Smoking Green Shoots Won’t Change the Numbers

H/T Calculuated Risk who reports that Bankruptcies in May UP. http://www.calculatedriskblog.com/2009/06/consumer-bankruptcy-filings-up-sharply.html

I’ve been hesitant to dissect the recent bad news on the unemployment front too much because it’s going to get a lot worse and I’ll probably have more to say on that later. Remember, we’re just beginning to unwind the automobile industry and the affiliated small businesses and industries that it sustains. As that occurs, there will be a multiplying effect in small towns every where. Most of these small cities are sustained by car dealers and maybe one or two factories, as these businesses disappear, so will the small businesses providing services to employees. It’s going to get much worse folks. Since we’ve had stories from some of our own friends, we know that that impact strikes our near and dear.

That’s why I’ve been really confused as to why the administration seems to think by just talking up a few possible changes, which could yet be classified as random variation given there has not been enough time to actually establish a statistically significant pattern, they expect wishful change. Perhaps it’s just a continuation of the election season. If it’s repeatedly read from a teleprompter, it will happen. Just clap REALLY loud if you believe in green shoots!!! It will revive the economy!

The first crack in the plaster happened when Goolsbee let slip this little GEM on Fox News on Sunday.  Michael Bowman writes:

The White House says America’s employment picture is worse than the Obama administration had anticipated just a few months ago. The somber admission follows the latest jobless report showing the highest unemployment rate the United States has seen in more than 25 years.

U.S. unemployment jumped a half percent in May, to 9.4 percent prompting this comment by Austan Goolsbee, a member of President Barack Obama’s Council of Economic Advisors:

“The economy clearly has gotten substantially worse from the initial predictions that were being made, not just by the White House, but by all of the private sector,” said Austan Goolsbee.

Economists point out that the current jobless rate is already higher than the hypothetical rate that was used to calculate the health of banks and other financial institutions in so-called “stress tests” earlier this year. And, the upward unemployment trajectory is expected to continue in coming months, even if the overall economy begins to recover.

Austan Goolsbee spoke on Fox News Sunday:

“It is going to be a rough patch [difficult period], not just in the immediate term, but for a little bit of time [in the future],” he said. “You have to turn the economy around, and jobs and job growth tends to come after you turn the economy around.”

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