A torrent of headlines came out today on the latest U.S. jobs numbers. Unemployment fell to 7.8%, below the psychologically important magic number eight. Hitting a four year low this certainly marks a change in the right direction, but we’re still talking baby steps (hand holding a toddler comes to mind.)
To have a substantial impact on the millions still unemployed this really needs to be closer to five or six percent. With only 114,000 jobs created we’re a far cry away from solid recovery. Numbers like 250,000 per month bring back better times from the abyss.
Still, current figures often underestimate the number of new jobs created (note the upward revisions of late) and the situation might be better than reported. We won’t know until after the November presidential election so whatever right direction/wrong direction spin the candidates want to put on these figures now’s their chance. Here’s what it looks like without the spin.
The gauge for recovery can’t really be measured solely by pre-financial meltdown levels anyway. Many jobs, especially in real estate and construction were unsustainably inflated by easy money sloshing around and unscrupulous mortgage lenders, traders and quantitative charlatans, but that’s another story.
What’s new is the housing slump appears to be in tentative recovery. The National Association of Home Builders/Wells Fargo Housing Market Index has been climbing for several months running now, albeit from a very low base and below even 1990’s levels. There’s ample room for improvement. Considering the flack the U.S. economy has been hit with since 2008, especially among proponents of the inevitable decline meme (and the dozens of books it spawned) let’s stick with the glass half full version. That same glass used to be cracked, leaking and irreparable.
Other data points show that the economy as a whole can be about as undecided as some American voters with only four weeks to go. The Institute for Supply Manufacturers gauge hit a four month high of 51.5 indicating expansion had returned to the economy. Alas, the Markit Index of Manufacturers fell slightly to 51.1 (still expanding but at a slower rate), from 51.5 in August.
These pesky social sciences. Conflicting data sometimes relegates the field more to a numbers running racket than say the mechanical precision of physics. Getting billions of electrons marching in single file across a TV screen remains far easier than accurately predicting the hiring and purchasing activity of a few hundred million people.
Since about 70% of the U.S. economy is driven by consumption and the holiday season represents a significant portion of consumer purchases for the year, perhaps better numbers are inventories and retail sales for October and November.
Wherever they end up, we still have a long slog ahead of us until the engines of American prosperity kick into high gear. On the bright side, innovation and ingenuity in the material sciences, biotech, information services and healthcare are expanding at tremendous rates. Once these go mainstream they’ll power an American renaissance sometime down the line. Just don’t ask for a firm date yet.
Photo: Depression Era Soup Kitchen, Wikimedia Commons