Friday's employment data weren't exactly scintillating. Everything was worse than expected: payrolls, the unemployment rate and overtime hours. I've mentioned before that the payrolls data underestimate employment growth initially in the first year of the recovery, with the underestimation only being corrected years later with the census. So the employment numbers are prolly a bit better than the headlines. But this underestimation doesn't affect the unemployment data (which come from a different survey). And unemployment and the unemployment rate went up.
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This is the first time in 50 years that the unemployment rate has risen so soon after the cyclical turning point. OK, the Japanese earthquake and tsunami had some impact, as did the mid-west floods. All the same ...
So far I'm sticking to the view that this is a classic mid-cycle blip. But I'm now watching the data very closely. And I suspect the Fed is too. Japan had 20 years of stagnation after its property bubble burst back in 1990. What if America is going to go through a similar experience?
More on that dismal prospect in the next post.