Unemployment & the Economy

http://www.nytimes.com/2011/10/08/business/economy/us-adds-103000-jobs-rate-steady-at-9-1.html?emc=eta1

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"Keep your mind off the things you don't want by keeping it on the things you do want." (W. Clement Stone)

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Wait, alert the authorities, the economy added jobs last month but not enough to reduce the unemployment rate! What a shock!

For those of us who follow the unemployment rate (or rates) because it is the most important lagging indicator for any economic recovery, we're not surprised. The "official" employment number is that the nation added 103,000 jobs in September. Now, of course, we need to subtract the Verizon employees who were out on strike and have now reported back to work: so, 103 - 45 = 58,000 which, perhaps, might be a more accurate number. Then, of course, we'll have the first revision and then a second revision of the numbers (standard operating procedure for the government) which could raise or lower that number later on.

What this all means is this: "we" never recovered from the worldwide financial crisis. The economists (and I use that term advisedly) will tell us that two consecutive quarters of negative GDP growth constitutes a recession, so they officially declared an end to the U.S. recession in June, 2009 (don't hold me to that date exactly - I just have no plans to look it up) where that criteria must have reversed. Today, there is consensus amongst most economists (this may be a "first") that the U.S. economy is running at stall speed: GDP growth at 1% or less. So, some of these economists are predicting a return to recession (that would be the recession that we never got out of).

Most economists see 125,000 to 135,000 jobs created per month in the U.S. economy as what's necessary to keep up with population growth. The unemployment report was actually encouraging to some economists (those who are being treated for depression) who had predicted a "net loss" of jobs for September.

There are 14 million people counted as unemployed in the United States today. An additional 9.3 million are working part time and would rather work full time. And 2.5 million have simply given up looking for a job. So, roughly 26 million, or 16.5% of working-age Americans want full-time work and can't find it.

Is there any good news? Well, yes there is: the temporary help industry added 20,000 jobs. For years, temporary help has been an early positive sign with the economy because it's the first thing that happens when employers are ramping up but don't want to hire (or hire back) permanent employees yet. The average workweek also lengthened slightly and wages went up slightly.

Government jobs, usually a plus in the past, went down 34,000: mainly from local governments which laid off teachers and other school employees. State and local governments have cut more than 500,000 jobs since June, 2009 (when "economists" declared an end to the recession).

Until the Top 500 CEOs start spending the more than $2.2 trillion in cash (an all time record) they have sitting on their books for capital projects (which will, in turn, cause spending by the next 500 in size and also small businesses), nothing will improve for years. In addition, "the gang that couldn't shoot straight" (aka, our people in Washington) needs to go big for infrastructure spending (something the U.S. actually needs) which will add, by some measures, $1.5 dollars to local economies for every 1$ spent (that's a Mark Zandi perspective).

If I'm a student, I major in petroleum engineering. Or, I major in civil engineering but not software engineering. If I'm in business school, I get an accounting degree, MS in same and a CPA (with Sarbanes, that's a job for life). If I have other interests and I'm getting a BA, I go to graduate school while the economy continues to suck (an economic term). If it's law school, I become a divorce lawyer and NOT a tax lawyer. Why(?), because, as Alan S. Blinder says, tax law can be done overseas, divorce law requires everybody being here. The division in the "globalized" world is no longer skilled vs unskilled in terms of where the work gets done, it's "what skill" and where can it most effectively be done?

My hope is that the U.S. economy will improve. "When" is the question.