It’s getting kind of scary how easy it is to dredge up bad news.

And if that keeps up, then I’m going to seriously be expecting a longer term bounce up on sheer contrariness factors. It’s one thing to see bad news pile on top of each other but, it’s another when EVERYONE is reporting ugliness.

It’s a Job Man

It appears that the unemployment rate last year in the US was 4.6% (from conferenceboard.ca) and currently it’s sitting at the 5.5% area.

Noting that those figures based on the US government’s weird black box of calculations (see any post this year from Mish about the disconnect there) let’s assume that the “real” numbers are higher - perhaps 6-7%.

I’ll quote Mish directly here at this point in regards to the upcoming figures tomorrow:

If so, unemployment will have risen from 4.4% at the beginning of 2007 to something like 7% at the beginning of 2009. Given that job losses are accelerating and that unemployment is a lagging indicator (unemployment is expected to rise for some number of months after the economy bottoms), it is not unreasonable to be talking about 10% unemployment sometime in 2010, with 8.5% to 9% or higher extremely likely.

Now Mish states we should get ready for “Depression Era” unemployment figures.

I’m a big fan of Mish, don’t get me wrong but when folks start babbling hyperbole I have to start poking around because I just don’t take much on credit.

From A Timeline of the Great Depression:

1930 The unemployment rate climbs from 3.2 to 8.7 percent.

1931 unemployment rises to 15.9 percent.

1932 Unemployment at 25% (http://www.econreview.com/events/ur1932b.htm)

1933 24.9 (courtesy wikipedia http://en.wikipedia.org/wiki/Unemployment)

1934 21.7

1935 20.1

1936 16.9

1937 14.3

and so on. In two years unemployment in the US jumped from 3.2 to 25% from 1929-1931.

Bah - Hyperbole.

But the Gloom Continues

Courtesy of GlobeandMail.com I do present less hyperoblic info:

Many believe the economy will continue to shrink through the rest of this year and into the first quarter of next year. At 12 months and counting, the current recession is longer than the 10-month average length of recessions since World War II. The record for the longest recession in the postwar period is 16 months, which was reached in the 1973-75 and 1981-82 downturns.

….

Employers in the Fed regions of Boston, Richmond, Chicago and Dallas reported that demand for temporary workers dropped. Employers in the regions of Boston and Cleveland also reported that seasonal hiring had been scaled back at retail stores. Employers in Atlanta noted that layoffs have accelerated and workers’ hours declined. Employers in the San Francisco Fed region reported job cuts and hiring freezing across a wide range of industries.

The Solution from Congress? $1 Trillion Dollars baby!

Bloomberg.com

“They need a stimulus of $500-to-$600 billion a year for at least two years to counter what is going to be a collapse in consumption,” said Rogoff, a former chief economist at the International Monetary Fund.

That number may grow. This week brought news that the economy has been in recession for a year. Tomorrow the government will release November employment data, which economists say will show another 330,000 jobs lost, the most in seven years.

….

New Jersey Governor Jon Corzine said Washington needs to step in because the U.S. is caught in a “liquidity trap,” where repeated interest-rate cuts by the Federal Reserve fail to boost the economy because banks don’t want to lend and skittish consumers and companies don’t want to borrow.

“If the government doesn’t operate to fill that gap, we are going to see not only rising unemployment but a shockingly high level of unemployment over the next 12 to 24 months,” Corzine said in Bloomberg Television interview yesterday. He called for a stimulus of “overwhelming force.”

….

“A stimulus of this magnitude helps push government debt as a percentage of GDP closer to dangerous levels, when inflation and interest rates start to rise,” said Thomas Atteberry, who manages $3.5 billion in fixed-income assets at First Pacific Advisors in Los Angeles.

Dangerous Levels?

I’ll let you decide with a great chart from Karl Denninger (aka Genesis) over at Market-Ticker

The Takeaway

Don’t believe the Hype!

I still like all the stuff I liked yesterday.

Theme Song