Guest Post: The Long Road to Recovery

Tyler Durden's picture

Submitted by David Galland of Casey Research

The Long Road to Recovery

Last week the government released the latest unemployment data. Bloomberg,
always ready to roll up the sleeves to help its friends in government
(get reelected), was running a headline that “Companies in U.S. Added
67,000 Jobs in August.”

While I haven’t had time to go through the minutiae of the report, I
find myself scratching my head at Mr. Market’s rather positive reaction
to the report, given the bullet points:

  • Manufacturing payrolls declined by 27,000.
  • Employment at service-providers fell by 54,000.
  • Retailers cut 4,900 workers.
  • State and local governments gave walking papers to 10,000 people.
  • The federal government cut 111,000 jobs (mostly temporary census workers).
  • The number of
    “underemployed” – people who want full-time work, but have given
    up and are now working part-time, increased again, from 16.5% to 16.7%.

The fine folks at Chart of the Day just published their take on the numbers. You may see something cheerful in this snapshot, but if so, it eludes me…


Interestingly, a week ago ADP, a company that does real-time payroll
processing for about one in every six U.S. workers, and whose data –
because it is based on hard data and not surveying – has tended to be
accurate, released its report for August employment. Based on ADP’s
data, they had forecasted that the construction industry had actually
cut 33,000 jobs in August.

Their data pointed to an overall decline in the work force of 105,000
jobs, worse than the government’s numbers that showed overall
unemployment rose by 54,000 – moving the unemployment rate from 9.5%
back up to 9.6%.

At all times, but especially ahead of an election as important as
November’s, you can count me skeptical in the extreme when it comes to
government data. Especially when it flies in the face of the clear
trends in motion. Even with the government’s stimulus funds still
coursing through the economy, in the second quarter U.S. gross domestic
product fell by more than half, to an annualized rate of just 1.6%.
Without the government’s supercharged spending, it’s been calculated
that actual GDP would have been halved again.

So, where are all these new private-sector jobs coming from?

The construction industry was reported to have hired 19,000 people – a
good number of whom, I suspect, are working on government-subsidized
projects. At least in this neighborhood – and everywhere else I’ve
traveled over the summer – there are almost no new houses being built.
But there are a lot of roads being paved, whether they need it or not.

It also was reported that 17,000 new temps were hired in August.
Historically, the number of temporary workers rises throughout the
duration of a recession. In fact, only when the number of temps
decisively turns down, in conjunction with full-time employment turning
up, can we begin to expect that the economy is on the road to

Health care also added a fair number of jobs, over 20,000. The nation’s
hospitals and medical facilities are dangerously understaffed –
especially ahead of the pending nationalization of the industry and the
added demand that will trigger – so this is a bright spot, of sorts.

And the mining industry added 8,000 jobs, as you would expect it to.
All to the good, until the next round of legislation sends this and
other “dirty” businesses back into retreat. (A major overhaul of the
U.S. mining regulations was temporarily shelved because the Democrats
were concerned it would hamper Nevada senator Harry Reid’s reelection
chances. After the elections, expect it to resurface.)

However, even if you take the government’s latest unemployment report
at face value and accept that the private sector added 67,000 jobs,
with overall employment falling again by “just” 54,000, the country
still hasn’t even begun the process of clawing back the more than 8.4
million jobs lost since this crisis hit.

And, given that the economy is being helped along through overt
stimulus and the Fed’s not-so-overt policy of maintaining abnormally low
interest rates, conditions for a recovery are about as favorable as
they’re going to get.

As Bud Conrad explains in detail in the current edition of The Casey Report,
these low interest rates simply can’t continue. And when they start to
go up, along with taxes as the Bush tax cuts expire, the faltering
economy will be dealt another body blow. (Click here to read Bud’s analysis.)

I might quip that the road to recovery will be long indeed, but that
would be inappropriate, because so far the road to recovery is nowhere
in sight.

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lynnybee's picture

.....what recovery ? !   everyone knows what must be done for any kind of meaningful recovery.......get rid of the FEDERAL RESERVE BANK, default on our debt, maybe 10% to the bondholders, flat tax, blah !    ...... first we MUST CRASH & then we can talk about a recovery; unfortunately for me, being 60 years old, I'll probably be dead by the time there's any prosperity here in the U.S. every again.     ......... i'm damn depressed & madder than I've ever been in my entire life .

zaknick's picture

God bless.


