Saturday, December 5, 2009

US Unemployment: Who Do You Believe?

I WON'T PRETEND TO BE A STATISTICAL BRANIAC when it comes to the economy. Well, statistically I'm a braniac but not when it comes to statistics. Oh, never mind. Anyway, maybe someone can explain to me why, with all the hoopla about the US only losing 11,000 jobs last month, there is this other statistic from a private payroll company, called ADP, that provides payroll services to 1 in 6 US workers, 23 million, which says that the economy lost 139,000 jobs in November. I wouldn't want to suggest a government head count was inaccurate or politically motivated, of course. I just want to know how they came up with such different numbers.
Anyway, even by the most optimistic numbers there's still a helluva lot of people out of work in the USA. And many of those have now been unemployed for half a year or more - 38.3 percent of the unemployed, up from 35.6 percent. That's probably why one economist, Allen L. Sinai described the good news this way:
“Things are getting better, but a one-month respite, frankly, means nothing in the context of the worst labor market ever seen since the 1930s.”
And, at this point, I still stand by my argument that the US economy has bought a temporary relief on the basis of postponing a major correction. It may be that the economy stabilizes as a result of the $787 billion stimulus package (not to mention trillions more in bank bailout cash) but one of two things face the US economy in the future. Either the effect of the bailout won't be sustained and into next year the recovery will lose steam. Or the contradictions that led to the present crisis - the financialization of the US economy, the massive growth in both private and public sector debt - will continue to overhang the economy and lead in a few years to a new crisis. I suspect if it's the latter, it will take less time than the gap between the last bubble burst - the dot-com bubble -  and the most recent one, about 8 years.
Likewise, the imbalances in the global economy haven't even been touched and, if anything, have gotten worse as China has poured most of its stimulus spending into investment, creating a mass of over-capacity. Trust me on this, I'm a brainiac.
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