We Have Seen the Enemy

We knew that total payrolls would fall in June, as
temporary Census workers were pushed back out into the unemployment
wilderness. Investors are focused on the private sector payroll growth,
and they got 83,000 additions.

That’s better than May, and better than the
ADP payroll report. But it’s not as good as
the 110,000 payroll additions economists were hoping for.

During the “jobless recovery” coming out of the
2001-2002 recession, slight misses to the employment number were
perceived as good news. That’s because corporate profits were good, and
investors didn’t want to see an advance in wage inflation and cause the
Fed to raise interest rates.

So, will it be different this time? Will small misses be
perceived as bullish?

First, let me say I am well aware of the danger of
saying “it’s different this time.” And if I were a bear, I wouldn’t want
to stay short after today’s employment number on the chance that it’s
good enough to move stocks higher.

On the other hand, will the number be strong enough to
send stock prices higher and instill some confidence that the economy
really is recovering and not on the verge of a double-dip into

There are some
key differences between this recovery and the previous “jobless
recovery”. Unemployment is much higher this time around, and the economic
weakness came from fundamental sources: banks and housing.

In other words, this recession is much more structural
than the recession of 2001-2002. And I think it’s safe to say that we, as
a nation, stared directly into the abyss during the financial crash of
2008. Staring into the abyss leaves scars.

There’s no doubt that this recovery is a much tougher
one than the “jobless recovery” after the Internet bubble and the
terrorist attack of 9/11. There was a clear enemy, and in many ways,
Americans were able to rally together.

This time around, the enemy is us. It’s a political
suicide to admit such a thing, and we have serious fighting inside our
government as politicians of both parties seek to be blameless and point
fingers. That stalemate is certainly not helping, and it’s damaging
confidence and furthering the notion that the government is out of touch
and more concerned with re-election than actually fixing any problems.

Congress just failed to extend unemployment benefits for approximately 2
million people. Congress has to have a week-long vacation to July 12
before they can resolve the matter.

To me, that’s just pathetic. People need help, and even
if unemployment benefits add to the deficit, is that really a good enough
excuse to leave 2 million people twisting in the wind?

I didn’t really intend today’s Daily
to become a rant

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