Apr 01 2009

More Bad Unemployment News

Friday is the big day for the national unemployment update, but we get a hint today that it will not be good news:

Private employers cut jobs by a record 742,000 in March versus a 706,000 revised cut in February that was originally reported at 697,000 jobs, said ADP, which has been carrying out the survey since 2001.

The big drop foreshadows a huge decline in the non-farm payroll reading in the government’s employment report that will be released on Friday, some analysts said.

This should rattle support for the Democrat plans to deal with the economy. And I will say it for the 100th time – there will be little to no relief in the job picture through the summer since the Spendulus bill passed by the dems will not start producing any significant jobs until the end of this year. BTW – the state reports should come out around the 11th so we can highlight some of the big states and illustrate how impotent the dems have truly been.

One response so far

One Response to “More Bad Unemployment News”

  1. WWS says:

    We are rapidly headed to a 10% unemployment rate The rate is increasing at about .5% per month, with no signs of slowing – Friday we should hit 8.5%. This is a very significant number, because 10% is the point at which almost all of the assumptions about a wished-for economic recovery break down. We will probably hit 10% by midsummer.

    Remember that Obama’s economic plan assumes that unemployment never goes over 9.1% for the year – looks like we’ll be there by the end of April.

    But that’s a sideshow, not the real problem – the real problem is companies such as Capital One, who have said that their financial model is fine as long as unemployment stays below 9%, but above that their default model breaks down. This applies to every other consumer credit company as well, and yes, to the car companies. Once we go past 10% unemployment, not only do we NOT have a recovery this year, but we get an entirely new down leg as housing, cars, and retailers all take another beating as consumer spending drops again. This is where so many of the rosy scenario assumptions have been wrong – they have either ignored or assumed away the effect that growing unemployment will have on all consumer spending forecasts, even while acknowledging that consumer spending is driving this economy. It doesn’t take a lot of common sense to realize that the less jobs there are for consumers, the less spending those consumers will be able to do in the aggregate. But all of the rosy scenarios forecast an increase in consumer spending soon. Where is that spending going to come from? (Answer – it comes from the need to forecast good economic times ahead, and so this is another example of a situation where the forecast has very little to do with the actual data)

    I disagree with you slightly about the Spendulus bill – I hold that it will *Never* do anything to the unemployment rate, because almost none of it was actually focused on realistic job creation efforts. Don’t believe the hype that claims that some parts will actually create jobs – break down the actual appropriation line by line, and you will find that those job creation claims are based on ridiculously unsupportable assumptions. For example, do you think paying Bill Gates to build a bridge will create even a single job that didn’t exist before? If that bridge was needed, Gates would have built it anyway. If it wasn’t really needed, then it’s just another bridge to nowhere, and we would have been better off dropping handfuls of cash out of helicopter doors.

    I fear, in fact strongly believe, that we have just spent 6 months and over a trillion dollars doing absolutely nothing, and now we and the world are in substantially worse financial shape than we were last September.