Economy Refuses to Tank. Bears Weep

I think this article makes it clear that the author's knowledge of economic fundamentals is severely lacking.

Comparing jobs data from the previous recession yields little to no insight into the current environment for many reasons, not least of which include:

1) Since 2001-02 recession we've experienced a "jobless recovery," indicating that US labor markets have remained closer to their equilibrium while economic growth (GDP) has improved (likely due to productivity increases and consumer-focused tax cuts)

2) The US economy has continued its transition from a manufacturing economy to a service sector economy, completely skewing the validity of jobs data in contributing to a determination of economic strength. This is largely because productivity is more important to economic growth than simply counting the number of jobs (or lack thereof). Therefore, while we may be currently losing less jobs overall than in the previous recession, the jobs now being cut may have a greater impact on productivity (right now there are many high-skill, high-paying, and probably high-productivity jobs being cut).

Oh, and nevermind the fact that equity markets and the dollar have not yet begun to accurately price in the full effect of bank losses and credit market tightening.

Mr. Pethokoukis should probably stick to Soviet politics and American history.

Mises of PA 3:08PM May 05, 2008