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Author Topic: Top Economist - May jobs improvement a 'fairy tale'  (Read 1623 times)
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WhiskeyGirl
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« on: June 10, 2009, 09:09:08 AM »

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Rosenberg is one of those dour but smart economists that never saw a market he really liked, which made him a real oddball at Merrill Lynch. I don't always agree with his conclusions, but admire his perspective, command of history and the language. Late last week, he provided some great insights into the recent May unemployment numbers.

He complained it's misguided to see the loss of 345,000 jobs in May as one of the green shoots merely because the decline was less severe than April (-504,000), March (-652,000), February (-681,000) and January (-741,000). He points out that the "fairy tale birth-death model" from the Bureau of Labor Statistics added 220,000 to the number, so adjusting for that, we would have actually seen a 565,000 headline job decline. The birth-death model is a mathematical construct used at the BLS to account for the fact that hundreds of small businesses rise and fall each month and yet are not captured easily in government data.


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...the market is extrapolating this improvement forward and drawing the conclusion that employment is going to start to turn positive on a first-derivative basis by August, at which time we will all be saying goodbye to the recession.

As you can probably guess, he thinks this is bunk, and here's why. He thinks changes in the second-derivative (i.e. the rate of change, not the change itself) only take you so far. As an example, the best nonfarm payroll report during the last expansion was the 380,000 print in November 2005...

...Just as it would have been premature to call for the end of the economic expansion in November 2005 at the peak of the job gains, it is very likely a mistake in the other direction to be calling for the end to the downturn just because employment is no longer declining at the same awful pace it was at the turn of the year.


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...Rosenberg further points out that the data show that not only are businesses still cutting jobs but they are also reducing the hours that their employees are working, so total labor output is weakening...

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Now here's my take: The jobs picture is improving a little, but from total despair to a merely depressing level. I have never personally witnessed so many solid, productive, creative, smart people thrown out of high-paying jobs. Companies are no longer cutting fat; they're cutting meat and bone.

This will have an effect on consumer spending, and certainly should make us wary of depending too much on U.S. consumer spending over the rest of the year...

http://blogs.moneycentral.msn.com/topstocks/archive/2009/06/08/top-economist-calls-may-jobs-improvement-a-fairy-tale.aspx

Where are the jobs saved?  Jobs created?  Will temporary jobs for students replace the wages of breadwinners?  Save families?

What is the value of destroying generations of hard working profitable car dealerships?  Redistribution to those favored by Obama?  I haven't seen race or ethnic background mentioned, only political affiliation.  Are any specific races or ethic backgrounds over represented among the closed dealerships?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
WhiskeyGirl
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« Reply #1 on: June 10, 2009, 09:12:33 AM »

From the comments -

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One important thing to remember.....Unemployed people don't buy items.   Our government can't manipulate this fact.  Until our economy starts adding 100,000 plus jobs per month, we will stagnate.   - Millen hater (Posted 06.09.09 7:02 AM)

Hmmm...Obama admin not spending stimulus, unemployed not spending (can't afford Cobra either), few if any jobs available - maybe 1 for every 1,000 people looking...

Just raise taxes, import/amnesty more people, raise public benefits usage...destroy profitable dealerships...

Where are the green shoots?
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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