Unemployment Rising Quickly

The official government numbers of how many American citizens are now unemployed were released early on Friday 9 January and they were quite hideous. Officially the unemployment rate shot up one - half percent from 6.7 in November to an over fifteen year high of 7.2. Unofficially the numbers are seriously troubling as the real unemployement rate is now between 15 and 19 % ( and maybe as high as 22 % already ) if one factors in all the disillusioned non-working, the underemployed, and those working only parttime because they cannot find fulltime employment. It is stunning to realize at least over two million jobs have disappeared since September. Look for the numbers for January to be worse, perhaps significantly, than those in the past few months

The trends are looking worse as each week goes by. It now appears certain official unemployment will exceed the 9 % threshold by late Spring or early summer, and 10 % could be here by July or August. Whereas many experts felt the peak would be less than 10 % mere weeks ago, there are some now who feel it will go to 12 % perhaps by years end or early in 2010.
This would be the highest numbers since the year 1940.

Many eminent economists are perplexed on what steps could be taken to reverse this trend and start to return the economy in a positive direction. When one out of eight is officially not working and the unofficial number exceeds one in five, there will be little doubt the nation will be in a depression. The federal government can only spend so much money in attempting to reverse this downturn, and the amount already spent is staggering. And with news that foreign investors are beginning to become averse to purchasing US securities being used to finance this incredible federal deficit, the nearterm and longterm scenarios become only increasingly alarming.

One question that is up for debate by many is whether the economy will start to experience deflation (which is what is happening to a small extent now) or whether a cycle of rapid inflation is going to begin to occur in the second half of 2009. There is no clear consensus among experts and observers about what direction prices will take later this year and into 2010 and beyond. While deflation is less painful for consumers, especially for those living on the edge, the consequences for the economy on an overall basis are believed to be worse than if rapid inflation begins to occur.

The Great Disruption is promising only to worsen rather than abate for the foreseeable future. Hold tight onto your assets in the form of cash as much as possible.

http://www.latimes.com/business/la-fi-jobs10-2009jan10,0,5726920,full.story

http://www.rgemonitor.com/blog/roubini/

http://www.mcclatchydc.com/251/story/59365.html

http://ourfuture.org/blog-entry/2009010209/bushs-last-month-sees-unemployment-hit-22-according-wingnuttias-math

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