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A Labor Department report out this morning found that employees cut 247,000 jobs in July. While this was relatively good news – it represented the fewest lost jobs in a year – it still meant nearly 250,000 jobs lost for the month. Yet the unemployment rate actually fell, from 9.5 to 9.4 percent.

Which may leave one asking: Why did the unemployment rate fall even as more jobs were lost?

The short answer is that the labor force shrunk. David Wyss, chief economist for Standard & Poor's, suggested that students who had been looking for summer jobs essentially gave up, moving them out of the category of unemployed. (They were no longer looking for work, after all.)

"If they haven't found something by the Fourth of July, they spend the rest of the summer at the beach," he said.

The Wall Street Journal's Sudeep Reddy offered the longer answer to this question in a blog post:

The payroll figures — jobs lost — comes from a Labor Department survey of employers. The unemployment rate is measured through a separate survey of households — asking people whether they have a job, whether they want a job and whether they searched for a job (among other things). If people drop out of the labor force, the unemployment rate can decline because fewer people would be considered jobless.

The July household survey showed the civilian labor force shrinking by 422,000 and employment falling 155,000. That translated into 267,000 fewer people listed as unemployed. The labor-force participation rate fell 0.2 percentage point in July to 65.5%

As Reddy notes, the decline in the unemployment rate doesn't mean unemployment won't hit 10 percent – in part because signs of improvement in the economy may result in more people entering the workforce, expanding its size overall and effectively pushing the unemployment rate up.

Goldman Sachs CEO Lloyd Blankfein is telling employees of the powerful bank to avoid displays of conspicuous consumption, the New York Post reports.

Goldman has faced a spate of bad press of late, including a Rolling Stone article casting it as "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" and a New York magazine piece asking if the company is "evil." (See "The Shine Comes Off Of Goldman Sachs" for more.)

Blankfein appears to be trying to stem the tide by convincing employees to keep a low profile – and maybe put off buying that fancy new mansion until the economy has improved.

"This is a sensitive time for us, and [Blankfein] wants to make sure that we're not being seen living high on the hog," a source told the Post.

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The cover of the most recent issue of New York magazine features an illustration of a giant masked man holding a bag of money. The man towers over the tiny people below, who are offering up what appears to be futile resistance.

Across the middle of the page are these words: "Is Goldman Sachs Evil?"

That's the sort of question that was not being asked in polite company before the economic downturn. Back then, Goldman was seen as one of the prime drivers of capitalism, a company staffed by men whose generous compensation was justified by their role in helping power the economy to never before seen levels – something that brought wealth to millions of Americans.

That was then. And this, it seems, is now. Matt Taibbi's began his July "Rolling Stone" story on Goldman by writing that "the world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

That's just the opener: Taibbi goes on to blame Goldman for essentially creating numerous economic bubbles and busts in service of the greedy ends of its "gangster" employees, who manipulated everything from tech stocks to gas prices with little concern for what effect their reckless speculation might have on the rest of us.

Taibbi's article was knocked in some quarters as naïve and reactionary –"a joke" written by "the Sarah Palin of journalism" – and some of the criticisms are legitimate. But even if one can quibble with the details, it's undeniable that Taibbi tapped into a populist rage against a company unused to such negative attention. And the fact that the story appeared in a pop-culture magazine – the Jonas Brothers graced the cover – meant that the negative portrayal spread well beyond the business community.

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Despite the president's claim at a joint appearance this afternoon that "I like Chancellor Merkel a lot," President Barack Obama and Germany's Angela Merkel are widely believed to have a somewhat frosty relationship. The biggest perceived rift between the two? How best to respond to the global financial crisis.

Mr. Obama, of course, has pushed through a massive stimulus package and pressed for greater government spending worldwide to end the recession. Merkel, who helms the largest economy in Europe, has resisted such spending; her government has passed only a pair of small stimulus packages in response to the economic crisis.

One reason for the two leaders' different philosophies is ideological: Merkel is a center-right politician who has argued against bank bailouts in Europe. But German history is also a factor. Under the German parliamentary governmental system known as the Weimar Republic, Germans faced hyperinflation in the 1920s that destroyed savings and drove many people into poverty. Here's one (fictionalized) account of what it was like:

The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."

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The Senate today passed a bill giving the Food And Drug Administration power to regulate the sale, manufacture and marketing of tobacco products.

The bill is a big deal: It has been in the works for a decade, and supporters say it could mean a reduction in the number of Americans who die each year from tobacco use, a figure that stands in excess of 400,000.

"We're going to be able to protect millions of children and Americans from deadly tobacco-related disease," said Sen. Dick Durban, according to the Associated Press.

You might expect tobacco companies to oppose the legislation, and you wouldn't be wrong: Lorillard Inc., the third-largest tobacco manufacturer, issued a statement saying "Congress should not be burdening the FDA with a new responsibility over a multibillion-dollar industry when it is failing presently to preserve its core mission."

But the largest tobacco manufacturer in the country, Philip Morris USA – a division of Altria Inc. and the home of the popular Marlboro brand – largely supports the bill. The company's spokesperson, Bill Phelps, told NPR it "will create a framework for the pursuit of tobacco products that are less harmful than conventional cigarettes."

