’s largest city, Sheikh Ibrahim Khalil laments his country’s sporadic uprisings in the name of Islam.”I don’t know why this change has come,” says the 57-year-old Muslim preacher. “Twenty years ago we never used to have this. Everyone got along.”

Outside his vine-covered house, silence prevails on the Sharada estate. Most of the factories that once helped Kano honour its state slogan, “Centre of Commerce”, are shells. The economic slump worries the Americans, especially since it has strengthened the hand of the more militant of northern Nigeria’s Muslim leaders, who are rattling the mild-mannered sheikh.

The role of Islam in Nigeria is in the spotlight, especially in America, since Umar Farouk Abdulmutallab tried to blow up an aircraft landing at Detroit on Christmas Day. The young Nigerian’s failed attack has since been claimed by al-Qaeda, fuelling long-held fears that the jihadist group, already present in north Africa, could win recruits among Africa’s most populous country with some 150m people.

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It’s quite a graphic–take some time to try to let it sink in (Hat tip: Calculated Risk)

President Obama was forced to concede today that the US deficit will soar to record levels this year as he unveiled a $3.8 trillion annual budget that faces a perilous passage on Capitol Hill and could decide the fate of his presidency.

Blaming the extraordinary levels of government debt on the profligacy of his predecessor George W. Bush, Mr Obama said that the deficit would reach nearly $1.6 trillion this year, far more than the White House predicted last year and a staggering level that is alienating voters.

Mr Obama, facing a difficult political landscape and an economy where one in ten Americans is still unemployed, sought to present a budget with dual priorities: bringing down the deficit while spending billions of additional dollars to create jobs.

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Ted Cox worked as an electrician for 27 years before losing his job last April when his employer filed for bankruptcy.

Cox was earning $19 an hour but now makes ends meet on $351 in weekly unemployment benefits. He also receives $113 monthly in food stamps.

“There’s nobody hiring,” Cox said.

Two daughters, ages 13 and 17, live with him. His children qualify for Medicaid. He has no medical insurance. “God help me if I go out there and break my leg,” he said.

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Obama should launch his own moon shot. What the country needs most now is not more government stimulus, but more stimulation. We need to get millions of American kids, not just the geniuses, excited about innovation and entrepreneurship again. We need to make 2010 what Obama should have made 2009: the year of innovation, the year of making our pie bigger, the year of “Start-Up America.”

Obama should make the centerpiece of his presidency mobilizing a million new start-up companies that won’t just give us temporary highway jobs, but lasting good jobs that keep America on the cutting edge. The best way to counter the Tea Party movement, which is all about stopping things, is with an Innovation Movement, which is all about starting things. Without inventing more new products and services that make people more productive, healthier or entertained ”” that we can sell around the world ”” we’ll never be able to afford the health care our people need, let alone pay off our debts.

Obama should bring together the country’s leading innovators and ask them: “What legislation, what tax incentives, do we need right now to replicate you all a million times over” ”” and make that his No. 1 priority. Inspiring, reviving and empowering Start-up America is his moon shot.

And to reignite his youth movement, he should make sure every American kid knows about two programs that he has already endorsed: The first is National Lab Day. Introduced last November by a coalition of educators and science and engineering associations, Lab Day aims to inspire a wave of future innovators, by pairing veteran scientists and engineers with students in grades K-12 to inspire thousands of hands-on science projects around the country.

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What about the future? The problem in the job market going forward is not so much layoffs in the private sector, which are abating, but a lack of hiring. The federal stimulus program is offset by a 2010 budget shortfall for state, city, county and school districts, which the Center on Budget and Policy Priorities recently estimated will be in the range of an astonishing $200 billion nationally. Since virtually all states and cities have to run balanced budgets, the result will be reduced services, layoffs and tax hikes.

