Unemployment 8.6%

[The Vorlon]

The headline number (Drop to 8.6%) is good news.  

I am sure the Obama folks and the media will spin that number really hard, and to the degree it can become a narrative it is good in that it may improve the general level of confidence in the economy.  There is a $h*tload of cash on the sidelines, and to the degree confidence improves, some of this capital may reenter the economy.

The bad news is that 315,000 folks just simply gave up looking, so the drop is a statistical quirk not a real reflection of actual gains.

With the revised upward numbers from the previous two months, the economy is in reality more or less at a break even point - new jobs being created more or less equaling the increase in persons in the workforce.

I suspect that the "headline number" will stay pretty constant for a while - if we get a spurt of job growth, the spurt will be masked by previously discouraged workers rejoining the workforce. (and vica versa, if growth goes south, discouraged workers will rise)

An interesting question is how many of the long term unemployed (ie nearing the 99 week unemployment Insurance limit) have just gone off the books and are working in the underground economy?

In Europe (Italy is the poster child for this) the real number of folks with a job is a fair bit bigger than the "official" one - As US policies converge with those of Europe, it will be interesting to see if the underground economy grows to also match European levels.

[The Vorlon]

The first editions of the AP story pointed out that it ONLY dropped because 315,000 people stopped looking for work, so they are no longer counted toward unemployment figures.

The AP has now conveniently reworded that information after their overlords in the DNC demanded that they hide it.

Pure coincidence.

[The Vorlon]

Look...voters vote THEIR pocket books, and when the percentage of the population working is shrinking and wages (even before adjustments for inflation) are shrinking...it doesn't matter if Unemployment Rate drops to 2.0%, the voters aren't going to drink the Kool-Aid.

And an economy growing at 2% GDP with NEGATIVE real wage growth will soon become an economy with NEGATIVE GDP growth - a recession.  And that new recession is going to be obvious in 2012Q1 (or 2012Q2, at the very latest), right in time to engineer a landslide against Obama.  In fact, as I pointed out last month, half the GDP growth of Q3 was due to increased spending on medical services and electricity (due to the heat wave).

The negative wage growth (even before inflation), is showing up in both the GDP reports and the employment reports....it's undeniable.

Not to mention, consumers are continuing to pay down debt.  So with shrinking wages and no new debt spending, where is continued growth going to come from?

Wow.. and I thought I was a pessimist... - I am thinking flat gdp will 2013.....