Nice chart via Annaly Capital, showing the “Mother of All Jobless Recoveries.”
You can see why the Rutgers study showing a full jobs recovery not taking place until 2017 is very possible.
>
click for larger graphic
>
Thanks, Scott!
"The trick is to stop thinking of it as "your" money." —IRS auditor
Adding some more information to the inflation/deflation debate, The CRB Raw Industrials index is just 3% from an all time record high. The index includes copper scrap, lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth, wool tops, hides, hogs, lard, steers, tallow, butter, soybean oil, corn, wheat, and sugar. The Journal of Commerce Index of 18 industrial materials is just shy of its highest level since mid May and 15% from its record high and the CRB index is at a one month high, 7% from the highest level since Oct '08 but remains 42% off its record...
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October 2nd, 2009 at 3:06 pm
Then there is this.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aXoQJ14iSlWg
You’ve questioned the birth/death adjustment all along haven’t you BR?
October 2nd, 2009 at 3:10 pm
I dunno, BR. Doesn’t look too much like 1974 to me.
October 2nd, 2009 at 3:12 pm
well from snowboarder’s perspective- the steep red line looks pretty damn good- maybe it will finish off with a nice verticle-
nirvana
October 2nd, 2009 at 3:18 pm
The red line does not include revisions – add another 800,000+ and make that “more that 8 million jobs lost”.
October 2nd, 2009 at 3:19 pm
Similar chart from Calculated Risk:
http://www.calculatedriskblog.com/
http://4.bp.blogspot.com/_pMscxxELHEg/SsXzzDSUSqI/AAAAAAAAGfM/PWX-2daRZ0w/s1600-h/EmploymentJobLossesRecessions.jpg
The trend – and extrapolation – seems clear enough. Difference is that all previous econ. contractions shown were simple inventory recessions, vs. credit contraction recession currently. Big difference, but would expect worse empl. growth in this expansion for that reason only.
October 2nd, 2009 at 3:23 pm
Did anyone hear Ken Langone on Bloomberg….he was great….he said that if any business man touted “green shoots” like the gov’t is doing, they would throw the book at us. He calls these green shoots a fraud.
He also questions that “Pat” type character Chris Romer(of course her name is Chris). If you have a chance, watch this:
PragCapitalist MUST SEE KEN LANGONE INTERVIEW: “GOVERNMENT IS LYING, WORST IS AHEAD OF US”: You just have to love .. http://bit.ly/1AlyCy
October 2nd, 2009 at 3:24 pm
It seems to me this country (and the world) is awaiting another ground-breaking invention like the Internet to spur new economic growth (real growth this time, not phony real estate growth borne of easy and cheap credit) and job creation. If we keep blowing our wad on propping up failed companies and industries, we may never see that day, at least not see it any time soon.
October 2nd, 2009 at 3:28 pm
from Yahoo Finance-
“upscale New York eatery Maloney & Porcelli is offering its patrons “stealth” doggie bags featuring logos of downscale eateries like Sbarro. ”
to make it less noticeable to the “less fortunate” who can’t eat upscale I presume-
a non-descript bag would work as well- no? By doing this “stunt” they get a little laugh out of it- “as if they would really go to Sbarros”- chuckle, chuckle-
what snobs
October 2nd, 2009 at 3:28 pm
@ahab: It’s all in the logo, ahab, dontcha know? You betcha.
October 2nd, 2009 at 3:31 pm
If we get 1%-2% economic growth, over the next few years, unemplyment will creep up to 12%-14%. It takes about 2.5% just to keep up with population growth. http://www.bushongbusiness.com/opinion.html
October 2nd, 2009 at 3:34 pm
MW -
The “old” business model of private-sector R&D (i.e.: Bell Labs – think invention of the transistor) was abandoned, and now mostly offshored to China, Far East. Where do you think new jobs will be? All in the name of short-term corp. profitability. Now remove ethics, and viola!
Yes, that’s a good use of capital – propping up failed Co’s. Think mal-investment. Are we done yet, or do we need to follow in Japan’s footsteps of the “lost decade”? Gov’t in charge of recovery not a good idea:
“If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand” – Milton Friedman
October 2nd, 2009 at 3:35 pm
@sharkbait: I have no idea. I really don’t. Was just throwing it out there as what I see to be the only real “solution”. I figure we can’t extend and pretend forever. Am I wrong about that?
