Reality check

About those green shoots. While the bulls trumpet Friday's BLS headline jobs losses of 345,000 being less than expected, let's put that in perspective:

1) The "better than expectations" number relied on 220,000 jobs being invented by the BLS's "birth/death" model. Without that adjustment, the number would have been 565,000.
2) 345,000 jobs lost is still worse than the worst month of the 2001 recession.
3) Average hours worked was at an all-time low of 33.1.
4) Unemployment is not only at 25-year highs and rising, it is in fact accelerating, and already worse than the worst-case scenario in the recent bank "stress tests."

A few references for those who would like more detail:

Mike Shedlock
Zero Hedge
Calculated Risk: Employment report, comparison to stress tests, involuntary part-time workers.

Yes, auto production (including Government Motors) will necessarily bounce back from extremely depressed levels in the second half of this year, and that bounce will contribute to what I expect will be positive GDP growth. Positive GDP growth means the recession will be officially over, but it won't feel like it. Unemployment will keep rising at least into 2010, and won't come down to healthy mid-single-digit levels for a long time after that. And what short-term recovery we will see is being paid for by putting our children deeper into debt with unprecedented, trillion-dollar deficits. And there's a very real possibility that the extreme fiscal recklessness will cause interest rates to rise significantly, causing another big leg down in housing.

Green shoots indeed.

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