The comedian Michael Ian Black recently remarked that “If they’d just stop making girls I’d get a lot more done”.
In terms of the economy, I’d say that if they’d just stop making unemployed people, I’d feel a lot more positively about the chances for a sustainable recovery. But they continue to make unemployed people, look at this morning’s initial jobless claims data via Marketwatch:
The number of people applying for initial unemployment benefits climbed by 19,000 to 479,000 in the latest week, the Labor Department reported Thursday. The four-week average of initial claims — a more accurate gauge of employment trends – rose by 5,250 to 453,250.
The Jobs Picture is the straw that doesn’t stir the drink right now. I was talking to a friend of mine who is in the center of the Northeast commercial real estate scene yesterday and he heartily agrees. He doesn’t see how things can ever improve without a real reversal in the unemployment story.
And let’s dispense with the “employment is a lagging indicator” nonsense from your textbooks. In a deflationary environment, unemployment is a coincident indicator, not a lagging one. Look at the data from 1970 to 1982 for your proof of this: Unemployment began to rise as the economy slowed down and peaked at the nadir of economic activity.
The deflationary recessions of that period are more apropos to what we’re experiencing now than anything post 1990. No jobs = no soup for you.