Signs of a Jobless Recovery
Joseph Cox
The news of the Dow closing over 10,000 points yesterday was hailed as proof that the economy is back on track, the index is now up from a low of 6,470 in mid-March - a gain of over 54% in 6 months. That is startling growth, though probably much of that is due to unnecessarily painful losses in the first place. After all, the Dow is still down over 28% from its high. However, as Michael Roston points out, all of that progress in the stock markets hasn't trickled down into employment as evidenced by record military enlistments:
Americans are going so broke in this jobless recovery that instead of finding work in our not-so-happy-fun-time economy, they’d rather get shot up and shoot at other people in Iraq, Afghanistan, and other places.
That’s right, the Pentagon reported on this day of Dow 10,000 that our strained Armed Forces have beat their recruiting goals for the fiscal year, driven by economic unease.
I don't want to imply that everyone who joins the military does so because they have no other option, but clearly when they are setting recruitment records there must be more to it then good advertising.
Living on the East Coast in a big city sometimes I feel insulated from the real pain people are feeling in the middle of the country, I hope that next year's stimulus money will do more than just blunt the full force of the "Global Economic Meltdown" (I don't like that phrase, it doesn't have the historical resonance of the Great Depression and instead sounds like the promo to a cable news special that caught on) and actually starts cutting into the unemployment rate.
Hat Tip: Andrew Sullivan
Reader Comments (1)
If I were given the dubious honor of applying a name more fitting than "Global Economic Meltdown", which could really be anything, I would chose "the Debt Bubble", as this follows logically from "the Tech Bubble", "the Real-Estate Bubble", and "the Subprime Bubble". Most analysts seem to agree that we're out of the recession, but the way the Federal Reserve has got us to this point is by refinancing the macroeconomy with more debt. The stock market rise only means that more and more people with disposable income (more or less outliers) are betting on future recovery, but it seems unlikely that capital gains and additional sources of corporate finance alone will be able to compensate for nowhere near full employment, massive levels of consumer and corporate debt, unprecedented government expeditures, and a hugely swollen monetary base. Ben Bernanke knows he has to tread carefully on this one. If the Fed lowers the money supply too quickly, it could trigger another (u-shaped) recession. If it doesn't lower the supply of money fast enough, it will escalate the current devaluation of the dollar and create a "fiat bubble". There's always the possibility that the narrow window between these two dire sets of outcomes doesn't exist, and no matter what we do, we'll enter into a period of stagflation. People tend to mistake the appearance of economic health via sets of proximal indicators such as the Dow as economic health itself, but, given the difficult situation in which we still find ourselves, it is possible that this upsurge is nothing but a large bear-market rally.