Lisa Simpson
Mar 29,2010
In: Finance

The Magical Recovery of America Sans any Jobs

The magical recovery of America sans any jobs.

One magazine pointed to the magical recovery of America sans any jobs. This poses the question about recovery itself. There is no supportive evidence to show that recovery is in progress. Last February was the 26th consecutive month that America dropped jobs. Below the surface the situation is scary.
David Rosenberg detailed plenty of supportive evidence that recovery was not happening. More than five million owners of residential houses are late on their mortgage dues. Foreclosures are increasing the pipeline being enormous. Housing sales and prices were abysmally low. Usually the shop shelves have five to six months supply of houses but right now it is 21 months. There is a huge shadow inventory of houses waiting in the sidelines. There are 19 million empty residences – nearly 15% of the total number across the country.

On the employment front more than 6 million citizens have been without a job for a minimum of 6 months. Since the latter part of 2007 full time jobs numbering 11 million have been lost. Jobs in millions have been lost despite huge economic stimulus. What will happen when that stimulus starts to be withdrawn is anybody’s guess. One out of every six American is either unemployed or underemployed. The employment to population ratio for the adult male was 73%. Currently it is 67%.

The Federal deficit is more than 10% of the GDP – it being double the ratio of the 1930s. The growth of private capital is at its slowest since the last twenty years. 30% of the manufacturing capacity is lying idle.
Generally at this particular point of the economic cycle employment usually expands by 150,000 each month. But unfortunately it is still shrinking. It is 8.4% less than just prior to the recession. The economy is short of 12 million jobs for full employment to be noted. It will take years to close the gap – years of showing steady growth.

The values of commercial properties have fallen by 30% during the past year; it is continuing to fall.
The ordinary American is poorer by $100,000 despite the rally by the stock market; homes and equity have vanished.

Bank credit is shrinking at a record rate of 15% per annum this current year as the lenders are sitting on $1.3 trillion cash. Commercial and industrial loans have crashed.

There is no doubt that the green shoots have wizened and dried. They seem to appear and disappear because they were illusions never quite real.