Click to enlarge.
The following chart shows the decline in the unemployment rate from the peak following each of our past recessions going back to the late 1940s.
Click to enlarge.
The next chart shows the average decline over the 12 months following the peak and where we are in this cycle.
Click to enlarge.
Perhaps I am just being a nattering nabob of negativism, but that sure looks like a "subprime" recovery to me.
December 12, 2009
Jobs Are on the Way!
The nattering nabobs of negativism are ignoring the facts.
All would be lost if nothing nattered. Literally!
In 2007 forecasters told us housing prices wouldn't fall and the economy wouldn't lapse into recession. Oops! Since the unforeseen debacles of 2008, existential angst has led forecasters to err on the side of bearishness.
Bearish since 2004. Started this blog in 2007. Still bearish. Woohoo!
But the doomsayers don't simply err by dismissing mounting evidence and embracing the narrative of decline. They mistakenly assume that companies won't put their cash hoards to work and that a new set of disruptive job-creating technologies won't emerge.
Turbocharged disruptive job-creation technologies? Still waiting!
October 8, 2010
America's Job-Creation Engine Remains Stalled
September's report provided further evidence of a U.S. economic recovery in search of a turbocharger. So far, like the usual boosters -- housing and consumer spending -- don't have nearly the oomph that they did in past recoveries past.
See Also:
Calculated Risk: Summary for Week ending Oct 9th
Source Data:
St. Louis Fed: Civilian Unemployment Rate
The Great Mortgage Mystery
ReplyDeleteOff Topic Question.
ReplyDeleteI just read an article in the paper that says China is planning to raise their minimum wage substantially. The analyst said this was as good as a revaluation of the Yuan.
I just googled around and it seems this has already been happening. (Its also interesting that China allows cities and regions to set their own minimum wages.)
http://www.businessweek.com/news/2010-07-01/china-provinces-raise-minimum-wages-to-curb-disputes.html
Is this idea really as good as revaluing the Yuan? Because if it is, then I can see China doing this instead of revaluing. You get the same effect (I wonder about that) but your treasuries still come due at the old amount, and your populace feels richer, too.
Of course, its comical that the same article says that revaluing the Yuan by 20% would destroy the export industries...but raising labor costs by 20% is fine?
May have to start closing down my RMB accounts if this is the new plan in China.
Coba
"September's report provided further evidence of a U.S. economic recovery in search of a turbocharger."
ReplyDeleteAnd herein lies the problem, as any car nut knows turbocharging has a lag in it.
What the US economy actually needs is a supercharger!
We need to instantly force feed some stimuli into the economy.
So they say housing and 'conned'sumer spending doesn't have quite the ooMPH as in the past?
Well I say let's put the pedal to the metal and start sending out 100K checks to the unwashed masses.
Ahhhh, I can feel the acceleration kicking in now, just don't know if it is from a genuine recovery or from going over a cliff.
Your middle chart shows nicely how bad job recoveries
ReplyDeletehave been since the advent of Reaganomics.
The mortgage mystery link was interesting and scary. Mostly scary. Halloween is coming up though, lol. Sigh.
ReplyDeleteCoba,
I have very little idea what one currency should be worth relative to another one. I am therefore just generally skeptical when others seems so sure (that was and is true of the Euro, the Yen, and the Yuan). I'm tempted to think if there was a great "opportunity" to make money off the obvious then it wouldn't come "knocking on my door". Somebody would have already made the big bet on it long before it got to me. In other words, the market doesn't need me if it truly is a sure thing.
In other words, I don't feel that I have any great insightful currency trading information that I could leverage to do better than the market as a whole.
watchtower,
I like it! I'm picturing the following week's grocery flyers. Your $100,000 checks would be a sight to behold. These could be sold at par!! It would give new meaning to a "Grand Sale", lol. Sigh.
In Hell's Kitchen,
I was tempted to split the averages into two different time periods. I wasn't quite sure how to justify the split, but your theory seems rock solid to me. Perhaps I am biased though, because I can't stand "trickle down" economics.
It makes little sense to me to stimulate those among us who are better off on the hopes that some of it trickles down.
Why not stimulate those who are worse off in the hopes that some of it trickles up? Why would that be any worse?
Surely if the rich knew the poor had more money, then the rich would "hope" they would spend it and therefore the rich would expand the size of their businesses to meet the new demand.
What if the poor knew the rich had more money though? What would they do? Hope some of it trickles?
It just doesn't pass the smell test to me.
Good to see you back!
ReplyDeleteone doesn't have to be predisposed
ReplyDeleteagainst Reaganomics to notice their
advent when viewing long-term data
series of various economic indicators.
Comparing the pre-Reagan US economy to
that of post-Reagan is akin to
comparing apples to oranges. Well,
they're both roughly spherical, but...
Nattering Nabobs of Negativity unite!
ReplyDeleteWho’s upset over the economy? Everybody, everywhere
27 mins ago
By JANE SASSEEN
Yahoo! News
"Unemployment just kept going up and up and up. … The stimulus has been an absolute disaster. Cash for clunkers — people took the money and bought foreign-made cars," McCammon laughs in obvious disgust."
http://tinyurl.com/28xve3f
GYSC,
ReplyDeleteSometimes I sits and blogs, and sometimes I just sits. ;)
(It is based on a favorite quote of mine, just replace "blogs" with "thinks".)
In Hell's Kitchen,
ReplyDeleteRumor has it that our prosperity turns into "pumpkins" once the party is over. Sigh.
watchtower,
ReplyDelete"Nattering Nabobs of Negativity unite!"
It all started with our last successful ad campaign of course.
Nattering Nabobs of Negativity untied!
Big winner! The shackles of optimism no longer impede our movement, lol.
United we fall, divided we hoard basic necessities.
ReplyDeleteWoohoo!
Mark - thought you might find this interestig
ReplyDeleteAluminum is most likely to be the first industrial metal used to back an exchange-traded product
http://www.bloomberg.com/news/2010-10-11/aluminum-most-likely-choice-as-first-exchange-traded-industrial-metal-fund.html
- jus me
jus me,
ReplyDeleteYet another outstanding example of things you think I might find interesting!
Am I that transparent? :)
Who am I kidding? Of course I am. All this country needs is for everyone to hoard as much aluminum foil as I have.
1. Huge price increases as everyone hoards 20+ years of personal aluminum foil usage.
2. Huge price crash as everyone suddenly stops buying aluminum foil.
Welcome to the wonderful world of commodity cycles and negative real interest rates.
From your link...
“You’re going to get eaten alive on the storage costs,” said John Hyland, chief investment officer of U.S. Commodities Funds LLC, which manages about $7.4 billion of assets. Storing gold costs about 0.1 to 0.15 percentage point annually, while for aluminum the figure might be 10 percent, he said.
10%? Where the @#$% is it going to be stored? Fort Knox?
On May 29th I calculated that a cubic foot of aluminum costs roughly $151 (at prices back then).
Does it really cost $15 per cubic foot to store it per year? Seriously? I need to get into the aluminum storage business. I've got roughly 20,000 cubic feet of storage space in my house. I'd move out and earn $300k per year. That's assuming the floors could handle the weight of course. Even if they didn't why would I care? I'd be pulling in more than enough for floor repairs, lol.