Friday, September 4, 2009
Unemployment. Un - Employment, for sure
...the details beneath the surface of the unemployment rate figure are very troubling. The adult male unemployment rate has already climbed above the 10% level. When all the labour market slack is included, for example, the fact that full-time employment cratered 336,000 and those working part-time for economic reasons surged 298,000, the all-inclusive U6 jobless rate rose to an all-time high of 16.8% from 16.3% in July. Unless the laws of supply and demand have been permanently repealed, this record and growing amount of slack in the labour market is only going to exert more downward pressure on wages at a time when organic personal income is deflating at nearly a 5% annual rate. Unless Uncle Sam extends his generosity, the outlook for the consumer is fraught with fragility, and all one has to do is have a read of those tortured FOMC minutes that were released earlier this week from the August meeting to see how nervous the Fed really is over prospects for a sustainable recovery.