Thursday, July 2, 2009

Unemployment Jumps... Can We PLEASE Forget About Inflation?

Marketwatch reports:

Workers lost jobs at a faster pace in June than in the prior month, the Labor Department said Thursday. Nonfarm payrolls shrank by 467,000 in June higher than the 325,000 decline expected by economists surveyed by MarketWatch and the 322,000 jobs lost in May. The unemployment rate ticked higher to 9.5% in June from 9.4% in the previous month. Economists had expected the unemployment rate to rise to 9.6%. Average hourly earnings were flat at $18.53. Economists had been expecting a 0.2% gain.
Unemployment vs. Broader Measure

Unemployment Breakdown

Hires - Openings - Quits (April w/ May coming in a week)

Source: BLS


  1. jake, i take it you don't think inflation is 'always and everywhere a monetary phenomenon'.

    look, b-nanke will have his nominal growth even if unemployment is 50%. they have to, because the debt is high as it is already.

  2. i absolutely don't think that (we have 'credit money', not 'fiat money' - great post on that here:

    LONG term i agree he'll get his inflation in a base case scenario as credit comes back, but over the next 2-3 years? absolutely not...

  3. I am always brought back to a dollar devaluation thought on this. I am all for deflation, assuming the currency stays intact. Just because something has never happened before does not make it an impossibility. Unemployment skyrocket in Weimar Germany and in todays Zimbabwe, yet inflation ran rampant because the currency fell down and died.
    Great blog by the way, been reading for about 3 weeks.

  4. thanks for checking out the blog.

    if the dollar devalues, what is it devaluing against? the only currencies where i see a possibility (in the near term) are emerging market countries with exposure to commodities (all others are trying to devalue along with the U.S.). the problem there is IMO commodities are due for a dramatic fall again with reduced global demand.

    the only reason i see inflation as a threat is if we see supply destruction. that could definitely happen as businesses shudder (just think about the reduced supply if GM and chrysler were allowed to fail). if this were to happen, then supply / demand imbalance could be a problem even with reduced demand...

  5. Jake,
    great point as for what the buck may devalue against, but I am not thinking in a paired trade sort of way. I see today a second round of "stmulus" (another trillion) is on tap for the US and the California situation is not going to fix itself (government bailout with full honor of CA debt promises). At some point there must be a limit to US spending, what I like to call the debt Chandrasekhar Limit, and at that point of recognition the dollar will fall. Just me 2 cents, well 0.02 with inflation or 2.00 with defaltion anyways!

  6. Here's some interesting info. Apparently the overall unemployment in June was 14.7 million people. (Sources: & Dallas South Blog)

  7. 14.7 million people lost jobs ?? My My

    i wish this comes to an end now....