It’s Not About Jobless Claims Today, It’s About What Will Hamper Job Growth In A Few Months

You’ve no doubt heard about the jobless claims number. At an incomprehensible 3.28 million Americans filing for unemployment for the first time, this level far exceeded the wildest expectations as the economic costs of the shutdown continue to be come in far more like the worst case. And as bad as 3mm is, the real hidden number is likely much higher.

As next week’s tally will certainly be.

The dislocation is upon us, but that’s no longer our major concern. Having been left no chance to avoid one, the only issue now is how quickly we get out from under it. If 20 million American workers maybe more are dispatched to the unemployment line in the weeks ahead, how soon do we get them back to work?

Just as important, do they all get a chance to go back?

See, that’s the thing about GFC1 and its Great “Recession.” The economic chain of causation isn’t the same this time versus that last time, but there’s that whole financial crisis which is turning out to be way too similar. In the long run it was the GFC rather than the G’R’ which spoiled any chance at real recovery.

It was one of the very few things Ben Bernanke got right during his crisis tenure. In February of 2009, Senator Bob Corker asked then-Federal Reserve Chairman if we should all be worried about zombies. Would the US economy end up plagued by unproductive companies as Japan had been throughout its lost decade(s)?

No, said Bernanke. He’d fix the one thing that needed fixing the most:

If there is one message that I’d like to leave you with, if we’re going to have a strong recovery, it has got to be on the back of a stabilization of the financial system.

We can lament that it is this way until the cows come home; the sad truth is that we live in a highly financialized, globalized economy. That kind of system absolutely requires monetary and financial growth in order to function. Without it, no growth and no chance to get back to where we had been before the “subprime” dislocation.

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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