Unemployment - Leading Indicator

From Chart of the Day:
As today's chart illustrates, today's move above the 10% threshold marks only the second time such a move has occurred during the post-World War II era.

Comments: Normally, we view the unemployment rate as a lagging indicator of economic performance. Recently, this has changed, in my view. Unemployment has become a leading indicator as central bank and government interfence in the economy has prevented the market from making the necessary structural adjustments.If we examine the broader unemployment measure of U-6, which is more complete in my view, we see that U-6 has risen from 17.0% to 17.5% in one month!
We are now seeing unemployment levels in the United States that rival those of the Great Depression.
The green shoots are taking on a very brown appearence as the so-called stimulus runs out of steam.
My concern is that governments and central banks worldwide continue to head in the opposite direction of what the market demands. The market wants to correct the excesses so new, productive growth can begin again in a similar way that spring follows winter. It appears that the authorities will stimulate the economy to death resulting in a long lasting Economic Winter that will eventually freeze all credit and growth, leaving us with extremely high, chronic unemployment.
Those of us who live in democracies need to remind our elected representatives that we will hold them accountable for the results of this excess.
For those new to the site, please view the archives to look for economic coping suggestions and strategies.

Comments

  1. no one can be held accountable when we have let this happen over and over. We speak and demand change but we stop short of starting change.

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