Posted by Karl Denninger
Nonfarm payroll employment edged down (-85,000) in December, and the unemployment rate was unchanged at 10.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment fell in construction, manufacturing, and wholesale trade, while temporary help services and health care added jobs.
This is huge, and is why last month the report was an actual “green shoot” but not conclusive evidence of a turn.
This month threw cold water on the premise that the corner has been reached and we are now on the “upswing”.
While the number of employed is not dropping as quickly on an annual comparison basis, it is still declining. For me to get somewhat-positive that red line has to go above zero and remain there, as it did in the middle of 2002.
But the truly bad news is found here when it comes to sustainable recovery and a look forward in terms of budget deficits and thus being able to “work our way out of the hole” on systemic debt:
After dipping back monentarily the inexorable rise continues.
This graph, more than anything else, shows the structural problem our economy faces going forward, and is one of the reasons that I believe “this time it’s different” when it comes to sustainable recovery.
We have not managed to add people back into the labor force on an annualized basis since this series began!
This means that there are more and more people who are sucking on the government teat, which is not true GDP – it is a transfer tax. It is part and parcel of the Ponzi. And since this downturn began both of the indications that we might be seeing “hope” – the first around the end of 2008 and now this year at the end of 2009 – proved to be nothing more than tiny downward blips in a pattern that shows incredible and continuing deterioration.
Government fools have already been out this morning talking about further extending unemployment benefits. All that will do is cause interest rates to move higher (due to more government borrowing) and further smash housing and other long-running investment.
This report is, unfortunately, a whole bottle of “Round Up” dumped on the top of the previous month’s “Green Shoot.”
What is especially troubling in this report is the implication that employers, who usually hold off on firing until after Christmas, didn’t this time around. That has nasty written all over it – and leaves open the possibility that we’re nowhere near the bottom on this cycle.