The usual suspects are out touting their book as the “there can not be a recession when the economy is this strong” parade continues on the various Bubblevision programs. For example, here are a few videos to highlight this disturbing lack of historical perspective.
From Dutta, that’s not surprising.
Zandi also doubted a severe recession in 2007 would be in America’s future. Some of us knew in late 2006 that the system was doomed.
Now that was just two weeks ago. So look out for the end of mankind and capitalism as we know it.
On to the reality portion of my rant.
Everyone who is considered by the used car sales stock media as a “serious economist” would never say that unemployment is about to super spike to massively higher levels as the US economy implodes into a recession. The reality is that every time the US has had a major recession, and we’ll leave the pandemic out of this discussion, unemployment spikes rapidly just before or after the recession has already started.
Let’s start this discussion with a review of the last three “big ones” after 1987 and how the unemployment data, not including the more accurate U-6 really panned out.
First in 1989, the post-crash economy which stumbled after the October 87′ debacle grew as Reagan’s policies were continued under President George H.W. Bush. The Cold War was ending and the future never looked brighter until the Iraqis decided to invade Kuwait creating a situation which caused a short term spike in economic activity followed by the inevitable recession.
The U-3 unemployment rate followed in lockstep:
Imagine the panic of the Biden Junta should a spike above 5% hit during January of next year.
In 1999-2002, the recession was postponed due to political reasons. This time the BEA didn’t want to make the hard call in mid-2000 so as not to influence the Presidential election. In reality, the US economy had contracted severely in every metric except employment levels by June of 2000 and that data was suspect considering how ruthless the Clinton regime was regarding protecting its perfect economic record since 1992.
The shadow recession almost got AlGore the weirdo elected. Thankfully it did not. Unfortunately the GOP alternative was not much better and unemployment spiked with the blame put on 9/11 even though the acceleration in layoffs started long before the attack.
Lastly the “Great Recession” which was an actual depression for 20-30% of the American population.
The devastation wrought by years of Federal Reserve mismanagement and lack of oversight along with political incompetence lead to one of the most fearsome crashes in American history. Unemployment started to rise rapidly, especially for the much larger contractor grouping working within the “new” economy, in early 2007. The hard layoffs hit towards Christmas of that year causing massive concern despite denials by many on television and the political world.
And now the nightmarish rate rise:
The real unemployment rate, as measured using 1980’s comparable metrics was closer to 17-19% at the peak, if not worse as the BLS continued to churn absurd revisions out on a monthly basis.
For this current era, keep in mind that inflation is not over, the recession may be starting any week now, and the layoffs reported thus far are just the tip of the iceberg. This could be the big, nasty reset in American financial markets which has been postponed twice in the last twenty years or just another excuse for government largess to pacify the masses.
Regardless, by the time unemployment levels and rates catch up to economic reality, the markets will be the last entity to recognize the problem and set pricing accordingly; especially during an election year.