David Rosenberg: NFP ‘Mega Reality Check’

07-10-2011 • Ritholtz.com

“Now the policy cupboard is bare, and “we can see what the emperor looks like disrobed. It’s not a pretty picture.”The economy, Dave goes on, is in a very fragile state. Which isn’t all that surprising since it still bears the scars of the credit and market collapse and the Great Recession that accompanied it. However, historically, such ugly episodes—and there are quite a few slumps and crashes in the postwar period—are not typically followed by recoveries as flaccid and as pathetic one has been. Particularly rare is to see an economy that’s supposedly well into recovery produce the likes of a puny 18,000 monthly job gain. For a recovery worthy of its name, Dave contends, celebrating its second anniversary you would expect employment to rise more on the order of 180,000. It’s hard to overlook that missing zero in Friday’s headlines. Scanning the gory details of the data, Dave notes that the total of unemployed in June swelled by 173,000 and exceeded 14 million for the first time this year. Including discouraged workers, the pool of available labor soared by 483,000 to 20.6 million, which works out to seven people vying for every job opening. The normal ratio is close to three.