Hiring & Unemployment

http://www.nytimes.com/2010/11/06/opinion/06obama.html?emc=eta1

http://www.nytimes.com/2010/11/06/business/economy/06jobs.html?nl=todaysheadlines&emc=tha1#tab=1

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"Where success is concerned, people are not measured in inches, or pounds, or college degrees, or family background; they are measured by the size of their thinking." (David Schwartz)

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The good news is that the economy added 151,000 jobs in October (159,000 private sector) on a surge in the service sector. That's good because our economy is now 70% "service." There are really 2 magic numbers here. By general consensus, 125,000 jobs is the key number to be ABOVE: there are that many new entrants (roughly) into the workforce each month. The other is 5%: our GDP growth would have to average that much for a year to drop the unemployment rate by 1 percentage point. As it is, we have to average 2.5% GDP growth just to keep unemployment from rising. Both numbers are approximate, but then so is "economics."

The interactive graphic in the Times article attached does a nice job of showing the public and private numbers on increased hiring. This may be an early indicator that GDP may be growing at a more rapid rate than the 2% many economists project. According to BLS data, the average hourly workweek and average hourly wages also rose in October.

The Fed followed thru with their plan to spend $600 billion on the economy this week. We see that as good. Others worry about inflation down the road. Our response is that, without spending like this, there will be no "road." It's that simple. The real (BLS U-6) unemployment rate dropped from 17.1% to 17.0%: this is the more realistic rate that includes people who have given up looking, etc. This number has to go down short term and long term or we will creep closer to the 25% rate we saw in the Great Depression. We already have higher numbers for the "long term unemployed" than at any time since the Depression.

In one of the most disingenuous acts we've seen in a long time, Rush Limbaugh and other talking heads of his "ilk" have criticized President Obama for his current trip to India and other Asian countries because it will cost $200 million a day. We're going to dignify the "source" of that data by saying that an Indian stringer spouted those figures without any facts to back it up and people like Limbaugh ran with it.

Those aren't the numbers, but, even if they were, are we going to criticize the President for what he does or what it costs? We've attached his explanation of what he's doing and we think it's reasonable. He'd like to improve our export situation: as he says, for every $1 billion we export, that's 5,000 jobs in the U.S. Asia is where three of the five largest economies in the world are (with a rapidly expanding middle class). In India, the President will be negotiating about reducing barriers to U.S. exports and increased access to Indian markets. In South Korea, the host of the G-20 economic forum, he will be participating in signing a trade pact that could be worth billions in increased exports. We used to be the top exporter to South Korea; now we're in fourth place. Who let that situation slip?

Hours worked and temporary hiring are key indicators but exports have a role in the process and we haven't paid attention to that situation in a long time.

We read Nouriel Roubini and he defines "worst case" for us. We're hopeful that 2018 (per Roubini) is not how long we'll have to wait for a "comeback."