Generational Dynamics
	Forecasting America's Destiny ... and the World's
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Generational Dynamics Web Log for 8-Oct-04

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September jobs report much poorer than expected

September jobs report much poorer than expected

George Bush will face harsh attacks on the employment issue at this evening's debate as a result of a Bureau of Labor Statistics (BLS) report that the American economy created only 96,000 jobs in September.

The figure is substantially below the amount that economists had predicted. Economists had been forecasting an increase of 128,000 to 144,000. At the beginning of 2004, economists had been predicting that the economy would be creating several hundred thousand jobs each month by now.

Last month, I wrote that the August jobs report, at 144,000 new jobs, was much more positive than expected, helping Bush as the Republican convention ended.

Today's report contains even more bad news, however: The BLS has revised the August figures down to 128,000.

This increases the danger that Bush will be "Hooverized," by being compared to Herbert Hoover, who lost his fight for reelection to Franklin Roosevelt in 1932, mainly because of the jobs issue.

As I've been saying since 2002, Generational Dynamics predicts that the economy is entering a new 1930s style "great depression," and that stocks will fall by 50% or more in the next two or three years.

The reason is the following: The stock market bubble of the 1990s occurred at exactly the time that the generation of people who lived through the stock market bubble of the 1920s and the following Great Depression all disappear (retired or died), all at about the same time. Today, we haven't yet "paid the price" of the 1990s stock market bubble, as can easily be seen by the fact that stocks today are overvalued by 100% by ordinary price/earnings evaluations.

Unemployment since 2001 (Source: WSJ)

After the Nasdaq crash in 2000, the economy didn't follow the path of the economy after 1929 because the Fed has flooded the economy with money by keeping short-term interest rates close to zero. This allowed people and businesses to avoid bankruptcy by borrowing low-cost money, but the result is that public debt has now increased to the highest levels since the 1930s.

Generational Dynamics predicts that the economists who are predicting a surge in job growth will continue to be as wrong as they've been in the last two years, and that unemployment will reach historically high levels within the next two or three years. (8-Oct-04) Permanent Link
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