Jobs: Cause & effect … and spin

High fives on Friday when the monthly unemployment numbers were reported.

Jobs up,  Unemployment below 9%.

Even the WSJ is hinting at a turning point (extract below).

Thank god for Obama’s Trillion-dollar Stimulus.

Oh, really ?

First, the unemployment rate is down because the discouraged folks have stopped looking for work and don’t get counted as unemployed.

According to Reuters:

  • The U.S. labor force remains as small as it has been in a generation … 
  • More than 5 million Americans have disappeared from the job rolls …
  • If the labor force was currently at 2007 levels, the unemployment rate would be a whopping 12 percent.

Second, the Stimulus was almost 2 years ago.

Time lag?

I think not.

If, in fact, the economy is turning – and, for the record, I’m not buying that – it’s more likely a rapid-fire response to the extension of those much maligned  Bush Tax Cuts.

At least, companies have 2 years of relative certainty regarding taxes.

Perhaps a little certainty is breeding a little employment.

You think ?

* * * * *

WSJ, The economy shifts into forward, March 5, 2011

Even the WSJ declared:

“With 192,000 new jobs created in February, the U.S. economic engine clearly has shifted into forward recovery.

  • The unemployment rate for the first time in 20 months nudged below 9%, settling at 8.9%.
  • In the private economy, hiring expanded by 222,000.
  • Construction hiring hints that perhaps the worst of the housing depression is over.

Keynesians will have a hard time explaining why the jobs recovery started long after the bulk of the stimulus dollars were spent.

We still have 13.7 million officially unemployed Americans, with 2.7 million more who stopped looking for jobs. Nearly half (43.9%) of those without jobs have been out of work at least six months.

The main reason the unemployment rate has fallen the last several months is that the number of working-age Americans not in the labor force dropped by two million over the past year.

The U.S. economy needs to maintain a pace of 190,000 net new jobs for at least the next 12 months merely to get the jobless rate back to a still awful 8%.

At least the jobs recovery is finally headed in the right direction.”

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