“No matter how you slice it or dice it, the U.S. economy remains fundamentally weak.”
That’s how David Rosenberg, formerly chief North American economist with Merrill Lynch, looks at today unemployment report in his daily newsletter, which he pens from his new perch at boutique investment firm Gluskin Sheff. Despite doses of government fiscal stimulus that are “dulling the pain” of contracting GDP, there is nothing the government can do about employment, writes Rosenberg, short of making firing illegal.
Sifting through the details of the Bureau of Labor’s report, details he calls “simply awful,” Rosenberg notes that 65% of companies are still cutting jobs, a “disturbing” stat, and manufacturing employment fell by 63,000 jobs in August, it’s lowest level since 1941 despite inventory replenishment that’s been widely reported.
Further, Rosenberg notes the shadow numbers, much of it buried in the “Household Survey.” The actual decline in employment was cushioned by more people working at home. Salaried workers, on the other hand, dropped 637,000, the largest decline since March. The household survey actually shows employment fell by 1 million, writes Rosenberg, if you dig into the details, “which is unprecedented,’ he notes.
Further, nine million people are now “working part-time because they have to, not want to,” adds Rosenberg. The adult male employment rate — males lost jobs at a faster rate than women in the August numbers — is already above 10% in the U.S.
Lastly, those looking for a job for more than six months without success are now a record one third of the total jobless, at 5 million, which Rosenberg argues portends a long-term trend in jobless — longer than the current downturn, in other words.
In conclusion, Rosenberg ends with some articles in The Wall Street Journal from August and September of 1930, after over a year of the Great Depression. The articles mentioned investors looking for places to put money to work in the stock market after a big 50% run-up.
“We only know now with perfect hindsight what these pundits did not know back then,” writes Rosenberg. “That there was another 80% of downside left in the bear market.”
Source: Gluskin Sheff