Lorillard, Reynolds American Inc. and other tobacco companies have an explanation for why Philip Morris is supporting a bill that would mean stronger regulations on its products: They say the legislation will pave the way for the company to cement its dominant position in the market, because the regulations will make it harder for companies to market smaller brands or introduce new products.

As the Wall Street Journal notes, Lorillard has gone so far as to call the legislation "the Marlboro Monopoly Act."

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The big debate around the tax day tea party protests has been over what they really represent: An organic movement built on genuine anger, or a more cynical and partisan effort by the Republican Party to score points against the Obama administration.

Based on Wednesday evening’s protest in New York City, a strong case can be made for the former. Though mainstream Republicans, GOP lobbying firms and Fox News have embraced the protests – Newt Gingrich was the featured speaker here – many of those who attended were not offering anything akin to Republican talking points.

“I think Newt Gingrich is – I think he’s a slime ball,” said Roy Delduco, a self-described Constitutionalist with tattoos up his arm and a shaved head. “I don’t like Republicans. I don’t like liberals either. I don’t like the whole bipartisan system. I think it’s part of the problem.”

Delduco said he wants the Federal Reserve disbanded, the IRS “put in jail” and his taxes lowered. He complained about government spending under both Presidents Obama and Bush.

“We’ve basically bankrupted the dollar, and I’m scared,” he said.

That’s not to say there weren’t plenty of complaints about Mr. Obama and his administration at the demonstration: protesters interviewed by CBSNews.com mentioned the president’s alleged bow to the Saudi leader, the recent Homeland Security report on right-wing extremists and unsubstantiated rumors about Mr. Obama’s birthplace, among other complaints.

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EconWatch will be covering the San Francisco and New York City "tea party" protests in person – click here for background on the protests – but in the meantime we wanted to get you up to date on some of the protests that have already gone on or are going on now.


In Cumberland, Md., "peaceful protesters braved a steady early-afternoon drizzle out of their concern for current governmental policies and the well-being of future generations," according to the Times-News. The protesters reportedly carried signs proclaiming “Do Away With the IRS” and “Stop Spending Our Kids Money."

In Lafayette, Ind., "a large box of tea bags was dumped from a Lafayette bridge into the Wabash River" as hundreds of protesters cheered.

In Champaign, Illinois, about 400 people watched keynote speaker Randall Stufflebeam say "We don't need a flat tax or a fair tax. We need no tax, the way it was in 1913," according to the News-Gazette.

In Madison, Wis., "Speakers at a sometimes angry rally Wednesday accused Gov. Jim Doyle and lawmakers of smoking crack cocaine, said government spending was ruining the country and called for the ouster of all elected Democrats. One sign in the crowd compared President Barack Obama to the anti-Christ."

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Almost three-quarters of Americans think it is a good idea to raise taxes on people making more than $250,000 per year, according to the latest CBS News/New York Times poll.

In fact, two-thirds of Americans think the tax code should be changed so that middle-class Americans pay less than they do now, while "upper income" people pay more.

As for President Obama's overall budget plan, a majority - 56 percent - say it sets the right priorities for the country. Thirty-two percent say it doesn't, and twelve percent don't know.

The poll also finds that Americans are more likely to say the spending proposals in the budget will help the economy (37 percent) rather than hurt the economy (23 percent). Twenty-nine percent aren’t yet sure.

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Similarly, 32 percent of Americans say they think Mr. Obama's proposed tax plan will help the economy, while 21 percent think it will hurt. Again, a significant portion – 37 percent – are unsure.

Fifty-six percent of Americans say they approve of Mr. Obama's overall handling of the economy. (Read more on Obama's approval ratings here.) His marks on specific economic policies, however, are not so high.

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After a few weeks of ceaseless hazing and calls for his resignation, Treasury Secretary Timothy Geithner has emerged as a "keeper." He heads to the G20 summit in London after a bold week on Capitol Hill, where he introduced plans to buy up to $1 trillion in toxic assets and outlined the government's proposal to the rewire the crippled banking industry.

The reception to the Geithner’s plans was mixed, but at least the stock market had an up week. As Geithner keeps repeating, the country's economic problems are unprecedented and complex, and require some risk on the part of the government and taxpayers.

"We're not going to get through this unless we [are] willing to take risk again," Geithner said during an appearance on "Meet the Press" on Sunday. "You know, the financials took too much risk. The great danger for us now is they're going to take too little risk, they're not going to take a chance on a viable business or a family that wants to put their kids through college."

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The BBC is reporting that "France will walk away from this week's G20 summit if its demands for stricter financial regulation are not met."

French Finance Minister Christine Lagarde said French President Nicolas Sarkozy won't sign onto an agreement if it does not include more stringent global financial regulation than either the United States or the United Kingdom want.

The G20 is seen as a crucial opportunity for world leaders to coalesce around a coordinated strategy for dealing with the economic crisis, a prospect threatened by the prospect of France walking away from the table.

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