Lost jobs number negative, but improving

November saw the U.S. shed 169,000 jobs according to payroll firm ADP. The pace of job loss is slowing, however, the number lost last month still exceeded expectations by 19,000. ADP’s number is not the official Federal number, that number comes out on Fridays. But nonetheless, the national data and the ADP data show the same thing: a slowing down in business firings.

A Couple of Points:

1. We are still not back into positive territory. Jobs are still being lost, meaning that unemployment has not bottomed. This is starting to get a little unnerving and a little worrying. We are in a “tweener” spot right now where the economic recovery can solidify, or it can collapse. Right now government stimulus is propping up the economy. When the government spends the economy improves. But that stimulus has led to little job growth. Poor unemployment numbers make consumers nervous. That means they don’t spend. At some point the economic growth torch has to be passed from the government to the consumer. After all, it’s the consumer that finances the government in the long run.

2. Earlier this year economists were overly pessimistic. This was demonstrated by actual data being better than economist expectations. Much of the first half of the year this blog was spent highlighting that while the sky had lowered, it had not fallen. But now data are missing economist expectations in the other direction. That is, economists are overly optimistic. I don’t know about you, but as an investor and citizen, I prefer the former situation. To me this is an indication that this recession is not tracking “historical trends.” Unfortunately, unpredictability in the economy makes it difficult to manage. That can lead to mistakes. Mistakes in actual policy choices and mistakes in missed opportunities. It is these that we need to be vigilant in tracking over the next 4-6 months. Any policy choices deserve our scrutiny. Any missed opportunities – as reflected in poor economic performance, like unemployment failing to improve – deserve our attention, too.

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But the good news remains: the unemployment situation is not as bad as it was before.

Over and out!

Jason