The consequence is that the U.S. economy””for decades the greatest job creation machine in the world””is taking longer and longer to replace the jobs already lost. In the 1970s and 1980s, Jane Sasseen noted in a recent report in BusinessWeek, it took as little as one year from the end of a recession to add back the lost jobs. After the eight-month downturn ending in March of 1991, for example, jobs came back in 23 months. After the downturn from the dot-com bust in 2001, it took 31 months. This time it could take as many as five years or even more to recover all of the eight-plus million jobs lost since March 2007. That’s because we would have to create an additional 1.7 million jobs annually beyond those for the 1.3 million new people who enter the work force every year.

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The 2000s””the Noughts, some call them””turned out to be jobless. Only about 400,000 more Americans were employed in December 2009 than in December 1999, while the population grew by nearly 30m. This dismal rate of job creation raises the distinct possibility that America’s recovery from the latest recession may also be jobless. The economy almost certainly expanded during the second half of 2009, but 800,000 additional jobs were lost all the same.

It took four solid years for employment to regain its peak after the 2001 recession. With jobs so scarce, wages stagnated even as the cost of living rose, forcing households to borrow to maintain their standard of living. According to Raghuram Rajan, an economist at the University of Chicago, this set the stage for the most recent crisis and recession””a crisis, ultimately, caused by household indebtedness. If the current recovery is indeed jobless, wages will continue to lag. Since they are now virtually unable to borrow, households will have to make do with less, and reduced spending is likely to make the economic recovery more uncertain still.

So which is it to be: jobless or job-full? Of paramount concern is the growth in long-term unemployment. Around four in every ten of the unemployed””some 6m Americans””have been out of work for 27 weeks or more.

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There is no silver lining to the dark cloud that has enveloped America. A slight decline in the rate of job losses at the end of last year, coupled with a rise in the gross domestic product, gave hope that we were at the beginning of a sustained recovery from the Great Recession. The December jobs report has doused that hope.

Unemployment has graduated from being a difficulty, a headache, a setback, a worry. Now it is nothing less than a catastrophe. The true measure of it is that nearly a million Americans have become so demoralized that they are no longer even trying to find work. No fewer than 929,000 men and women who want a job haven’t looked in the past year. That is nearly 50 percent more than the number who felt it was a hopeless quest a year ago (642,000 in 2008). With 15.3 million out of work in the longest and deepest downturn in our economy since the Great Depression, the unemployment rate managed to hold at 10 percent in December only because of an extraordinary shrinkage in the labor force: Some 661,000 gave up their searches for work. (Job losses totaled 85,000, according to the Bureau of Labor Statistics’ nonfarm payroll data; the bureau’s household survey indicated a loss of 589,000 jobs.)

Roughly 40 percent of the unemployed, or a total of 6.1 million, have been out of work for more than 27 weeks. The average period of unemployment exceeds 26 weeks, the highest level in postwar history; the previous peak, in July 1983, was just 21.2 weeks. The better and more comprehensive measure of both the unemployed and underemployed, the household survey, edged up to 17.3 percent, up from 8.4 percent two years ago and just a shade below the all-time record.

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American families were squeezed last year as their inflation-adjusted weekly wages fell 1.6 percent — the sharpest drop since 1990 — well below the 2.7 percent consumer inflation rate.

Consumers’ spending power sank in the face of falling wages, job losses and higher prices for energy, medical care and education. Slack pay and scarce job creation are slowing consumer spending, hindering the economy’s ability to mount a strong recovery.

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The White House has reached a tentative agreement with labor leaders to tax high-cost health insurance policies, sources said Thursday. The agreement clears one of the last major obstacles on the path to final passage of comprehensive health care legislation.

White House press secretary Robert Gibbs said health care negotiators are “very, very close” to an overall deal and hope to have resolved most of their differences by day’s end. But White House officials privately cautioned that their optimism does not mean that a final health care deal will be formally announced Thursday.

