Job Market & the True GDP

Reuters writes:

U.S. employers axed payrolls by 533,000 jobs in November, the most in 34 years and far more than expected, government data on Friday showed, as the year-old recession hammered every corner of the U.S. economy.

U.S. stock markets opened lower, oil prices and the dollar weakened and U.S. government bond prices rallied as the data showed the U.S. downturn was deepening.

“You can’t get much uglier than this. The economy has just collapsed, and has gone into a free fall,” said Richard Yamarone, chief economist at Argus Research in New York.

As far as the True GDP is concerned, this should not appear as a big surprise. Those who follow that number will generally be able to predict developments like this long before they occur. For example, the True GDP in the US has been steadily declining since 2001. The same applies to the period from 1970-1975.

Even after the official recession in 2001 was over, it kept on falling while stock and real estate markets surged again. This enables those who monitor this figure closely whether or not a boom appears justified and sustainable, or whether or not a correction is impending. More importantly: The longer the supposed boom lasts, the more severe will the correction be if the True GDP contracts during that boom time.

Related Posts:

Leave a Reply

Your email address will not be published. Required fields are marked *

 

Subscribe without commenting