Job losses accelerated more quickly than expected last month and the unemployment rate rose to 9.5%, casting doubt on prospects for the U.S. economy to soon rebound.
U.S. employment fell by a seasonally adjusted 467,000 jobs in June, after declining by 322,000 the month before, the Labor Department said Thursday. The report is at odds with such signs of recent economic improvement as growing home sales and increased business investment.
“I think we’re past the period of free fall in the economy but it would be premature to say that we’ve reached the bottom, or might, within the next couple of months,” said Jeffrey Frankel, an economics professor at Harvard University. “I’m expecting the recovery to be a slow one.”
This one is splashed across the front page of this morning’s Wall Street Journal. Read it all.
We’re [url=http://reason.tv/video/show/810.html]turning Japanese![/url]
I think there are only two possible paths to sustained recovery, to say nothing of a new boom:
a) The old economy — debt-powered consumer spending — is revived by deficit spending and massive injections of liquidity … which requires vastly over-indebted people (and governments) to borrow even more, or
b) Most past mistakes and malinvestments are corrected as all bad debt washed away through repayment or default
Free markets are attempting path B, but are being fought vigorously by governments and central banks pushing path A. In that dynamic neither approach is likely to gain traction. We are thus embarked upon a new civil war of sorts: the political class [i]versus[/i] the economic class.
Many key metrics are tracking quite a bit worse than in the early quarters of the ’30s depression. World trade, for example, is dropping twice as fast. Employment is dropping faster, yet he US has it rather better than most of Europe and much of Asia. Unemployment in Spain is already near 20%.
The political class will, of course, blame the economic class for all the difficulties. As conditions deteriorate, the opportunities for demagoguery are legion, and the present US administration have demonstrated repeatedly their willingness to distort economic truth in the service of increasing political power … most specifically, theirs.
Meanwhile, in the last two quarters households have repaid about 3% of their debt. If that repayment rate can be sustained it will take 12 years for debt levels to return to pre-bubble values as a percentage of GDP … provided GDP can hold steady or better for the next dozen years, which is doubtful.
Increased taxes, too, will drag on companies’ willingness and ability to resume hiring, as well as make it harder for households to repay debt and build savings. Carbon taxes, 10% VATs, and federalised health care costs will all quite substantially increase tax burdens on the most productive sectors of the economy; at the same time they will hamstring consumer spending, compounding the problem.
Jobs will remain scarce for a long time.
As gloomy as your news is, I think you are spot on. My husband lost his job in January. The Aussie company he worked for decided to close down their US operations. I don’t expect any headhunters to be calling soon. I thank God each day for my job.
but this is all Bush’s fault, right?
#4. Bush is not free of guilt certainly, but it is primarily the Fed’s fault.