All About The Onion: 63,000 Jobs & An Economy Without A Core genre: Econ-Recon & Nouveau Thoughts & Six Degrees of Speculation
It's difficult to find anything to smile about in the latest jobs report. Despite the assurances from the Bush administration that the economy remains strong, each new report brings evidence that we're in a recession. It looks like the administration is either in denial or simply employing the same "head in the sand" mindset that spent the last five years telling Americans that the situation in Iraq is improving. Despite the president's rosy rhetoric, I choose to believe that the data doesn't lie.
The current economic uncertainty reminds me of a metaphor shared by a friend many years ago. While discussing borderline personality disorder, a psychological condition prone to sociopathic behaviors, she described it as being akin to comparing an apple to an onion. The normal personality is like an apple, in that it has a core; whereas with the onion, you peel away layer after layer to find that no core exists.
It's not a perfect analogy, but it underscores my belief that this latest period of economic expansion has lacked the essential fundamentals to insure economic stability. When one strips away the facade of inflated home values...driven by artificially low interest rates...all that remains is a tenuous economy in the throes of adjusting to the instability and uncertainty of globalization.
The economy shed 63,000 jobs in February, the government said on Friday, the fastest falloff in five years and the strongest evidence yet that the nation is headed toward -- or may already be in -- a recession.
"I haven't seen a job report this recessionary since the last recession," said Jared Bernstein, an economist at the Economic Policy Institute in Washington. "This is a picture of a labor market becoming clearly infected by the contagion from the rest of the economy."
The loss in February was the second consecutive monthly decline in the labor market; economists had predicted a slight increase. The government also revised down its estimate for January to a loss of 22,000 jobs -- the first decline in four years -- and cut in half its estimate for job growth in December.
Wages stayed stagnant in February, further depressing the outlook for consumer spending over the next few months. Among rank-and-file workers -- more than 80 percent of the work force -- average pay grew just 0.3 percent to $17.20 an hour. Wages are effectively running flat when adjusted for inflation.
These job losses are only one segment of the current economic downturn. Truth be told, the housing crisis and its impact on financial markets looks to be an unprecedented debacle that has yet to fully unfold. The efforts of the Federal Reserve to reduce interest rates and make huge amounts of capital available to struggling financial institutions is a testament to the severity and complexity of this crisis.
I suspect the powers that be are hesitant to offer a candid assessment for fear it will trigger even more caution on the part of consumers. To a degree, that is prudent. Unfortunately, this snowball is already rolling and I see little reason to offer false assurances that it won't continue to expand. I look for the government to make added admissions in much the same manner found in a criminal investigation...as more evidence is unearthed, the administration will find itself unable to continue with the denials.
Look no further than a comparison to the Saving & Loan scandal of the late 80's to understand how the government will attempt to downplay the gravity of the situation. Sadly, I'm concerned this fiasco may be far more pervasive. While the S&L scandal was primarily isolated to commercial real estate, the current crisis involves residential real estate and millions of homeowners. That alone suggests a greater magnitude; one that will strike a blow to a core source of economic growth...consumer confidence and spending.
I don't want to be an alarmist, but I see a unique and troubling confluence of conditions that have the potential to challenge our existing economic constructs. The growth of multi-national corporations with GDP's that rival those of many nations serves to undermine the assumption that all Americans share similar economic objectives with consistent measures of success. It simply isn't true in this day and age of global investments and the outsourcing it facilitates in order to increase the bottom line. When the goals of a huge corporation no longer comport with the goals of their nation of origin, the established economic models have become outdated and virtually irrelevant.
I realize I'm painting a gloomy picture. At the same time, I'm convinced that the American public must demand an honest assessment and an open dialogue with regard to these dramatic developments. If we allow our politicians to plot the course...in conjunction with their corporate benefactors...we may find ourselves in a conflict with the United Empire of ExxonMobil...a conflict that we can neither overcome or endure.
On that dark note, I think the following video from The Onion captures much of the essence of this shifting economic construct. It made me laugh...but as with all comedy...it also underscores an undeniable truth that requires our consideration.
The Onion: Outsourcing Child Care Overseas