One Scary Unemployment Chart

By: TraderMark Monday, February 09, 2009 12:54 PM

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Thanks to reader Linda for sending this chart; as they say a picture is a worth 1000 words. What we show below is the number of job losses VERSUS the peak employment level.... i.e. how many are lost versus the highwater mark in employment.

As I was stating throughout 2008 as the "bottom pickers" were telling us to buy stocks, "they" were using the wrong playbook. Most market participants under the age of 50 have been living in a world of corporate led recessions... not a consumer led recession. This is why (even if you exclude the financial destruction) this was going to be something akin to the early 80s or late 70s - the last consumer led recession. And I'd argue in the few decades since our economy has transformed even more to a "service based" economy which is dependent on people shopping - so it's an even more perverse loop to the downside than if we had similar conditions in the late 70s or early 80s. Now, anyone who studies history would know how much deeper consumer led recessions are but apparently our public school systems (and MBA programs) are not churning out the type who bother with history... not that important I guess. But I don't blame these people for getting it wrong; our "best and brightest" in the Federal Reserve completely missed the boat as well; as well as former Goldman Sachs executives running the U.S. Treasury.

Now here is the scary part - at this point during the past two recessions we were flattening out (1990) or reducing our rate of decline sharply (2001). And once again the tired bulls are using the wrong playbook... they cling to "well it can't last that long, after all the recession started in Dec 2007 so on average it lasts blah blah, so therefore blah blah blah must come out of recession by blah blah date". It's getting tiring listening to "playbooks". Wake up folks.

We're already down 3.5 million jobs from peak and I've called for potentially 4 million more to go in the remaining 11 months of 2009; Nouriel Roubini (Feb 6: What Would Roubini Do?) makes me sound like a bright eyed bushy tailed Kool Aid drinker with his call for 6 million. Let's go with my number - that would take us somewhere into the mid 7 millions as we sit 11 months from now. Go ahead and project that angle and duration on the chart above and get back to me with your talk of 2nd half recoveries. (p.s. one note - the employed population of the U.S. is larger now than 1990 or 2001 so of course by nature the job losses will be larger; but that does not "excuse away" the degradation in this chart)

And for the optimists out there talking about the recovery, I'd like to point out that in the relatively mild early 90s recession it took 32 months to get back to the peak employment level.... and in the "jobless recovery" of the early 00s it took nearly 50 months. We're in month 13 and the potential for job losses (in my mind) goes out to month 26-30 before we flatten out. How long before you think we reach the credit induced, house building, credit card spending, 0% car loan buying employment levels we enjoyed in 2004-2006? Buckle down folks - it's going to be a few years of "dark" ... (Dec 15: The Economic "Recovery")

But not to worry, the "2nd half 2009" recovery is almost here (Jul 1, 2009!) and Obama will be creating 2M... I'm sorry, 2.5M... he meant 3M... err let's call it an even 4M jobs so the "V shape" rebound on this chart awaits us soon.

Kool Aid!

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2/9/2009 1:38:43 PM "Missed the boat?" Naive by John Ryskamp I wish you would stop repeating this idiocy about policy makers "missing the boat." No. They conspired to rob the country. They knew perfectly well what was going on, and they decided to go with corruption. Stop with this "missing the boat" idiocy. Face the fact that the political system is THOROUGHLY corrupt. And be prepared for our little oligopoly to move to fascist style corporatism, accompanied by placing under Federal control pension plans, 401K plans, and money market plans. YOU are the one ignorant of history. Mussolini and Hitler both seized funds in a similar manner, and the Government now is preparing us for this by saying that there needs to be "private participation" in the bank bailout. When the next debt shoes drop, then we will ALL be called upon to "participate" by giving up the above-named sources of cash. And here is more of your ignorance. The Federal Government is pulling back on its participation in the society. Much to the surprise of post-War babies such as yourself, West Coast Hotel v. Parrish (1937), a case you have never read but the case which established the "scrutiny" regime under which we all now live and which caused this corrupt debt bomb, NEVER repealed Mellon's "liquidate liquidate liquidate" and that's exactly what the Federal Government is doing now. Which has begun the replacement of the "scrutiny" regime with the new "maintenance" regime. Don't know anything about the history of that either, do you? Just read my book, John Ryskamp, The Eminent Domain Revolt. We are heading straight for the collapse of the economy and the ensuing political crisis. Reply Rating: (3) (0)

I wish you would stop repeating this idiocy about policy makers "missing the boat." No. They conspired to rob the country. They knew perfectly well what was going on, and they decided to go with corruption. Stop with this "missing the boat" idiocy. Face the fact that the political system is THOROUGHLY corrupt. And be prepared for our little oligopoly to move to fascist style corporatism, accompanied by placing under Federal control pension plans, 401K plans, and money market plans.

YOU are the one ignorant of history. Mussolini and Hitler both seized funds in a similar manner, and the Government now is preparing us for this by saying that there needs to be "private participation" in the bank bailout. When the next debt shoes drop, then we will ALL be called upon to "participate" by giving up the above-named sources of cash.

And here is more of your ignorance. The Federal Government is pulling back on its participation in the society. Much to the surprise of post-War babies such as yourself, West Coast Hotel v. Parrish (1937), a case you have never read but the case which established the "scrutiny" regime under which we all now live and which caused this corrupt debt bomb, NEVER repealed Mellon's "liquidate liquidate liquidate" and that's exactly what the Federal Government is doing now.

Which has begun the replacement of the "scrutiny" regime with the new "maintenance" regime. Don't know anything about the history of that either, do you? Just read my book, John Ryskamp, The Eminent Domain Revolt.

We are heading straight for the collapse of the economy and the ensuing political crisis.

Rating: (3) (0)

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