November Jobs Report: 533,000 Reasons for Obama to Change Direction

It's not just the we had the worst monthly job losses (-533k) in 34 years, look at the terrible revisions to previous months. Turns out we lost 403k in September and 320k in October. That equals 1.2 million in just 3 months.

Now interestingly, I got an email from the econ team at Goldman Sachs last night that argued for a "more diversified" policy approach to the economy from the Obama administration. That is wonkspeak for tax cuts. Even if the $500 billion+ stimulus spending plan has a positive effect, it is going to come too slow. Tax cuts can work much faster. Withholding schedules can be changed. Payroll tax deductions stopped. In addition, there should be  a tax holiday for corporate taxes along with a big rate cut. All this would boost confidence and let individuals and business keep more of what they earn. Fear is killing this economy.

 A bit more from GS to really depress you:

"If real spending falls further in the first quarter of 2009, as we currently project, it will not take much, only about a 1% annualized drop, to make it the largest cumulative correction since World War II. The current record is the slump precipitated by the credit controls of 1980, which pushed real spending down at an 8.6% annual rate in the second quarter of that year following a 0.6% drop in the first quarter.

As remarkable as the current correction in real spending may seem, it is more remarkable that it is occurring in the face of a sharp drop in energy prices. In other words, nominal consumer spending is on course for about a 9% annualized decline this quarter. If this figure holds, it would be the largest quarterly setback in nominal spending since World War II."