Had you been reading the Reuters survey of 84 economists yesterday, you would have thought jobs were stabilizing and the country was on the road to recovery:
A US government report on Friday is expected to show the economy stopped shedding jobs last month for the first time since it fell into recession two years ago, easing a political weight on President Barack Obama.
A Reuters survey of 84 economists on Thursday forecast nonfarm payrolls would be flat in December after dropping by 11,000 in November, far fewer than in previous months.
This morning we learn, once again, that economists missed their forecasts, as job losses continue to mount:
U.S. employers unexpectedly cut 85,000 jobs in December, cooling optimism on the labor market’s recovery and keeping pressure on President Barack Obama to find ways to spur job growth.
The unemployment rate was unchanged at 10 percent in December, but that reflected a surprisingly large number of people leaving the labor force.
Each month we are told that recovery is underway and to expect growth, and yet, month over month we unexpectedly see rising unemployment, declining home sales, increases in foreclosures and tightening of wallets for consumer goods.
Regardless of what is actually happening, it doesn’t stop our best and brightest economists, however, from misrepresenting the real state of our economy:
â€œThereâ€™s still a bit of caution in hiring by businesses,â€ said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. â€œThere were some positive things in the revisions to the prior month, but in general weâ€™re still in adjustment mode in the labor market.â€
A bit of caution? I’d say there’s a lot of caution in hiring, as small business owners who provide 80% of the jobs in this country are seeing decreased revenue, difficulties in accessing business loans, and are awaiting the possibility of increased tax burdens because of health care.Yes, we are in an adjustment mode, and we’re still adjusting the the trillions of dollars in excess credit that was leveraged within the system for the last 20 years.
The very same economists who were calling for continued growth at the top of the real estate bubble and didn’t see the train wreck that was about to happen, are now calling for recovery in the middle of a Depression.
‘Ol Remus at the Wood Pile Report sums up the dangers of following the theories of economists in his most recent report:
There’s a reason crusaders and lobbiests carry an economist under each arm, they’re the enablers of so-called entitlements to our earnings, the whole sorry list of kleptomachinationsâ€”socialized medicine and carbon credit scams and the like, macro thinkers who don’t concern themselves with details, meaning us. They plot backwards from a desired result, usually somebody else’s, eager that their malodorous schemes might prevail, with their name-plus-ism attached, little minds craving aggrandizement, willing to throw all else onto the rails. Financiers and bankers are petty shopkeepers compared to economists, Engels and Marx for two.
If you’re trying to guess which direction our economy is headed going forward, we recommend either considering the exact opposite of what mainstream economists forecast, or simply flipping a coin.