The Scariest Employment Graph -- The Drudge Report -- Not About the Bakken

This graph is very, very interesting.

One has to ask the obvious question: why?

With regard to jobs:

• no recession has been deeper
• no recession has been longer

It has now spanned one entire administration. 

And yet, how many trillions of dollars were spent "stimulating" the economy? $16 trillion in debt right now, and soon to raise the debt limit.

One has to ask the question: why?

Why has this recession lasted longer than every previous recession in modern history, since WWII? And only seniors even think about WWII any more. In fact, two wars since then, the Korean War and the Vietnam War, aren't even talked about much any more. That's how long it's been -- how many years this single graph covers.

I have to disagree with Drudge: it's no longer scary. It might have been scary two years ago when we did not know how much further down the "red" line would go, but it has turned the corner, and now the "red" line has become the norm.

We see the slope of the curve with 150,000 jobs being added each month. At this rate, it appears it will be another four years before we get back to the baseline. Of course, we will never get back to the baseline: there are too many advances in technology; some jobs are never coming back. It would not surprise anyone (except the Geico cavemen) if Sears, Best Buy, and/or JC Penney are gone by the end of the year. Surviving companies have gotten stronger, and learned to do more with fewer employees. The weak companies will simply fade away. As just one small example, the huge Barnes & Noble store at the upscale mall in Alamo Heights/Lincoln Heights, San Antonio, was gone when I returned this past December. It was an icon, a mall anchor. And it's gone. The Target store in the same area closed years ago, its demise probably hastened by the Wal-Mart (and its deceptive ads) around the corner. (Which begs the question: if Wal-Mart is so successful, why doesn't Target use deceptive advertising? But I digress.) We haven't yet seen the end of the decline in state government workers that is yet to occur.

But that graph at the link is truly amazing. It is one folks should spend some time on, and ask the question "why?"

But, as noted above: the graph is no longer scary. This is what is scary: if the red line dips, that will be scary. Jack "The Shining" Nicholson scary -- but to see a dip that means anything, it would have to be a sustained dip for three or four months. And that's what makes the graph scary. So, we'll see.

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How do we fix that "scary" graph?

It is very, very simple.

We re-set the baseline to where the -3% currently is. I think everyone pretty much agrees that 7% unemployment, perhaps 6%  is the new norm. If so, move the baseline, call it a day, and move on.

The Fed has signaled that 6.9% is the new "bar." It was mentioned that we are only 0.7% in unemployment away from the end of QE: that means when unemployment moves toward 7%, the Fed feels it has met one of its two mandates: full mandates.

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From an unconfirmed source: Average U6 Rates: (U6 rates began being used in 1994)

• 1994 - 2000  = 8.8%
• 2001 - 2008 = 9.2% (statistically, not much change from previous time period)
• 2009 - 2012 = 15.9% (a bit worse, I suppose)

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Add a few more. Company praised by the president one year ago shuts down:

Owner Bruce Cochrane, a fifth generation furniture-manufacturer, formed the company in 2011 with a $5 million investment and the hope he could make a profit off people who wanted to buy furniture made in America.

It was a move that caught the attention of North Carolina officials and those in the White House. Last year, Cochrane sat with the first lady during Obama’s 2012 State of the Union Address. He also joined the president and other business leaders in a discussion about how to create more jobs at home.

Sad. 

Read more here: http://www.miamiherald.com/2013/01/04/3167317/lincolnton-furniture-company-praised.html#storylink=cpy