Is there good news in this bad employment report? Perhaps.
The December employment situation report was as bad as could be. Non-farm payrolls fell by 524,000 and the unemployment rate rose to 7.2%. An additional 154,000 jobs had been lost in October and November according to revisions to those month’s reports.
When you look further into the numbers things get worse. There was a drop in hours worked to an all time low when seasonally adjusted and more people are only working part time. Shadow Government Statistics is reporting that the drop was 697,000 with seasonal biases worked in.
People in the self help arena always note that acknowledging you have a problem is the first step in solving it. Well 2008, and 2007 for that matter, was a year of denial. Our political and economic leaders and those people in business and the media who benefit from a positive equity outlook had first been denying a problem, then declaring it over. Whether it was housing, banking sector writedowns or the market in general, there has been no shortage of so called experts declaring that we have hit a bottom.
First these Pollyannas said there was no problem, then when they couldn’t deny it any longer they said the worst of it was past, and then when the news got worse they said well now the worst is in and some even said that everything would be fine except for those people talking down the economy; all those chicken littles out there where actually causing the problem by scaring people.
I found that humorous until it became apparent that many people took that perspective seriously. If that were the case why didn’t the constant drumbeat that the worst was behind us have that same “self fulfilling prophecy” affect?
But the reaction to today’s numbers has been grim, which is a good thing. How can you address a problem if you don’t know the magnitude of it. Perhaps we wouldn’t have thrown so much good money after bad if the folks at Treasury and the Fed acknowledged (or publicly acknowledged) the scope of the problem back in 2007. I understand the need to avoid a panic but if anything has been learned in the various financial and political scandals over the last few decades it is that sunlight is the best disinfectant.
Our economy has been propped up by various bubbles over the last decade and when some people had the temerity to point out the house of cards nature of our economy they where shot down and met with the new paradigm argument. It was used to justify ridiculous valuations of non-profitable companies during the tech bubble and that 10%+ annual growth in housing was sustainable.