Hang the Fed banksters!

hedgeless_horseman's picture

Report: Los Angeles spent $70 million in stimulus funds to create 7.76 jobs

A new piece of evidence has emerged in the debate over the effectiveness of President Obama's 2009 stimulus package, and it's not good for Democrats. According to two newly released audits performed by the Los Angeles controller, L.A. spent enormous portions of the $594 million in stimulus funds it received on projects that created or saved just a handful of jobs. All told, the audits — available here and here [pdf] — examined $111 million in stimulus spending by the city's Department of Transportation and Department of Public Works, and found that the money went to projects that created or retained just 54 jobs. That works out to roughly $2 million per job.


I hate Yahoo, too.  Nevertheless:

lynnybee's picture

......... just to qualify that statement ... am mad & upset, not for me, but, for the children.  I don't give a crap about myself, can do without most anything, would gladly sacrifice what little I have if it meant that the kids didn't have to suffer .....

nmewn's picture

Most have the same sentiment I think...a broad spectrum of folks.

As far as sacrifice, we have already, enough.

How many more years of stagnant wages is enough? How much more can our own currency be debased? How can freedom & prosperity for all be doled out by those who seek to reduce it by their very actions against a portion?


I don't think it's too much to ask that our elected and appointed officials be at least as honest and as intelligent as us, if not more so. It's clear they are not, look where we are.

Not only here but across the globe...randy little incestuous gnomes.

It's not time for's time for clawback bitchez.

Incubus's picture

All societies inevitably fail because once a person becomes 'priviledged,' they are corrupted.

Call it a disconnect, whatever--when you're making 177K a year from the cattle masses, and you're given even more through lobbying-- whose interests would you seek to further? 


Every so often "good guys" come along, but they're assassinated before they muck up too much.  "Freedom" is an illusion, there never was any freedom.  You've all been raised to see your class-slavery as something that is "American."

Appealing to human greed is a funny thing -- promise a person some digits in a computer system for a house, a salary, whatever-- and he'll throw away his life for it.  It's a very smart system when you think about it: they all run to take up their shackles, to work feverishly for a piece of a pie that was never meant to be theirs for very long.

We are units of labor, a means to produce wealth, to produce "power" for the bourgeoisie.  Dress it up any which way you'd like to, the fact is, that's what the majority of any population is used for.

Oracle of Kypseli's picture

It doesn't have to be that way. Parents, grand parents, wise men and teachers should be preaching the dangers of over-consumerism, the need for saving % of your earnings and overal financial responsibility and common sense. Governments should make it more dificult to get credit for consumption and whatever else is necessary.

In other parts of the world mortgage was unheard of. It is only lately that American banks expanded their subculture of slavery through debt elsewhere.

Our kids now don't know any better. We do need failure and we do need to see some people punished as a vivid and powerful example for the ffuture generations.

Who are those parents that use 2 to 3 credit cards to buy stuff from the Apple store for their youngsters? (as someone posted elsewhere) These parents are also part of the problem.

CPL's picture

Pretending like the smallest cog in the machine isn't a problem as the large cogs in a machine that wastes more than it produces is as dumb as pretending like the plumbing fixes itself.


Grow up.

nmewn's picture

I dunno.

Maybe I'm Pollyannish, but I believe someone of high morals & ethics can not be corrupted by a promise of wealth.

It's a given that most have a few drops of larceny in their soul (doesn't everyone?) but the ethical & morally superior among us will feel deep guilt and remorse when they act on a larcenous thought.

It can be as simple as swiping gum at the store when the store keeper yells from the beer cooler he'll be right out. Your standing there with no one watching out for the stores interests as you weigh your petty prospects. You opt not to because of your ethics & morallity not because of risk/reward being so small you will have to answer for it.

So for me it becomes a question of ones integrity, not money/wealth. Many good things can be done with wealth. It's how the wealth was accumulated that I can have an issue with.

When you purposefully debase the currency, which I have given my time & labor for in good faith, you have stolen from me just as surely as if you had stuck a gun in my face and demanded some bills from my wallet.

I don't much care if you're rich or poor. If you stick a gun in my face you should expect the same reaction on my part.

CPL's picture

Who cares about kids. Seriously. We are as rare as broken glass at this point at time. Pretending like the half literate hillbillies that text are the future of the universe is demented as wishing your cat has am epiphany on how it's going to play PS3 without thumbs.