Four labor negotiators briefed lawmakers on the parameters of the deal at a luncheon at the Capitol. Lawmakers said the agreement would raise the cost of unusually generous health policies and ignore secondary coverage, such as vision and dental plans. Health plans negotiated as part of collective-bargaining agreements would be exempt for two years after the 2013 effective date, giving labor leaders time to negotiate new contracts.

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A potential wave of new regulation and higher taxes may be scaring many businesses from hiring, prolonging any rebound in employment, say business groups and economists.

The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs.

“I don’t really see the private sector hiring much in the next few months,” says Brian Bethune, an economist at Global Insight. “For the small-business sector there is just too much uncertainty about what happens beyond 2010.”

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A federal spending surge of more than $20 billion for roads and bridges in President Barack Obama’s first stimulus has had no effect on local unemployment rates, raising questions about his argument for billions more to address an “urgent need to accelerate job growth.”

An Associated Press analysis of stimulus spending found that it didn’t matter if a lot of money was spent on highways or none at all: Local unemployment rates rose and fell regardless. And the stimulus spending only barely helped the beleaguered construction industry, the analysis showed.

With the nation’s unemployment rate at 10 percent and expected to rise, Obama wants a second stimulus bill from Congress including billions of additional dollars for roads and bridges ”” projects the president says are “at the heart of our effort to accelerate job growth.”

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Most economists agree that the U.S. left its recession sometime last summer. Yet with each passing month, the employment news remains grim. Looks like we’re in a jobless recovery.

The December job numbers released Friday were of little comfort. True, November’s payroll loss was revised upward to show a minuscule gain of 4,000 jobs. But December’s loss of 85,000 was about twice what Wall Street expected, and the unemployment rate remained at 10%.

For key groups, the news is far worse. Teens, for instance, suffer a 27% unemployment rate. If you’re a construction worker, it’s little better ”” one in four workers in that industry are without work.

Overall, those “underemployed” ”” lacking either a job or not working full time when they would like to ”” now stands above 17%. Also last month, emergency filings for jobless benefits surged 43% nationwide ”” a scary statistic if ever there was one.

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More than half of black males between the ages of 16 and 19 are unemployed, according to the U.S. Bureau of Labor Statistics. And that’s only counting those seeking work. Economists say legions of other young black men ”” nobody knows how many ”” have given up looking.

Sitting in an empty classroom at the YouthBuild Charter School in Washington, D.C., Andre Johnson, 18, talks about his fruitless job search.

“I apply for jobs every day,” he says. “And usually I do it online, ’cause I know before when I used to go in the stores, they used to look at me actually different and weird, and they say, ‘Oh we don’t have no applications or nothing,’ and I never believed them.”

Academics believe fewer than 14 in 100 young black men actually have jobs. Washington, D.C., has the worst teen employment rate in the country, according to the Bureau of Labor Statistics.

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I happened to catch this yesterday during lunch. Watch it carefully and watch it all. Listen attentively to his idea of the possibility of the emergence of a new business model which poses huge issues for employment going forward–KSH.

An exodus of discouraged workers from the job market kept the U.S. unemployment rate from climbing above 10 percent in December, economists said.

Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

“The actual unemployment rate is higher than shown by the official numbers,” Bandholz said yesterday after a Labor Department report released in Washington showed the economy unexpectedly lost 85,000 jobs in December while the jobless rate was unchanged.

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Update: There is more useful material here.

Beginning last January, The New York Times made regular visits to Beth Court, about 60 miles east of downtown Los Angeles, to chronicle how the foreclosure crisis had reshaped a middle-class neighborhood. Four of the eight houses went through foreclosure, and the others barely escaped the same fate. Beth Court was a microcosm of a nation in deep recession, a block of neighbors whose bad choices ”” often with the complicity of lending agencies ”” came crashing into a global economic downturn.

Now, a year later, California’s unemployment rate continues to grow, its housing market remains depressed and the state’s fiscal situation is dire. But the economic and policy shifts that are slowly changing parts of the country are also making a mark here.

