Interesting Take on Unemployment……

Before you dismiss this out of hand, the logic behind it makes sense. As the economy purges the highly unproductive parts of the labor force (unions) we could very well see increasing GDP without the corresponding jobs gains one would historically expect. As Davidson says, it is far too early to tell, but it is as variable that must be watched.

“Davidson” submits:

I ran this to just see what it may be telling us. The history of % Employed shows a slight uptrend with that point today at 47.89% while we are at ~44.9% today or about 3% below peak employment. The numbers work out to 9.3mill unemployed.

There is a slight up trend in the % Employed which may represent more working couples, more singles waiting later to have children, more singles in general or a combination of the above and other factors that I haven’t looked into.

It struck me that this recession may have been used to purge union workers who have been particularly inflexible regarding work requirements. We may see a recovery to normal GDP with a relatively high unemployment rate which would reflect the productivity and flexibility of the remaining workforce.

Too early to tell, but the possibility that unions were purged for higher productivity would mean that we will have to be careful interpreting past employment trends as future economic and market indicators. I do think that the resurgence of productivity, the rise in production and the strong rise in exports means that the US has regained some global competitiveness. The examples of Lean Mfg have seemed to grow exponentially the past few years with very large companies, i.e. CAT, GE and F, and the quality is beginning to show itself especially in F. The business flexibility of CAT is revealed in their making 3 significant acquisitions this year based on the cash flow derived from Lean Mfg changes.

It will take the next 5yr-10yrs as data develops to fully understand the current situation as the future evolves.