The unemployment numbers were released this morning. They were not as good as expected. Pretty horrible actually. Some of the comments from pundits ahead of the number were interesting. Diane Swonk said, “I never thought I’d be reading political briefs to make my decisions on investing.”. She and I both. It’s a weird time.
Our labor participation rate is horrific. It almost looks to me like government employees are messing with that number in order to change the headline percentage number. Older statistics were revised down. It’s not as if we haven’t seen manipulation in other areas of the bureaucracy. We are stymied with current policy on unemployment.
This number won’t have an effect on voting booths in November. Americans know the economy is shit. What is anyone going to do about it?
The way out of our situation is growth. In order for America to resume a typical growth path, we need to create around 300K jobs per month or more. That level of job creation will drop the unemployment rate at a good clip over time.
There is a lot of headwind fiscally for our economy. The largest tax increase in US history is coming January 1, 2013. We are around two-four years away from the fiscal cliff where US finances begin to resemble a banana republic, not superpower. Europe, China, Brazil, and India are all slowing. They all will try Keynesian fiscal stimulus to jumpstart their economies. Baby boomers are becoming net drains on finances as they retire. Instead of paying into the government, they are pulling out. It’s a challenging future.
There is only one way to overcome it all. Growth. There is only one way to grow. Create the right broad based economic incentives for American industry, and get the hell out of the way. The US tried Keynesian stimulus in March of 2009. It failed.
As a trader and person that invests in innovative startups, I see the macro forces that affect the international economy, and I get to interact personally with the people taking risk at building companies that can really grow and create future opportunity for our country