The Bureau of Labor Statistics reported today that the U-3 unemployment rate rose to 9.7% in August, up from 9.6% in July. In One Word: Yuck, Karl Denninger focuses in on the U-6 figure, which is a more accurate count of the job stuggles average Americans are experiencing:
The issue here is the unemployment rate continues to rise.Â The incipient “improvement” has now been canceled, which unfortunately extinguishes the expectation of “imminent recovery.”
What I really don’t like is the U-6 number, which ticked up on a seasonally-adjusted basis by a full five tenths to 16.8% after falling back two tenths in July.Â This implies strongly what I suspected – that seasonal (e.g. hospitality, etc) hiring in fact was reported in July (hired in June) and now we’re seeing it come back off, and that the excess movement was greater than the seasonal adjustment – in other words, the “apparent improvement” was a Chimera rather than reality.
This is consistent with how my general thesis has unfolded:
There has been no real economic recovery; the uptick we have seen thus far has been driven by government spending and distortions rather than actual private activity improvement.
My thesis remains: There is not and will not be true economic recovery on a sustainable basis until the credit intermediation system is truly fixed, and that cannot happen so long as the lying continues.
We keep hearing that unemployment is a lagging indicator — but the fact remains that if there are no jobs, there is no consumer spending, hence no recovery.