Unemployment Rate Jumps

The July numbers for employment produced mixed results.

The nation's unemployment rate climbed to a four-year high of 5.7 percent in July as employers cut 51,000 jobs, dashing the hopes of an influx of young people looking for summer work.

Payroll cuts weren't as deep as the 72,000 predicted by economists, however. And, job losses for both May and June were smaller than previously reported.

July's reductions marked the seventh straight month where employers eliminated jobs. The economy has lost a total of 463,000 jobs so far this year.

The latest snapshot, released by the Labor Department on Friday, showed a lack of credit has stunted employers' expansion plans and willingness to hire. Fallout from the housing slump and high energy prices also are weighing on employers.

First, as I pointed out yesterday, these so called experts have way too much power. The so called experts overestimated the GDP number and the underestimated the jobs number. Thus, I for one find their predictions worthless. Unfortunately, the market often times reacts based on how each number does compared to expectations.

Jobs and GDP growth often move in a staggered order of each other. For instance, the economy began growing as early as 2002. Well into 2003 however, we were still losing jobs. Many folks will remember the Democrats were using the "jobless recovery" mantra for a long time until it stopped being a jobless recovery.

The economy, much like everything else, doesn't have everything move in tandem. That said, we can glean trends from what we see. Given that this is now month number seven of lost jobs and GDP has been growing less and less, all of these are signs that we are close to a recession.

The stimulus to me was like putting a band aid on a bullet wound. It is unfortunate that in this political climate the sensible thing will never be done. In my opinion, the only jolt this economy needs is to make the tax cuts permanent. Of course, not only will that not happen, but most Democrats will likely blame the same tax cuts for the economic malaise.

Right now, the economy is like a staggered boxer and it needs a jolt. A one time $600 check is not the kind of jolt it needs to make a recovery. By making the tax cuts permanent, it would give tax payers piece of mind in predicting future taxes. Furthermore, it would cost absolutely nothing. That's the kind of jolt the economy needs to recover and unfortunately it won't happen.