I remember a conversation I once had with a 20 something. I ask her about the colorful tiger on her keychain. “Is that Tony the Tiger?” I asked. Or, was it the Exxon Tiger, I thought to myself. She politely and proudly corrected me by announcing that it was Tigger, a character from the Disney Channel 1983-1986 television series “Welcome to Pooh Corner”. I am a child of the 1950’s and she is a child of the 1970’s. There was no need to mention Tigger first appeared in A.A. Milne’s 1928 book “The House at Pooh Corner”. The takeaway from that exchange is one man’s Tigger is another man’s Tony the Tiger. However, they are not the same nor are all green shoots.
Everyone enamored with green shoots sightings are convinced that the dubious vegetation is proof of the Second Derivative test at work in the economy. Therefore, the market rally is real because the economy is strengthening. At best, these sighting are a false positive. At worst, I see a pause in the economy before another wave of contraction occurs. A tree branch breaking your fall 10 stories down, after falling from a 20-story rooftop does not reverse the accident; it merely delays the consequences of falling.
Before everyone became an expert in deflation economics, an additional 200,000 newly created jobs each month was necessary to keep up with population growth. This growth in jobs supported economic expansion, which in turn, allowed for market multiples expansion. Looking at the recent employment figures from the Bureau of Labor Statistics (BLS), Monthly Data A-1/ Household Data Historical, with my population adjustment, the numbers are stunning.
| Total Unemployed | New Jobs Needed per mo. | Total Jobs Needed |
May 08 | 8,536,000 | 200,000 | 8,736,000 |
June 08 | 8,662,000 | 200,000 | 8,862,000 |
July 08 | 8,910,000 | 200,000 | 9,110,000 |
Aug. 08 | 9,550,000 | 200,000 | 9,750,000 |
Sept. 08 | 9,592,000 | 200,000 | 9,792,000 |
Oct. 08 | 10,221,000 | 200,000 | 10,421,000 |
Nov. 08 | 10,476,000 | 200,000 | 10,676,000 |
Dec. 08 | 11,108,000 | 200,000 | 11,308,000 |
Jan. 09 | 11,616,000 | 200,000 | 11,816,000 |
Feb. 09 | 12,467,000 | 200,000 | 12,667,000 |
Mar. 09 | 13,161,000 | 200,000 | 13,361,000 |
Apr. 09 | 13,724,000 | 200,000 | 13,924,000 |
May 09 | 14,511,000 | 200,000 | 14,711,000 |
Net 1 Yr. Lost Jobs | 5,975,000 | 2,600,000 | 8,575,000 |
I hope my analysis is too pessimistic but the numbers speak for themselves.
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