Are you ready for this, dear reader?
You remember that recovery? Well, forget it. There ain’t no recovery. But at least we’re not in recession anymore. Yes, now it’s official. Here’s the report from The New York Times:
The recession officially ended in June 2009, according to the Business Cycle Dating Committee of the National Bureau of Economic Research, the official arbiter of such dates.
As many economists had expected, this official end date makes the most recent downturn the longest since World War II. This recent recession, having begun in December 2007, lasted 18 months. Until now the longest postwar recessions were those of 1973-5 and 1981-2, which each lasted 16 months.
The newly-declared end-date to the recession also confirms what many had suspected: The 2007-9 recession was the deepest on record since the Great Depression, at least in terms of job losses.
From December 2007 to June 2009, the American economy shed more than 5 percent of its nonfarm payroll jobs; through December 2009, the month that employment bottomed, the economy had shed more than 6 percent of these jobs.
Additionally, a broader measure of unemployment, which also includes people who are reluctantly working part time when they wish to be working full time and those who have given up on looking for work altogether, also shows that unemployment this time around was far worse than in any previous postwar recession.
Okay, so now we’re out of the woods, right? Well, maybe not. Here’s another item from yesterday’s AP news:
Unemployment grew in more than half of US states in August, the largest number in six months, as private employers aren’t hiring enough to offset the loss of census jobs.
The Labor Department says the jobless rate increased in 27 states last month. It fell in 13 and was unchanged in 10 states and Washington, DC. That’s worse than the previous month, when the rate increased in only 14 states and fell in 18. It’s also the most states to see an increase since February.
Much of the decline was due to the ending of 114,000 temporary census jobs nationwide. Overall, the economy lost a net total of 54,000 positions last month and the unemployment rate ticked up to 9.6 percent from 9.5 percent. Private employers added a net total of only 67,000 jobs.
This unemployment thing is getting to be a bummer. As we reported yesterday, it pinches both young and old particularly hard. The young are traumatized for life, says a report in the Telegraph. They “lose faith in institutions,” it says. Which is not surprising. They never get in the habit of working. They become permanently unemployed…and unemployable.
The old have their crosses to bear too. Here’s The New York Times on the story:
…a growing number of people in their 50s and 60s…desperately want or need to work to pay for retirement and… are starting to worry that they may be discarded from the work force – forever.
Since the economic collapse, there are not enough jobs being created for the population as a whole, much less for those in the twilight of their careers.
Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly half of them have been unemployed six months or longer, according to the Labor Department. The unemployment rate in the group – 7.3 percent – is at a record, more than double what it was at the beginning of the latest recession.
Being unemployed at any age can be crushing. But older workers suspect their résumés often get shoved aside in favor of those from younger workers. Others discover that their job-seeking skills – as well as some technical skills sought by employers – are rusty after years of working for the same company.
Many had in fact anticipated working past conventional retirement ages to gird themselves financially for longer life spans, expensive health care and reduced pension guarantees.
Older people who lose their jobs take longer to find work. In August, the average time unemployed for those 55 and older was slightly more than 39 weeks, according to the Labor Department, the longest of any age group. That is much worse than in August 1983, also after a deep recession, when someone unemployed in that age group spent an average of 27.5 weeks finding work.
At this year’s pace of an average of 82,000 new jobs a month, it will take at least eight more years to create the 8 million positions lost during the recession. And that does not even allow for population growth.
And more thoughts…
Oh…the market update:
Yesterday, the Dow rose 7 points. Gold dropped back $6.
Nothing important, in other words. We still don’t have a clear picture of what this market will do…
..Is it “risk on” with a spree of higher inflation? A lower dollar? And a rally on Wall Street? Commodities seem to be anticipating it. They’re at their highest levels in two years.
..or “risk off”…with a sucker punch to investors – whacking commodities, knocking the dollar higher, while pummeling stocks…and even gold?
We don’t know. We wait. We watch. We wonder what will happen next…
..and we keep our money in gold and cash until Mr. Market declares his intentions.
*** On a lighter note, here’s deep thinking Thomas L. Friedman writing in The International Herald Tribune:
In recent years, I have often said to European friends: So, you didn’t like a world of too much American power? See how you like a world of too little American power – because it is coming to a geopolitical theater near you. Yes, America has gone from being the supreme victor of World War II, with guns and butter for all, to one of two superpowers during the cold war, to the indispensable nation after winning the cold war, to “The Frugal Superpower” of today. Get used to it. That’s our new nickname. American pacifists need not worry any more about “wars of choice.” We’re not doing that again. We can’t afford to invade Grenada today.
Is there anything the Sage of The New York Times doesn’t not know?
“Frugal Superpower?” Huh? The US is running a $1 trillion-plus deficit!
Can’t afford to invade Grenada? Is he kidding? We may not be able to afford NOT to invade Grenada. The US is running out of time and money. And the Tea Party activists are making themselves felt on American politics. They’re calling for “fiscal restraint.”
But government can’t deliver fiscal restraint. Not in this economy. Cutbacks to spending would probably produce even greater deficits, since economic activity would shrink up.
Besides there are too many zombie voters and lobbyists. And we have a printing press, for Pete’s sake. Serious cutbacks are out of the question.
But what kind of spending would get the support of the Tea Party activists…and all the other activists, chiselers, malcontents, Keynesians and blowhards? You guessed it. Military spending. Unfurl the flag, print up the money and bring out the cannons. Who objects?
What did Mussolini do when he found himself at the head of a bankrupt nation? He invaded Abyssinia.
for The Daily Reckoning Australia