Headline numbers looked more benign, but I just got an update from market strategist Bill King noting that without seasonal adjustment, the job loss was 954,000. Also, the “birth/death model” inexplicably created 72,000 jobs in December, which is ridiculous. So you can make the case we lost a million jobs in December.
Update: From Bloomberg:
“The labor market is clearly not functioning at all,” Wachovia economist John Silvia says of ongoing job losses, underscored by today’s non-farm payrolls data. “This will be a big hit to consumer spending and confidence. It suggests a very long, challenging recession.”
It’s disappointing to hear an economist misuse the language of his art and say something like, “The labor market is clearly not functioning at all.” The labor market is functioning fine. True, there’s been a rapid shift in demand to the left, which is going to cause a lot of serious pain for a lot of people – which I’m not minimizing – but there’s no evidence the market isn’t working in the sense that the credit markets were not working in the September-November period.
I hate to be pedantic, but imprecise language like this – saying the market isn’t working, when what I think he means to say is, “The market is giving me an outcome I very much dislike” – has consequences – like, for example, the State feeling it needs to interfere in a heavy-handed way, thereby making things worse.
What I find disturbing, as an analyst, is how much of the job elimination going on is pre-emptive, i.e. the companies involved have not yet had a negative financial result, they are PROJECTING negative financial results 6 or 9 months down the road and ANNOUNCING job eliminations now as a counter to their decreasing share prices, always trying to stay one step ahead of rational expectations of future financial activity.
I know it seems prudent to take projections like the ones I create and plan accordingly, but when it comes to layoffs, I have always felt management should be just a little more resilient and adopt more of a “Show me!” attitude about bad financial forecasts before cutting off the employment of productive employees.
KTF!…mrb
The market isn’t God, Phil. The state is also an actor in the market, and has always been a market actor. There is no reason for us not to help our fellow Americans through the government. That’s what the government is there for: its by the people and for the people. Being an American citizen means sometimes helping other Americans.
Contractions in the market mean that there will be more misery for millions of people. Since businesses can’t get credit and are laying off people, and 1 in 4 retail stores will declare bankruptcy, Government expenditure is what is necessary. Spending on the right things will also help businesses many years in the future, just as government spending on universities, the GI bill, NASA, Roads and the military helped the economy from 1945 on.
John, I didn’t say the market was god, and there’s a difference between, on the one hand, spending money to assist people and, on the other, taking more intrusive measures because one is goaded into believing the market mechanism itself is broken.
As an aside, the State is far less capable of “spending on the right things” (which concept of “right” is necessarily a quasi-totalitarian one as applied to the government) than the private sector. So we scorch the subprime mortgage originators, but insist Fannie Mae and Freddie Mac have to live another day to sabotage the mortgage market again, or we call Bernie Madoff’s Ponzi scheme a criminal tragedy while the Social Security Ponzi scheme is all-laudable, or we ridicule millionaire homes as obviously wasteful but turn a blind eye to Pentagon programs hundreds of billions of dollars over budget and ten years behind schedule, etc. The Federal government will not be our savior, even under St. Barry.
Well … every time the Pres elect opens his mouth, the market drops another 100 points … maybe that’s the cause and effect they’re trying to figure out.
RE: “That’s what the government is there for . . . ”
Uh — not it’s not. It’s there to fulfill its written-down and agreed-upon Constitutional role.
RE: “Being an American citizen means sometimes helping other Americans.”
Sure — but the argument at hand is by what means.
Given the misery charitable giving of those on the Left, it’s easy to see why they might want the State to pick up the slack they leave.
That said, the State can only give what it forcibly removes from another. In this case, the “other” will be both the productive, profitable sector (now and in the future) to bestow it on the unproductive and unprofitable. When you consider that you get more of what you subsidize and less of what you tax, this isn’t going to come out too well, IMHO.