October 2nd, 2009 at 3:36 pm
hipster-
thanks for the link- looks like good stuff- will check it out when i get home- streaming video at the office = big no-no
October 2nd, 2009 at 3:38 pm
By the way, sharkbait, our problems right now weren’t solely caused by our gov’t. In fact, I would say our elites working everywhere in big corporations and Wall Street, aided and abetted by our soul-less politicians (a corporatocracy, if you will) are mostly to blame here, along with a lazy, incurious, lack of critical-thinking populace who failed to hold any of these people accountable.
October 2nd, 2009 at 3:49 pm
Five… year… moving… average… in… BLS… model.
Please… cannot… explain…………. again.
October 2nd, 2009 at 3:53 pm
Yikes. If the rate of change stays true to the more contemporary dips- we are in for some rough times.
I’d say 36 months to recover from a bottom (not yet reached) is an extremely optomistic outlook. 48 months would not be easily challenged if one produced simple trend lines based on these graphics alone.
October 2nd, 2009 at 3:54 pm
@Mannwich
The answers to future prosperity are out there, if we would finally decide to get serious about funding them. One of our California universities has developed a nanotechnology method of targeting drugs to act on specific cells–ie you could give someone a chemo pill containing microscopic packets of the drug. It would be absorbed by a wide variety of the body’s cells, but the capsules would only release the drug when activated by non-harmful laser exposure.
In other words, you could administer a powerful dosage of chemotherapy that would annihilate the cancer tumor but leave the rest of the body unaffected. Sadly, while the Federal government is financing this and other ground-breaking research, the state government is systematically dismantling our public universities here.
We’ll have prosperity as soon as we get serious about working to obtain it.
http://www.ia.ucsb.edu/pa/display.aspx?pkey=2084
October 2nd, 2009 at 3:59 pm
MW –
Much of the stimulus $ is not going to be productive long-term. Maybe that’s the intent? Think cash-for-clunkers, and check recent auto data. Paulo Pellegrini (hedge fund guy) suggested writing down 30% of all household debt (approx. 4T of 14T), as a starter:
http://www.zerohedge.com/article/john-paulsons-abx-oracle-paolo-pellegrini-discusses-anemic-real-stock-returns-blasts-federal
# What should the Fed be doing? “We should focus on market based way of reducing household liabilities, basically restructure mortgages one by one and whoever made the mortgages should bear the brunt of the losses”
# “Long-term let’s change the mission of the Federal Reserve: let’s codify something that prevents it from running amok, like it did for the past ten years”
Basically, I believe there a number of intelligent MM’s out there (BR incl.) that could come up with a private sector plan that would be superior to the current stimulus pkg. More debt not a good soln. Really only helps banks (short-term), when these bad assets need to be written down.
Congress needs the political will to do it, instead of removing Glass-Stegall Act., etc. Campaign reform would be a good place to start.
Also, did anyone see jail time for financial CEO’s, CFO’s in the latest fiasco – other than Bernie M. (outright Ponzi, and ignored by SEC)? Am I missing something here? There was malfeasance wasn’t there? Anybody?
October 2nd, 2009 at 4:01 pm
Wow- pretty grim stuff out of Japan-
“Citing the five stages of corporate decline outlined by Jim Collins, author of How the Mighty Fall, the Toyota chief warned that his company has slumped to stage four, which Collins calls “grasping for salvation. . .
. . .We are grasping for salvation,” Toyoda said, adding that the company already has spiraled through the first three stages: (1) hubris born of success, (2) undisciplined pursuit of more and (3) denial of risk and peril. His self-admonitions echoed the apologies commonly made by Japanese executives who take responsibility for financial turmoil or corporate scandal.”
yeah- this is just your normal “run of the mill” recession
October 2nd, 2009 at 4:04 pm
Not sure if I should be concerned about our huge mountain of debt or China taking over U.S or this :)
Supermassive Black Holes Bringing Universe Closer to Death
http://www.wired.com/wiredscience/2009/10/moreentropy/
October 2nd, 2009 at 4:09 pm
Most Americans and the MSM are living in Alice in Wonderland, to borrow from David Rosenberg. Without government riding to the rescue, we would have had another GD. But stop and think…how could the government really do anything long-term that could avoid a GD without any cost? Not possible. We may find out the costs of government intervention in the long run will result in an even worse outcome. The chart above proves it…BTW the chart will be even worse when that baseline revision occurs.
October 2nd, 2009 at 4:13 pm
Should the Dollar, Oil, and gold, be so certain about, “inflating?
October 2nd, 2009 at 4:21 pm
The 1970s parallels truly elude me, Barry. The Japanese managed deflation playbook has yet to lead me far astray.
October 2nd, 2009 at 4:22 pm
franklin411 Says:
October 2nd, 2009 at 3:54 pm
The answers to future prosperity are out there, if we would finally decide to get serious about funding them. One of our California universities has developed a nanotechnology method of targeting drugs to act on specific cells–ie you could give someone a chemo pill containing microscopic packets of the drug.
reply:
——-
Why the fuck would I want to put money in that if I can make instant millions in the stock market? You have to come up with a better reason. Your plan has too much risk and takes too long. All I have to do is buy a dip when it look like some Fed sugar is on the way.
October 2nd, 2009 at 4:23 pm
Oil has me perplexed? A shit economy, no demand in the pipes 10 fold, but yet they think “peak oil” still lives. What’s the low, $6 somewhere back when?
October 2nd, 2009 at 4:27 pm
“All I have to do is buy a dip when it look like some Fed sugar is on the way.”
LMAO
October 2nd, 2009 at 4:30 pm
All I have to do is buy a dip when it look like some Fed sugar is on the way.
LOL
October 2nd, 2009 at 4:31 pm
Justin:
Oil has me perplexed too, just as you mention. The one thing I’d like to see is a reasoned guess about oil usage if plug-in cars with a charge distance of 100 miles are available in 24-36 months…(assumes a reasonable cost, I know..)….
I think hybrids would be needed for longer trips, but I think this could knock a real hole in the need for gas and diesel…but to this point I’ve not seen this animal in print…
B in T
October 2nd, 2009 at 4:34 pm
justin-
it’s the play against the $- and an inflation- for those fools that still think inflation is on the way-
far from it- hard to have inflation when everything has to be marked down to sell-
from Bloomberg-
“Executives at Kroger Co., the largest U.S. supermarket chain, blamed deflation for a 7 percent drop in earnings in the second quarter, while falling prices for food, gasoline, and electronics left August sales unchanged at Costco Wholesale Corp. A sustained price drop might set off a chain reaction in which lower profits force employers to pare wages and payrolls. That would erode consumer demand, exacerbating wage cuts and firings.”
October 2nd, 2009 at 4:36 pm
correction 4:34 post-
should read- it’s the play against the $- and an inflation hedge
October 2nd, 2009 at 4:39 pm
Campaign fodder for the Republicans in 2012. Obama’s “jobless recovery”, they will say.
October 2nd, 2009 at 4:47 pm
“The Securities and Exchange Commission may take action against dark pools as regulators seek to increase the transparency of the private trading networks, Nasdaq OMX Group Inc. Chief Executive Officer Robert Greifeld said today. ”
wasn’t it ZH that blazed the trail on this- as well as HFT- sure the dude ha a thing for conspiracies- doen’t mean it isn’t true- right?
October 2nd, 2009 at 4:47 pm
@justin
Peak oil refers to the maximum ability to produce oil ,the world is producing less but we are consuming even less . the price of oil in a free market supply/demand world would fall until a cheaper price would create demand. In an OPEC controlled market, they are setting supply to obtain a desired price.
October 2nd, 2009 at 4:52 pm
We crossed the Rubicon with Reagan in the 1980′s and it has taken about 25 yrs of debt does not matter with extreme greed by the corrupt corporate elite ( esp. financial crooks ) and ineffectual US government to manifest an absolute fugly employment situation ( we’re talking good paying ones folks ) for most Americans going forward.
October 2nd, 2009 at 4:53 pm
“the price of oil in a free market supply/demand world would fall until a cheaper price would create demand”
except when the price is manipulated by a million funds hedging against dollar devaluation.
October 2nd, 2009 at 4:54 pm
Steve Barry @ 4:09
“We may find out the costs of government intervention in the long run will result in an even worse outcome”.
Absolutely. But no reason why Obama should give a sh*t. (Or Bush, for that matter).
October 2nd, 2009 at 4:54 pm
Hey, Barry,
I think Mish has extrapolated the “red line” and done so recently. I see that now we’ve lost 7.2 million jobs. I was wondering just how many jobs you think we’ll lose before this is over….?
Care to make an estimate in print?
