Did anyone notice that the revisions in initial unemployment insurance claims today pushed the four week moving average up to 440,500, up 19,500 from last week.

Anything above 400k is regarded as recession territory. We just transitioned from teetering on the edge of a recession to plummeting.

Here’s my post in February on the topic, when claims were at 375,000.

Newspaper holding company AH Belo announced yesterday that ad revenues were down 21% in the second quarter. That 21% is the biggest decline I’ve seen yet. (Belo publishes four daily newspapers, including the Dallas Morning News and Providence Journal.)

For broader context: here’s an article about the ill newspaper industry in the International Herald Tribune, ironically, a newspaper I used to write for. Yes, the article includes that dire phrase “since the Great Depression.”

More thoughts on the phrase “worst since the Great Depression”.

I’ve been noticing the phrase “worse than the Great Depression” cropping up in news reports.

So, right now, there are 11 references to “worse than the Great Depression” in Google news. And 11,600 references in straight Google news.

Then there’s “worst since the great depression.” There are 53 of those in Google news and 12,500 of those in regular Google search.

This metric isn’t perfect, since the words will often be things like “the worst housing recession since the Great Depression” or “Beer sales in pubs are now at their lowest level since the Great Depression of the 1930s – down seven million pints a day from the height of the market” or “The US home foreclosure crisis has deepened to a level not seen since the Great Depression of the 1930s…”.

All of which suggests we also watch “since the Great Depression” too. Right now, there are 2890 results for that combination in Google news and 588,000 in regular Google search.

(For fun, I tried the same searches on Cuil.com, the $33 million Google killer. I get 472,817,893 results for Great Depression. Wow! Wait a second, I get just 5,396,452 results for “great depression.” And just 330 results for “depression.” Guess Cuil hasn’t programmed the quotation mark restriction into their algorithms. Definitely the worst search results since the great depression.)

NPR ran a long feature this morning about how bad people think the economy is — gas prices cutting into wallets, falling house prices, health-care costs, tight credit, creeping inflation.

The real bad news is… we ain’t seen nothing yet. Unemployment is still beneath what used to be called “full employment.”

Labor and politicians could only dream of 5% unemployment in the 80s and 90s. Unless we see a massive boom in export manufacturing (vabuuely possible with the dollar at $1.60 to the euro) the unemployment rate is headed back towards 8%. At which point today’s chorus of woe is going to sound, retrospect, like “Yellow Submarine.”

I just took a McCain poll appearing on Linked-In. From a media perspective, the Linked-in poll idea is fascinating because once you respond, you get to see how other Linked-In users respond with results broken out by sex, age, industry. Wow, that’s powerful as a media experience for Linked-In and HUGE as a service for advertisers.

But right now, I’m particularly interested in the poll’s slant: “What has the most long-term potential to lower gas prices for Americans?”

The answers: “Oil exploration on US territories,” “Alternative energy research,” “Better Middle East Relations,” “Smaller vehicles,” and “I do not know.”

First, there’s no room for “other.” Second, most of the solutions imply, either directly or indirectly, government interaction. Third, the obvious answer, “the market,” is missing. The poll begs the question: is this a question a candidate needs to be thinking about?

If anything, the government should be raising prices on gas (through taxes) to help us all retool our life-styles to prepare for the day 10 weeks or 10 years from now when gas costs $10 a gallon. To those who say “if we save it the Chinese will burn it,” I’d say, “let the Chinese build their economy on waste and inefficiency, we’ll compete far better with them in ten years.”

In the long run, the best solution to high gas prices — the only real long-term solution — is higher gas prices in the short-term. People will stop driving SUVs, manufactures will rush to make batteries more efficient, entrepreneurs will figure out solar cells. There will be millions of solutions that no five-year-planning bureaucrat can imagine. And then the market will lower prices.

“The economy is stalling even as the Federal Reserve and the government do everything they can to stimulate growth. In economic cycles since World War II, government spending and low interest rates pulled the United States out of recession. This time, even though the Fed has lowered short-term interest rates 12 times in three years, and the government has swung from a $237 billion surplus in 2000 to a projected deficit of more than $300 billion this year, the medicine appears not to be working.” NYTimes.com

Stocks are trading up and down in relative unison, an effect last seen during during major free-falls like the ’87 crash, the ’97 Asian crisis and the ’98 Russian debt debacle.

The market rallied sharply after each of these tumbles and periods of lock-step trading. Does this mean we’re going to rally big once the Iraq war is resolved? Or is the correlation with inflection points rather than bottoms, which might instead mean we are next headed down?

We are, in the big scheme of things, still perched atop a 19 year rally, and may not have factored in swelling deficits, exhausted consumer borrowing power, a coming housing slump, and/or looming baby boomer retirements.

Most importantly, we may have yet realized that the 19 year equity rally may have been powered by nothing more than falling interest rates. The future value of money was rising for the last 19 years. Is it any wonder that stocks, which we buy because they will generate future profits, were rising in value too? As the Fed’s ability to lower rates comes to an end, that trend is, by physical necessity, over.

I guess another possibility is that we are inflecting out of a rise into a plateau, the kind of bump and grind that we saw from 1965 to 1984.

See the Dow chart or click more for correlation chart. (more…)

Home equity loans are the crack cocaine of the American economy — fun while they last but then a real disaster. Banks like Wells Fargo are pushing Americans to “unleash the spending power locked up in your home!” and arguing that the practice isn’t risky because banks generally lend no more than 75% of the home’s value. Well, sure, the practice is not as risky for the bank that has the home as security, but for a family that has to sell or give up its home if the economy softens, the practice is potentially ruinous.

How many remember that half of America’s mortgages were in default in the depths of the Great Depression.

Proof we should worry: 10% of spam is pushing home refinancings. Yes, folks, step right up… pulling cash out of your home to buy a new car is about as wise as paying to “increase your bust size 20%!!!” and “FREE LUNCHES FOR ALL!”