No Progress on Unemployment

From Mish’s:

Tack on another month of no progress with weekly unemployment claims. The 4-Week moving average is still hovering around the 450,000 to 460,000 level where it was in mid-December 2009…

…Last week’s improvement in claims is an outlier primarily related to seasonal discrepancies in auto manufacturing workloads. The 4-week moving average smooths out such fluctuations and is still hovering above 450,000,

The numbers are consistent with an economy that is losing jobs.

The Obama Administration congratulates itself – and gives credit to the stimulus – that we are not losing 700,000 or so jobs per month, as we were in the worst part of the financial crash…but that is utterly meaningless: the jobs were lost and they are not being replaced. At best, we’re treading water. It is very likely, though, that we are actually still declining – such decline masked merely by the manner in which the BLS calculates employment (and its not a conspiracy – the BLS admits that its models are going to be inaccurate during a down economy).

Now, if the economy does go south in the second half of 2010 – as more and more people are expecting – then we might start to see towards the end of the year a sharp spike in job losses. Adding to this is the fact that cash-strapped State and local governments are starting to reduce their workforces. Unemployment might end 2010 significantly higher than we’ve seen in the past 12 months. 11 or 12% is easily possible, and its not out of the question for it to be much higher than that.

Dodging and weaving, the Obama Administration and the Federal Reserve are doing what they can do delay the crash until after the mid-terms – we’ll see if they can pull it off. But in the end, the crash must come – there is too much debt which simply cannot be paid back. Some sort of default is inevitable in State and local governments unless Uncle Sugar comes to the rescue with a bail out – and even that just moves the disaster to the federal level and increases its ultimate scope.

80 years of economic idiocy has to be paid for – the bill has come due, and we’re stuck with it.