Not Enough Work To Go Around This Labor Day

Home prices have plunged so far that buyers are tentatively stepping back into the housing market again …

And government largesse in the form of “Cash for Clunkers” giveaways has helped spur a rebound in auto sales …

But one major obstacle to a truly widespread economic recovery remains: Jobs!

Without gainful employment, you can be as earnest as all get out. You still aren’t going to be the catalyst for a powerful rebound. And unfortunately, all too many Americans just can’t find work.

The evidence? It’s all around us …

Elevated Claims … Ongoing Job Losses … Rising Long-Term Unemployment …
All Plaguing the U.S. Economy!

In the week ending August 29: 570,000 Americans filed for first-time jobless benefits. The number of Americans who had previously filed and still remain on the jobless rolls was 6.234 million.

While those numbers are down somewhat from their March highs, they’re far, far above what would be considered normal. The average reading for initial claims over the past 42 years is just under 360,000.

Then there’s this week’s report from ADP Employer Services. It showed the economy shedding another 298,000 jobs in August. While that was down from 360,000 a month earlier, it also marked the 19th straight month we’ve lost jobs as a nation.

The cumulative tally: Almost 6.9 million jobs down the drain!

Or how about the Federal Reserve’s own analysis? The minutes of the Federal Open Market Committee’s August 12 meeting were released this Wednesday. Officials expressed worry about job market conditions across the board, saying:

“Labor market conditions remained of particular concern to meeting participants …

“Job losses remained sizable …

“Long-term unemployment and permanent separations continued to rise.”

And …

“The unusually large fraction of those who were working part time for economic reasons and the unusually low level of the average workweek, combined with indications from business contacts that firms would resist hiring as sales and production turn up, also pointed to a period of modest job gains.”

Bottom line: All the multi-billion dollar bailouts, bank rescues, Fat Cat handouts, and other aid efforts from Washington have succeeded in buoying stocks and credit markets …

But they haven’t created jobs!

Or in plain English, the gains haven’t filtered down from Wall Street to Main Street.

The Implications …

Anyone looking for a powerful U.S. economic recovery is likely to be severely disappointed. And anyone expecting huge gains from risky assets will likely be disappointed, too.

You almost have to caveat any positive sentiments you share and trends you highlight …

• Yes, home sales are stabilizing. But they’re doing so at a low level and only because bargains abound.
• Yes, the acute phase of the economic crisis is behind us. But the long-term problems of dud loans, bad assets, and bank failures live on.
• Yes, you can get rallies in risky assets when the Fed and Treasury are handing out money like candy on Halloween. But true fundamental improvement is hard to come by here in the U.S., even as overseas rebounds seem more concrete.

So as we head into this Labor Day weekend, remember just how many Americans, unfortunately, still can’t find work. And keep it in mind the next time the politicians blather on about “green shoots.”

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