Friday, January 07, 2011

Unemployment Hocus Pocus

This morning, the headline on the Drudge Report was that U.S. unemployment rate is now 9.4%, down from 9.7%. On the surface, the spin is designed to paint a positive picture. But how does the employment rate fall when new jobs added are below the number of jobs required just to stay even?
Over the past three months, the economy has added an average of 128,000 jobs. That's just enough to keep up with the population growth. Nearly double is generally needed to significantly reduce the unemployment rate.
The December numbers -- the catalyst for the report -- is that we added 103,000 new jobs. The math does not add up.

We are optimistic as a nation. I talk to people all day the manufacturing sector. The general sense is that there is "cautious optimism." We want to believe that 2011 will be better than 2010, but we were at the same position last year and the year before that.

The underlying sentiment is that American politicians have let us down, regardless of party affiliation. That this will not change with a Republican House (and Democratic Senate and White House.) The federal (and many states') debt burden and the inability to reign in spending and taxation will forever dampen real growth.

Until businesses have confidence in long-term possibilities, they will be reluctant to take the necessary risks needed to expand and drive commerce.

No comments: