I’m afraid this guy may be correct:
Mohamed El-Erian says economists are wrong to dismiss unemployment as merely a lagging indicator, a sign of where the economy has been.
. . .
“Today’s unemployment rate is much more than a lagging indicator,” said El-Erian, whose Newport, California-based Pimco manages the world’s largest bond fund, in an e-mail after the Labor Department report on Oct. 2. “It is also a signal of future pressures on consumption, housing and the country’s social safety net.”
The job market tends to trail the economy in a recovery because companies hesitate to take on more workers until they are convinced the expansion will last. What’s different this time is the “large and protracted” rise in joblessness and the likelihood that it will stay high for years, according to El- Erian. That means unemployment will affect the economy going forward, not merely reflect where it has been.
“Less Credit, Fewer Jobs ”
A couple months ago I watched Australian economics professor Steve Keen give a convincing presentation pointing out that over the last couple decades, the only periods of significant job growth have been accompanied by large expansions in credit/debt (e.g., the housing and Internet bubbles). This doesn’t bode well for us today, as we are de-leveraging record debt.
Unless consumers (or the government) borrows and spends more, what is going to be the driver for job growth? I don’t see anything out there now.