Mr. Winkler, a factory worker, was hired at the end of September by Kimberly-Clark at the company’s mill in Fullerton, about 50 miles from here. He had gone more than year without a job….

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Manufacturing expanded in the United States in December, the fifth straight month of gains, amplifying hopes that a job market hobbled by double-digit unemployment might finally be adding paychecks. New jobless claims slipped markedly last week. Some economists think data to be released on Friday will show the economy gained jobs in December, the first monthly net increase in two years.

“We’re really coming back,” said Allen Sinai, chief global economist at the research firm Decision Economics. “The expansion is picking up the pace….”

But many economists remain worried that momentum could soon weaken, with the economy sliding back into glum times.

Indeed, the only area in which economists can reliably declare expansion is in the supply of competing narratives about the economy ”” perhaps to be expected in any transition between downturn and the inevitable turn for better.

“That is always the nature of the boomlet after recession,” Mr. Sinai said. “People think it’s going to fade away.”

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Even Americans who are lucky enough to have work in this economy are becoming more unhappy with their jobs, according to a new survey that found only 45 percent of Americans are satisfied with their work.

That was the lowest level ever recorded by the Conference Board research group in more than 22 years of studying the issue. In 2008, 49 percent of those surveyed reported satisfaction with their jobs.

The drop in workers’ happiness can be partly blamed on the worst recession since the 1930s, which made it difficult for some people to find challenging and suitable jobs. But worker dissatisfaction has been on the rise for more than two decades.

“It says something troubling about work in America. It is not about the business cycle or one grumpy generation,” says Linda Barrington, managing director of human capital at the Conference Board, who helped write the report, which was released Tuesday.

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The US public pension system faces a higher-than-expected shortfall of more than $2,000bn that will increase pressure on many states’ strained finances and crimp economic growth, according to the chairman of New Jersey’s pension fund.

The estimate by Orin Kramer will fuel investors’ concerns over the deteriorating financial health of US states after the recession. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times.

“If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”

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Unfortunately, growth caused by an inventory bounce is a one-shot affair unless underlying sources of demand, such as consumer spending and long-term investment, pick up.

Which brings us to the still grim fundamentals of the economic situation.

During the good years of the last decade, such as they were, growth was driven by a housing boom and a consumer spending surge. Neither is coming back. There can’t be a new housing boom while the nation is still strewn with vacant houses and apartments left behind by the previous boom, and consumers ”” who are $11 trillion poorer than they were before the housing bust ”” are in no position to return to the buy-now-save-never habits of yore.

What’s left? A boom in business investment would be really helpful right now. But it’s hard to see where such a boom would come from: industry is awash in excess capacity, and commercial rents are plunging in the face of a huge oversupply of office space.

Can exports come to the rescue? For a while, a falling U.S. trade deficit helped cushion the economic slump. But the deficit is widening again, in part because China and other surplus countries are refusing to let their currencies adjust.

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See what you make of it.

For most of the past 70 years, the U.S. economy has grown at a steady clip, generating perpetually higher incomes and wealth for American households. But since 2000, the story is starkly different.

The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

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Colorado’s minimum wage will drop slightly in the new year – the first decrease in any state’s minimum wage since the federal minimum was adopted in 1938.

Colorado’s wage is falling 3 cents an hour, from $7.28 to the federal level of $7.25. That’s because Colorado is one of 10 states that tie the state minimum wage to inflation. The goal is to protect low-wage workers from having unchanged paychecks as the cost of living goes up.

But Colorado’s provision also allows wage declines, and the state’s consumer price index fell 0.6 percent last year, so the minimum wage is going down.

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“The tenor of the calls has changed,” said Barry Waldman, vice president of communications for Trident United Way. “Two years ago, it was all people who were chronically poor and didn’t know how to go about getting help. And now we get calls from people who had a job, are desperate to get work again and can’t believe they are in this situation.”

Waldman said it has become a conundrum for nonprofits across the Lowcountry and the nation: The need for their services is reaching record levels while many of the people who once donated to these charities are unable to do so and now need help themselves.

