Maggie's Farm

ARRRRGGGHHHH!!!
http://news.yahoo.com/s/ap/20090924/ap_on_bi_go_ec_fi/us_economy

Listen folks, it's great that new jobless claims fell. But this isn't a sign of "recovery". Why are journalists so vapid?

Recovery is when employment GROWS by at least 150,000 jobs per month, not when unemployment is still rising. And while it's fair to say unemployment is a "lagging" indicator which will decline AFTER recovery begins, that lag is minimal.

Consider why: A recovery begins with the decision by companies to spend money. This decision has no immediate impact. The next step is to actualize the decision by spending it (to build up inventories, put up a new building, redecorate, advertise, etc.), this is the first impact - the spending on the decision.

At this point, other firms receiving this money have to decide whether they need to hire employees to accomplish goals. In the current economy, many companies are saying "I'm getting alot out of my staff, I'll put off hiring until I know I need someone extra". During a growth cycle, they won't wait - but coming out of a recession, they will....but not long. Because by waiting, they risk losing business. So they may wait a month at most.

At some point, IF the spending is large enough, and the needs are severe enough, more employees will be hired, and they will be hired quickly in order to maximize revenue fulfillment obligations.

It's hard to see how increased jobless claims, regardless of how far off the peak they are, is an indication of recovery. At best, one can say "things aren't as bad as they were". Which is good. But it's not great.

Now if jobless claims suddenly fell to zero, unexpectedly, then I think we'd have something to crow about. In the meantime, I'm loathe to sit here saying "wow, what great times we live in now that more people are out of work and the economy is recovering."