October 2nd, 2009 at 4:56 pm
leftback @ 4:53
You want to blame those who are hedging against a $ devaluation, or those who are causing it?
October 2nd, 2009 at 4:59 pm
Or do you think the 9.4 million of the Rutgers paper is about right?
October 2nd, 2009 at 5:00 pm
we knew this was jobless recovery. We knew this was a bear rally. but what we are surprised by is the magnitude.
If you guys can register at Register Free @ Investing Contrarian
You can get regular updates on business news updates esp from emergin markets China, India, Brazil and Russia but not excluding US or EU.
Some of you by now know that investing contrarian runs the fund GA Alpha Fund and posts its portfolio for all to see and analyse.
fresbee
October 2nd, 2009 at 5:05 pm
from David Rosenberg-
“To think we can have a 60% rally from the lows in six months and believe that somehow this is normal – please. By the time the market is up 60% from any low, it usually is up that amount in three years, not six months; and over 2 million jobs have been created. This is the first time the market has rallied this much with the economy shedding 2.5 million jobs.”
October 2nd, 2009 at 5:22 pm
By the way, as we know, U6 today was 17%…guess what is was just 12 short months ago…without looking…..
……………ok….10.6%..
Feel better? To me, this is really one amazing fact, how fast this number has risen in just a year…when I think of it, I see people who may never find their footing again…just awful. And the rapid rise in 12 months…just seems like it must be time to wake up and life will be all Ozzie and Harriet again…
October 2nd, 2009 at 5:27 pm
‘BUSINESS CYCLE’ SEEN AT NEW PHASE; Bankers Hold Downward Trend in Markets Indicates Recovery Is Near. DENY ANALOGY TO 1920-21 Economists Point to Superior Credit Conditions Now, Holding Easy Money Points to Revival.”
-July 6, 1930
this time is different- right-
“easy money points to revival”- sound familiar?
October 2nd, 2009 at 5:29 pm
@hobo:
That’s my point. Business can’t rejigger the entire economy from consumption to production. It doesn’t have the vision, and it doesn’t have the incentives. Only the people, acting through their government, can accomplish that.
October 2nd, 2009 at 5:34 pm
@BnT
U6 20% is guaranteed next year.
October 2nd, 2009 at 5:46 pm
We have all these pretty graphs, and fast computers, and models, and the Internet, and 5,000 business channels, the Blogs, and all this data…
And we don’t seem to be any smarter.
Kinda funny, isn’t it?
October 2nd, 2009 at 5:48 pm
Nobody knows what’s going to happen next, and the rats have taken to eating each other.
Maybe we’ve run out of suckers?
October 2nd, 2009 at 6:00 pm
@Manny – “I would say our elites ”
since you’re on a roll today, I think you should say EL-eets.
October 2nd, 2009 at 6:06 pm
I agree, sharkbait. The Wall Street bailouts is fast becoming the O man’s Iraq. I hate to say it. I really want the man to succeed….badly.
October 2nd, 2009 at 6:23 pm
What irritates the hell out of me is that nonsense about the BLS Birth/death models not performing “well” (as in crappy over-optimistic bullsh|t) during turning points.
Well, if the stupid model is only good enough when times are good and business is just you know, usual, why do we keep the BLS model going ? Just to feed a bunch of bureaucrats feeding the nonsense ? I mean, what’s the point of a model that is precise to .1% or whatever, highly tweaked, if it fails miserably when you REALLY need reliable numbers. Like a battery voltmeter that says, your battery is at 12.845 Volts (and you can start or car) and when it gets cold, oh sorry, I can only tell you that your battery is somewhere below 8 volts. No your car won’t start. It may or may not crank. I can’t tell you how long you’ll have to charge it. It may be 0 volts and you need a new battery etc….
Meanwhile the voltmeter manufacturer is having a pastrami sandwich at Maloney & Porcelli in a Sbarro bag.
Grrrrr.
EFing nonsense.
October 2nd, 2009 at 6:25 pm
I would have to say this chart it off a bit…
This is a quote from a press release from Bloomberg….
“Oct. 2 (Bloomberg) — The U.S. economic slump earlier this year was so severe it short-circuited the government’s model for calculating payrolls, raising the risk that today’s jobs report may be too optimistic.
About 824,000 more jobs may be subtracted from the payroll count for the 12 months through last March when the figures are officially revised early next year, a Labor Department report showed today. The revision would be the biggest since at least 1991.”
