Flying Pink Unicorns

I was right about the coming United States economic recovery. Its here, its real, and its effects have already begun to be felt in the labor market. The current statistics are (slightly) wrong, will be very misleading for February, when the jobs report comes out this Friday, the 5th, but beginning with the VERY NEXT report, due out on April 2, the job growth I have long been predicting (and virtually promising) will be here. Give me 5 more weeks, and then you may judge

While my timing was very slightly off (I had predicted job growth would begin in November, later revised to "by February,") I was, I think, very right in my overall predictions. The economy will add jobs this month (when the figures are reported in early April). North of 125,000. This will herald a long period of time in which the economy is growing, steadily, but not in a boom (say 2.8-4%), and in which we are adding jobs at a rate of circa 200,000 per month. The national unemployment rate, currently 9.7%, will most likely stay between 9.4 and 9.8 % for the next 3-6 months and then begin a long, steady, inexorable drop until it is around 7.4% or so when Obama wins a 41 state reelection landslide in November 2012 running on a strongly recovering economy, which was facing a possible depression when he took office. (See my post of December 20, 2009).The real credit will go to the huge and very creative approach to stimulating the economy taken by Time's 2009 Person of the Year, Ben Bernanke, (likely destined to go own in history as the most successful Fed Chairman of them all for his deft handling of the great financial crisis of 2008-2009), the monster bailouts put through by Paulson (Bush's guy) and Geithner at Treasury, the much loathed TARP rescue of the huge banks (which I always strongly supported) and the stimulus package passed in February 2009, with virtually no Republican vote


Many books will be written about the period of bailout, from late 2008-early 2009, and how they saved the US economy. I think I have outlined these books in various posts, including this one.

Back to the economy.


There have been recent signs of economic weakness which were somewhat surprising. I don't deny this. Nevertheless, I have the courage of my convictions of the above predictions. I know I was a little early in predicting job growth last year, (so sue me!) but it is now here, and in the next several months it will be clear to all.


On Friday the government will report that a lot of jobs were lost in February, probably more than 150,000, a bad number in line with the number of job losses late last year, and not at all in line with my relatively rosy predictions repeated above. But this won't in fact be true. Instead, the awful snowstorms on the eastern seaboard and in the south will have skewed the numbers, particularly in the construction sector. A lot of people will have been furloughed as a result of the bad weather, and thus show up in the statistics as having lost their jobs. Now that March is here and the weather will VERY likely improve sharply, many of these workers will be rehired. When coupled with hiring in the service sector, the beleaguered manufacturing sector (!) and Census workers, the result will be a solid, steady job growth, beginning THIS MONTH, and accelerating in the coming months.

Here is an article neatly summarizing what his going on now-- which is in essence what I predicted months ago would happen in January/February.

http://money.cnn.com/2010/03/03/news/economy/job_cuts/index.htm


This article states that, "private sector employers cut 20,000 jobs in February, the fewest since February 2008, when employment first began to decline." In short, businesses have cut pretty much all the workers they are going to cut as a result of the economic downturn. Home builders realized long ago that they were in a depression (that sector). Large manufacturers have done their cutting and, amazingly, are now ADDING jobs. Ditto the service sector, which was hammered by a monster slowdown in demand for their services in late 2008. That demand is creeping up, slowly, but up, forcing service sector businesses to expand the hours their current employees are working, and to hire new ones, often on a temporary basis, while the business leaders wait and see how demand for their services go.

Another factor which will spur job growth this year is if the logjam breaks in DC over health care (and other issues). Now I don't know if bills will be passed and signed into law, but I do know that by the Summer bills will EITHER pass or be deemed dead until next year. This will provide increased certainty regarding costs of new employees, which will help decision makers decide to add workers. Its not a huge thing in my opinion, but it will register.

The upshot? My predictions were right, I am reaffirming them, and in early April, when the jobs report for March comes out, you'll all see that I was right.


I know I said I'd donate $100 to Sarah Palin if we didn't have a month of 75,000 job growth by February 2010. That will not come to pass in the official numbers, but I think they are wrong, and there is evidence in the unemployment survey to support my view. Look, I am paying off under the spirit of my promise, not the letter. If we still haven't gained significant jobs by April of this year, I'll pay off. Give me a few months to go through coming data and see if I may have in fact been right but for the February snowstorms. If not, I'll pay up.