Do not pretend to fix stupid, nor offer a solution for it, as humans we have the solution. Blind belief.

Children are a dime a dozen and hiding behind them is a red herring, if you are pissed. Be pissed. Don't pretend it's about the next generation of asswipes in their 20's believing they "will" change the future. So far that's become the best consumer market of the decade.

//iPod anyone...if in some tin can crap anyone? Sick to death of the child argument, I have 4, want one? Didn't think so.

StychoKiller's picture

Buy more Gold, failing that, buy more Silver!

oklaboy's picture

More unemployment, beyatcjesss

frankTHE COIN's picture

A study just completed by Steven Gjerstad and Vernon Smith cite that from The Great Depression and all recessions after it, that housing construction recovered first, and once an economic recovery did take hold, construction improved the most. The conclusion was just as you all have been saying, and confirmed by horrible housing data, WHAT RECOVERY!

RSDallas's picture

Nothing remotely new here. 

Nathan Muir's picture

The Gov data has been complete bullshit for a long time, especially the UE reports.  But that shouldn't surprise anyone here.  Newbies - see shadow stats for accurate data.  Good weekend all

Carl Marks's picture

Now that Craig's List has eliminated adult service adds, this is the best site for mind fucking.

Oracle of Kypseli's picture

Still a good place to find solid wood dresser for $40 and lamps for $5 in your neighborhood, instead of taking a furniture loan to buy Chinese made plastic in the style of "Jewish rennessance" or "Italian gilded Guido" or plastic covered sofas "Grecian retro" with fake gold sparkles. 

CPL's picture

It okay, because the internet is so fair minded there is now


At least the people in the business of pornography can regulate it now...ho hum

CPL's picture

It okay, because the internet is so fair minded there is now


At least the people in the business of pornography can regulate it now...ho hum

kevinatoz's picture

There is no recovery.  40 million Americans on food stamps. No manufacturing jobs.  NAFTA is a joke.


TheGoodDoctor's picture

New stat: 1 in 7 families in poverty

Old stats: 1 in 5 out of work

                1 in 7 in foreclosure or behind on house payments

                1 in 8 on food stamps

Did I miss something?


i.knoknot's picture


now that the mainstream (AP et. al.) is actually 'shouting' bad news from the hilltops, one has to wonder that they're actually pushing for some (controlled) breakage, so they have an excuse to enact more policy.

be wary the agenda of the howler in the towne square.

not much has changed in the last 6 months, other than the sudden amount of negative news. some might believe they're finally figuring it out. i would argue that they're the ones that set it up, for this moment, in the first place.


CrashisOptimistic's picture

There need not ever be a recovery.

The E word.


Most holders of US Treasuries are . . . Americans.  Default wipes them out.

But none of this matters in a world with decreasing oil production.  The E word becomes very much more easy to achieve in such a world.  





primefool's picture

is it possible the stock market does not care about the "unemployment". has anyone looked below the surface of the "unemployment". High school grads /college grads - unemployment is around 5%. The really huge unemployment is amongst the rest of the population - dropped out of high school, no skills, etc.

The fact that the undereducated, and unskiled cannot find jobs has Nothing to do with the profitability of most of the large multinationals. Corporations are doing fine in spite of all the high schol dropouts not geting jobs. Surprised?

delacroix's picture

corporations, are doing fine? WTF, are you on meds ?

reading's picture

Well, your name says it all, but let's start with where are you getting your data?  It is seriously flawed...

Try reviewing this first:

That does not include the unemployment rate for more recent "college grads" ie, under 25.

bigdumbnugly's picture

The Long Road to Recovery

Last week the government released the latest unemployment data.


Fed motto (all sing now):  "You take the high road and i'll take the low road and i'll get the money befoooooore you."

Pillage's picture

Next month you're going to see for the first time ever election poll workers added to the employment numbers. Once he finds a way to add jury duty workers to the numbers you can bet he will.

Edward King's picture

I had one of several "welcome to the machine" moments in July of 2008 when I was in the Hamptons, and the people with whom i was staying left for an Obama fundraiser on the beach with Mayor Bloomberg.  Viewed through this lens many of the ensuing government decisions and the occasional strange Bloomberg article made sense.

RockyRacoon's picture

All of the added jobs are rounding errors.