Friday, September 3, 2010

Not Yet Robust

The Lehmann Letter (SM)

Today the Bureau of Labor Statistics reported that the economy lost 54,000 jobs in August:

The stock market interpreted the report as good news because the private sector gained 67,000 jobs while government jobs fell by 121,000. The reasoning went like this: It's good that the private economy is gaining jobs, even while the Census continues to shed jobs, because it's the private sector that must recover.

True enough. But keep in mind that we want the economy to truly recover, not merely avoid another recession.

Job Growth

(Click on chart to enlarge.)

Recessions shaded

The chart clearly illustrates the recession's damage to the labor market. At one time we were losing well over half a million jobs a month. Then we recovered into positive territory. But job losses recently reappeared as the Census shed workers.

Here's the point: The economy has to add 250,000 jobs a month to successfully drive the unemployment rate downward. That rate is now stuck between 9% and 10%. Those are not recovery numbers.

We need positive strength, not just the absence of weakness.

(The chart was taken from [Click on Seminars and then Charts.] Go there for additional charts on the economy and a list of economic indicators.)

© 2010 Michael B. Lehmann

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