The US economy has now lost six million jobs since the recession started in December 2007, with most of those losses occurring in the last six months. The record of 17 successive monthly job losses matches that reached during the 1981-1982 recession. Clearly, the latest employment data support the view that we are bottoming out, but while the rate of decline in unemployment (as in many economic statistics from trade to industrial production) is abating, current elevated levels will underpin the new culture of thrift apparent among US consumers. The GM/Chrysler bankruptcy will hit jobs this Summer; although manufacturing only employs tens of thousands, auto dealerships employ about 1m people in the US. emstrongThe savings rate, already at 5.7% as of April, is likely to hit 7-8% by year end./strong/em In fact, when marginally attached and involuntary part-time workers are included, the rate of unemployed or underemployed workers hit 16.4% last month, up from 15.8% in April and almost twice the level of a year ago.br /br /On that basis, it’s unsurprising, but also unsustainable, that government transfers have now reached over 16% of personal income, up over a third in a decade. While the terrifying freefall sensation engendered by last Autumn’s Lehman collapse and TARP fiasco is now over for the US and global economies, we are going to level out at a much lower altitude. There can be no return to the leverage fuelled boom conditions of 2003-7, given the scale of the aggregate debt burden faced by the US at about 400% of GDP. A US recovery will be grindingly slow and capped at maybe 2%, suggesting unemployment will almost certainly remain near double digits through 2010 as projected by the CBO . One slight positive is the declining demographic trend in new labour force entrants, emstrongalthough medium-term this will likely add fuel to the inflationary barbeque being cooked up by central banks from China to the UK./strong/em The key question is whether a slowing rate of decline in economic statistics is sufficient to justify the huge investor inflows into risk assets such as emerging markets and commodities, or whether we are simply seeing a mini-bubble echoing that of early 2008 which will be burst by sobering economic fundamentals.br /emspan style=”font-family:trebuchet ms;color:#3366ff;”strongThis article continues at /strong/spana href=”http://www.deadcatsbouncing.com/”span style=”font-family:trebuchet ms;color:#cc0000;”strongwww.deadcatsbouncing.com/strong/span/aspan style=”font-family:trebuchet ms;color:#3366ff;”br //spanbr //emem/emdiv class=”blogger-post-footer”img width=’1′ height=’1′ src=’//blogger.googleusercontent.com/tracker/1897020887579135393-3028812355848485576?l=deadcatsbouncing.blogspot.com’//divdiv class=”feedflare”
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Last 5 posts by Sean Maher

• Who was Smuggling $134bn in US Bonds into Switzerland? - June 12th, 2009
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