So in this case we are not really calculating correctly the real scope of these job losses… I wonder what the Shadow stats are saying also… It seems to me if more people go out of work we will have some serious problems that have nothing to do with market and equity moves. I am talking about too many people out of work dragging down the entire economy.
The other problem I see is the fact that those who have jobs are highly aware of the Unemployment Numbers and are willing to work more hours or produce more results for less money to just keep their job. This only makes the stress go up at the workplace which leads to other issues with health, etc…
On top of this I hear stories from people I know who have had their hours cut back or their wages reduced just so the company can stay afloat. This does not show up in the unemployment figures at all.
Is it just me… or is there some line of demarcation where there is not enough income generated by those who still have jobs to sustain even this sputtering economy? If the number of unemployed continues to rise isn’t this going to cause even more job losses as people start only buying absolute necessities?
I read this blog every day and I know there are lots of intelligent people analyzing the markets and the economy. What say you? Based on the worsening employment data is this just a really bad recession that is starting to bounce back or are we headed for something much worse….?
October 2nd, 2009 at 6:31 pm
nertopia-
. . .something much worse
October 2nd, 2009 at 6:52 pm
nertopia – agree with Ahab – but I think the timing of the “much worse” is where many of us differ. Next year? two years? five? Hard to tell right now.
October 2nd, 2009 at 7:23 pm
I think this time a lot of those job losses are structural, secular, if you will. They won’t be coming back in any form.
October 2nd, 2009 at 7:59 pm
@f411
“One of our California universities has developed a nanotechnology method of targeting drugs to act on specific cells–ie you could give someone a chemo pill containing microscopic packets of the drug. It would be absorbed by a wide variety of the body’s cells, but the capsules would only release the drug when activated by non-harmful laser exposure.”
—
Can you quantify, for me, the dumbass hillbilly farmer that I am, how what you describe there is going to add $50 trillion to our economy and get us back to break even?
I’d like you to step that out for me…
October 2nd, 2009 at 8:00 pm
sharkbait:
Do you really want to be quoting Uncle Milty? This recession/depression has pretty much discredited him.
October 2nd, 2009 at 8:00 pm
ZackAttack:
Springsteen was saying that 25 years ago.
October 2nd, 2009 at 8:11 pm
alright- this is right in line with what we are talking about-
Working Class Hero by John Lennon-
http://www.youtube.com/watch?v=br_KeK3nsWo
October 2nd, 2009 at 8:48 pm
And how does the Great Depression graphs compare to now?
October 2nd, 2009 at 8:58 pm
nertopia Says:
On top of this I hear stories from people I know who have had their hours cut back or their wages reduced just so the company can stay afloat. This does not show up in the unemployment figures at all.
reply:
Actually, it does show up in the Average Workweek, which today showed another tick down to 33.0 from 33.1. A post-depression low if I’m non mistaken.
http://biz.yahoo.com/c/terms/emp.html
October 2nd, 2009 at 9:00 pm
Meant to add:
“For the purposes of production and income calculations, a one tenth of an hour change in the workweek is equivalent to a 340K change in employment. Needless to say, the workweek data are therefore critical in judging the overall strength or weakness of the employment report.”
October 2nd, 2009 at 9:03 pm
“The other problem I see is the fact that those who have jobs are highly aware of the Unemployment Numbers and are willing to work more hours or produce more results for less money to just keep their job. This only makes the stress go up at the workplace which leads to other issues with health, etc…”
nertopia
Good points, all. And it’s why those Pollyannas who poo poo the UE stats by saying such things as, “well 90% of people still have jobs and money to spend”, are full of crap and have no clue (or they’re just being downright dishonest for their own agendas). The marginal difference between a U3 of 5% and one at 10% (with U6 at 17%) has huge effects that ripple through the economy.
This “recovery” is going to be a bitch. Those who remember the gloom of the early ’80s, just wait. This is going to make that look like a picnic. We’re just starting this, and it’s something we could have headed off a decade or more ago. But noooooo, we can’t be takin’ any pain or making hard decisions or letting bankers feel pain. So we plead with the Fed to keep the easy money drug coming. And they’ve always obliged.
October 2nd, 2009 at 9:18 pm
Let people tap their 401K’s tax free to pay down debt, and that would give a big immediate boost. Also, another boost would be more seed funding for start-ups, where the multiplier is large, rather than extending unemployment benefits, hiring more police officers, or saving banks from receivership.
