I’m a bit surprised that anyone can be surprised by the lousy jobs numbers for August. Consumers are worried and too many economists have been trying to draw trend lines through noise in retail spending data and call it proof that a recovery in under way. Broad measures of unemployment are stuck in the upper teens, big companies are continuing to shed jobs, small businesses on the whole are pessimistic, state budgets are under pressure and federal deficit spending is set to be reined in. With housing in most markets not having bottomed, the overwhelming majority of consumers having taking a wealth hit, businesses not investing and government not taking up the slack, where exactly is growth supposed to come from? The tooth fairy?
The government and private sector confidence generation apparatus hasn’t made much headway against the ugly combination of a post financial crisis hangover (known more formally as a balance sheet recession) and poor policy responses (yes, Virginia, while the authorities did keep the financial system from imploding, the failure to clean it up and provide for adequate stimulus to offset private sector deleveraging were and continue to be massive errors).
But why has the media been so clueless? Cynics might argue that they are paid to be clueless, and there is more than a bit of truth in that...
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