The American stock markets rose yesterday on the hope that the dire unemployment report released in the morning would spur the Fed to implement quantitative easing, round II. Even with this hope, the threat exists that further quantitative easing will cause inflation rather than an increase in the number of jobs. This brings back memories of the stagflation of the 1970's, namely price increases without economic growth.
Of note, the Sept. unemployment report showed an increase to 17.1% from 16.7% for U-6, the broadest measure of unemployment. This is an astounding increase!
The following article reports a much darker picture:
Forsyth, Randall W., 2010. Debasement blues. Barron's, Oct. 9.
From the article:
"John Williams of Shadow Government Statistics—whose call for a negative payrolls number cited here was right on the money—further adjusts the underemployment rate to count folks who have been out of the labor force a year, who don't get counted among 'discouraged workers' by the government. By his tally, true underemployment hit 22.5% in September, up from 22% in August, and a new high for the cycle but not one to crow over."
The prospects for recovery look very weak indeed.
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