Is The Recession About To End?

Several respectable bloggers and economists are concluding that the economy is coming around because of indications in various payroll and jobs data. Included, is this guy: http://mjperry.blogspot.com/2009/06/jobless-claims-as-percent-of-labor.html, this guy: http://scottgrannis.blogspot.com/2009/06/jobs-storm-has-passed.html, and these guys: http://www.ftportfolios.com/Commentary/EconomicResearch/2009/6/5/non-farm_payrolls_declined_345,000_in_may_smashing_consensus_expectations

All of them are folks I read. Nonetheless, I maintain that we are not at the beginning of a V-shaped recovery yet. I don't predict a V-shaped recovery. This is a scenario where the economy, after having gone down, goes back up. I predict an L-shape which is that the economy will stop going down but, rather than come roaring back, stays at a relatively low point for a long time to come. Anyway, it's on record.

I have absolutely no doubt that the unemployment rate will top 10% by the end of the summer despite predictions by some that job gains will start by the end of the summer. I also believe there's something fishy about the 345K job loss numbers. The BLS did something with birth-death rates in the calculation that skewed this number some how. The summer may give a break as people and businesses enjoy vacation and spend a little and maybe stop firing people in droves. But the continued uncertainty combined with auto job losses and the crazy unintended consequences of our current fiscal policy have me very nervous. Americans, true to form, are consuming more than they have on borrowed money. There was a rise in hotel and bar jobs. So people are confident using the credit cards again despite not having a job. I have friends who are doing this and I have gotten a little sloppy as well during the last few weeks by eating out a little more than I probably should. It still doesn't mean a long term sustainable recovery is underway.

Again, I hate to be such a negative voice about this. It gives me no joy. I just see no reason to be blindly optimistic or draw correlations in government economic data to prove a point. I think a lot of times professional economists lose the forest from the data trees. They could probably benefit by talking to friends, business leaders, and random people in their neighborhoods a little more. Government economic data doesn't give you the complete story.