The Real Unemployment Number

By John Carney

Good morning. Officially the February jobs number declined by 63,000. But the expansion of government jobs conceals the real damage our economy has suffered. Net out the government jobs and you have private sector employment contracting by around 101,000 jobs. Making matters even worse, average hourly wages have gone up 5 cents, fueling fears of price inflation. (The 5 cent number is actually quite typical for February and only looks high because employment fell so drastically.)
The Federal reserve announced that it would expand the Term Auction Facility, promising to keep running the auctions for six months. This is disappointing a lot of people who bought into the rumor of an emergency rate cut. And it may imply that the Fed, which took the action after it had already seen the horrible jobs numbers, feels that its hands are tied on interest rates by the threat of inflation.
Oh, and in other news Carlyle’s troubled fund was levered up 32 times, and its lenders are liquidating some of its securities. Ambac sold its shares last night at a 9% discount to the closing price.

Comments (8)

  1. 1
    Posted by guest | March 7, 2008 at 9:50 AM

    useful post

  2. 2
    Posted by diablo | March 7, 2008 at 10:07 AM

    Who are the fools who are buying into the rumor of more fed rate cuts? You know those cuts don’t do a thing anymore. Inflation expectations are going up, everybody is running to treasuries (when they are not speculating in commodities) so the yield curve keeps steepening. Rate cuts will come but their real effect is muted by now. But if someone gets the Europeans to follow, something might happen…

  3. 3
    Posted by guest | March 7, 2008 at 10:10 AM

    Please note the headfake rally in small caps this morning.
    short covering due to margin calls? I don’t know but it’s going to turn in a big way.

  4. 4
    Posted by guest | March 7, 2008 at 10:20 AM

    is ‘carney’ short for ‘carnage’?

  5. 5
    Posted by lift all the offers | March 7, 2008 at 10:34 AM

    Liquidity trap. Are we going down the same long, dark tunnel that Japan did? There’s a happy thought.

  6. 6
    Posted by guest | March 7, 2008 at 10:59 AM

    I heard some economist this morning state the real unemployment number is 6.8%. Yikes!

  7. 7
    Posted by guest | March 7, 2008 at 12:42 PM

    Yikes! is that Sykes @10:10?

  8. 8
    Posted by guest | March 7, 2008 at 6:25 PM

    12:42
    No. I just wanted to feel smart once this week. I needed it, bad.

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