With the state’s unemployment rate over 12 percent, more people are struggling to make the rent, pay their utilities and even buy groceries. The Lowcountry Food Bank, which distributes food to many other charitable organizations, has sent out 40 percent more food than it did last year.

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Currently, nearly 700,000 people in Florida receive unemployment benefits. For employers such as Kevin Rusk, owner and founder of the Titanic Brewery and Restaurant in Coral Gables, it comes with a cost.

Rusk is one of the thousands of business owners statewide who soon will receive notice that his unemployment insurance premiums are rising ”” in fact, skyrocketing.

The minimum rate for employers with few claims, which was $8, is leaping to more than $100 per employee. That has left business owners like Rusk with sticker shock.

“In my business, if I said I was going to increase the price of a burger,” Rusk says, “I can increase it 5 percent, 10 percent, you know? They increased it 1,200 percent, and that’s just a sour pill for most people to swallow.”

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Thirty-six members of Congress came out against a proposed tax on stock and derivatives trading, warning that it would drive up unemployment and undercut a shaky economic recovery in the U.S.

Charging investors for trading stocks, futures, options and other instruments would also drive up the cost of credit and private investment for both businesses and governments, according to a Dec. 15 letter sent by the 36 members, a copy of which was seen by Dow Jones Newswires.

The letter marks the latest opposition to an early December proposal by Rep. Peter DeFazio, (D., Ore.), who introduced the transaction-tax idea as one way to raise money for job creation and paying down the federal budget deficit.

“In reality, it would be a tax on all investment and savings vehicles because mutual funds and money market fund transactions are, by definition, purchases and sales of securities and bonds,” wrote the members of Congress in the letter.

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The last two quarters were even more extreme: Productivity in the nonfarm business sector grew at a shocking 8.1% annual rate. There are two possible explanations. One: The last two quarters were among the most technologically innovative and entrepreneurial in the history of the United States. Two: Fearful businesses pared payrolls to the bone. If the second is closer to the truth, payrolls are extraordinarily lean right now. Which means that firms will need to hire more workers as their sales and production grow. Which means that employment may start growing sooner than the pessimists think.

I have been pointing this out for months, but until the last employment report, it was a hypothesis supported by no evidence. Not anymore. While payrolls continued to decline in November, it was by only a scant 11,000 jobs; and the job counts for September and October were revised upward. The data now show a clear trend that suggests that net job creation may be only a month or two away. We’ll see.

There is more to the case for optimism. For one thing, less than 30% of February’s $787 billion fiscal stimulus has been spent to date; over 70% is still in the pipeline. Pessimists dote on the fact that the rate of increase of stimulus spending has probably peaked and will be lower in 2010. True. But the level of GDP will continue to get support from fiscal policy, and a second job-creation package (“Please don’t call it a stimulus!”) looks to be in the works.

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More than half of the nation’s unemployed workers have borrowed money from friends or relatives since losing their jobs. An equal number have cut back on doctor visits or medical treatments because they are out of work.

Almost half have suffered from depression or anxiety. About 4 in 10 parents have noticed behavioral changes in their children that they attribute to their difficulties in finding work.

Joblessness has wreaked financial and emotional havoc on the lives of many of those out of work, according to a New York Times/CBS News poll of unemployed adults, causing major life changes, mental health issues and trouble maintaining even basic necessities.

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The videos are well worth watching here also.

SPIEGEL: But even though there are still more people being fired than hired, the Chairman of the Federal Reserve Ben Bernanke is saying that the recession is technically over. Do you agree with him?

Volcker: You know, people get very technical about these things. We had a quarter of increased growth but I don’t think we are out of the woods.

SPIEGEL: You expect a backlash?

Volcker: The recovery is quite slow and I expect it to continue to be pretty slow and restrained for a variety of reasons and the possibility of a relapse can’t be entirely discounted. I’m not predicting it but I think we have to be careful.

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