October 2nd, 2009 at 9:27 pm
A recoveryless recovery?
October 2nd, 2009 at 9:52 pm
“You can see why the Rutgers study showing a full jobs recovery not taking place until 2017 is very possible.”
2017? Ha, ha: They’re dreaming!
Contrary to what you hear on right wing nut job talk radio (Rush, etc) and Fox News, the American economy is The Great Jobs Destroyer!
October 2nd, 2009 at 10:00 pm
blurtman-
i like that- here you go- your trademark-
A recoveryless recovery ™
no fee required
October 2nd, 2009 at 10:08 pm
@Mannwich 3:10 pm
“Doesn’t look too much like 1974 to me.”
I think that’s a typo — looks much closer to 1874.
October 2nd, 2009 at 10:32 pm
@Franklin411 3:54 pm
“The answers to future prosperity are out there”
Please explain how ANY technological innovation will provide employment for millions of people who are seriously deficient in the education dept, esp. in the science and math arena.
One of the characteristics of technological advancement is that it destroys the markets for previous employment skills and requires considerable learning and development of new skills, which more and more require levels of academic preparedness (e.g., statistics, computer programming, analytical thought) that are simply not present in the workforce at large, and take years of training to develop.
And if we cannot provide employment for the masses, if we end up running economy with a mix of computers and a small number of highly skilled and highly trained people, how will our market economy function, if the middle class is eviscerated and we have a permanent large segment of the potential workforce that are instead unemployed?
Sounds like a 21st century high-tech banana republic to me. And banana republics are not known for their social stability or for the general well-being of their populaces. Certainly any kind of “fair” elections would be the same pointless exercises that exist in the banana republics, with the public manipulated and presented with a false choice of candidates in election after election.
Oh, wait …
October 2nd, 2009 at 10:51 pm
@Franklin411 5:29 pm
“Only the people, acting through their government, can accomplish that.”
You might want to sit down for this. The “people” no longer have a government. The individuals who operate the government of the US of Bananamerica are owned, bodies and souls by the corpocracy. The political parties control the nominations and primaries, and nobody who does not obey the parties gets into office.
That’s why Obama campaigned on the promise of hope for change, and once safely in office is following the same directions and trajectories as his predecessor. Most definitely a smoother delivery, and not so grating in his public presentation, but in terms of his policies and treatment of the moneyed elites, he is the reincarnation of George W Bush.
The “people” never had a chance.
October 2nd, 2009 at 11:11 pm
I think the “recovery” picture becomes clearer if we step back and look at the global economy. If the US of Bananamerica and the EU crumble into a debt-saddled no-growth “recovery”, we see a curious thing in the global economy, wherein the third world nations swap places with the “developed” nations.
Most of the growth from this point forward is going to take place primarily in the Far East and India, secondarily in South America, Canada and Russia, followed by the Middle East and Africa, with the EU and Bananamerica bringing up the rear.
There will be growth and an economic recovery, it just won’t happen here. Put that in your S&P 500 and smoke it.
October 3rd, 2009 at 12:00 am
franklin411 Says:
October 2nd, 2009 at 3:54 pm
@Mannwich
The answers to future prosperity are out there, if we would finally decide to get serious about funding them. One of our California universities has developed a nanotechnology method of targeting drugs to act on specific cells–
***********
Pretty common stuff and not all that meaningful, in fact just another biotech story.
October 3rd, 2009 at 3:46 am
It is ironic that it would take all the working class rubes not pulling all the ox carts out there to make the magic money men in government and wall street look really stupid. So we all sit here, with honest looks on our faces looking at the ‘smarties’ running the place, “Have you got an answer for us?”
All we get back are blank looks, furrowed brows and a song worthy of little orphan Annie
October 3rd, 2009 at 3:55 am
I hear Canada and Mexico are thinking of erecting fences in order to keep American refugees out of their countries.
Just kidding…..I think.
@ constantnormal
I sure wish Barry would install a thumbs up meter. I’d go out and get a whole bunch of new aliases just to recommend your posts a few dozen times :)
October 3rd, 2009 at 9:53 am
You just can’t compare the last 30 years to taoday. The demographics a much too different.
For example, there is a huge group of boomers probably being forced into early retirement. These do not appear in the unemployment numbers. Many will probably come back into the workforce in a few years when their money runs out.
You probably also have a large number of women who stayed home to care for the children and used the house ATMs during those years. How attractive it must have been when house prices were doubling every few years. They don’t get into the unemployment stats either. They will soon be knocking on doors also.
Using past data to predict the future in a transition phase is a farce.
October 3rd, 2009 at 12:57 pm
[...] (Hat tip: Barry Ritholtz at The Big Picture.) [...]
October 3rd, 2009 at 1:49 pm
Calc Risk has a much more informative version of that same chart using the preliminary estimates of the coming revisions to the govt numbers:
http://www.calculatedriskblog.com/2009/10/comparing-employment-recessions.html
This economy looks far worse than ’73 – ’74 and our collective balance sheet looks like 1929…and you’re 75% long? Good luck. You’ve made good calls so far, but you’re very wrong at this point. Judging by your appearance on Kudlow, you appear to be digging in your heals with your current bullish stance and sanguine outlook.
October 3rd, 2009 at 2:18 pm
Next year, the Fed may be faced with stagflation, the simultaneous occurrence of economic stagnation and inflation. Sadly, the Fed cannot cure stagflation. A more complete discussion of this phenomenon is at http://rodgermitchell.com/inflation.html, but here is a quick overview:
Money is the lifeblood of an economy. During a recession, an economy suffers from “anemia,” a shortage of money. The treatment for anemia is to increase the blood supply. But typically, the Fed tries to cure recession by cutting interest rates. It tries to cure inflation by increasing interest rates. Since inflation is not the opposite of recession, doing the opposite doesn’t work.
To cure inflation it is necessary to raise interest rates, increasing the reward for owning money. To cure stagnation it is necessary to treat the anemia, i.e to deficit spend. The former is the task of the Fed. The later is the task of Congress. That’s why the Fed alone cannot cure stagflation.
Unfortunately, the Fed wrongly believes high interest rates slow the economy, so when stagflation appears, the fed will urge a reduction in deficit spending (bleeding the anemic), which it considers “prudent” while only reluctantly and incrementally raising interest rates.
This will continue the Greenspan and Bernanke policies, which will extend the recession.
Rodger Malcolm Mitchell
October 3rd, 2009 at 11:56 pm
[...] the economy may be worse than reported. The Big Picture shows this depressing chart of unemployment compared with all other post Depression recessions. [...]
October 4th, 2009 at 4:48 pm
The “jobless recovery” at this point is a given. No one expects any recovery in employment anytime soon. The trial balloons sent out this weekend from the administration will only extend the jobless recovery. Retraining programs (free school is better than work) and extended unemployment benefits (free money is better than work) will only make it more attractive to learn how to do something new. Notice the correlation in the chart to length of time until recovery and government the lengths government went to hep “solve the problem.”
October 4th, 2009 at 10:37 pm
[...] This is the worst recession since WWII in terms of job loss. How bad? This bad: [...]
October 5th, 2009 at 1:40 pm
On April 9, 2008, I wrote to the Chicago Tribune this note:
“Every U.S. depression, and the vast majority of recessions,, have coincided with reduced growth in the money supply. Today again, the U.S. economy is starved for money, which no amount of interest rate reductions can cure. To a small degree, interest rate reductions actually reduce the amount of money in the economy, because the federal government is required to pay less interest on its debts. There is one cure, and one cure only, for a recession, or depression: Increase the money supply. How? By federal deficit spending. The federal government creates money when it pumps more money into the economy than it removes by taxation. The $150 billion stimulus package is an example, albiet too little and too late. ” (http://rodgermitchell.com/medialetters.html)
At the time I suggested a stimulus package of $500 billion to $1 trillion. Now we have gone so far downhill, we need a stimulus far beyond that, perhaps in the $4 trillion range. The unsupported beliefs of the debt hawks not only have limited the size of the stimulus packages, but have resulted in much of the already-appropriated stimulus for being spent. So, the unfounded fears that taxpayers will pay for the stimulus now are magnified into the worse punishment taxpayers feel from the recession.
It was like not giving flu shots because the needle might sting, so instead we all got the flu. Thank you debt hawks.
That original $ mailing to taxpayers actually was a good idea. If it had been $1 trillion, rather than $150 billion, our economy would be in far better shape, today.
Rodger Malcolm Mitchell
http://rodgermmitchell.wordpress.com
October 5th, 2009 at 2:30 pm
Sorry. Should read ” . . . but have resulted in much of the already-appropriated stimulus for NOT being spent.