The Rigged Game: News and Views

The Labor Department today announced that U.S. employers cut over 530,000 people from their payrolls last month.

Last Monday, the National Bureau of Economic Research concluded the U.S. economy had gone into recession in December of 2007, confirming what was obvious. However, it takes months to acquire the data and then to analyze it, so the researchers from the NBER should be excused from being tardy in making their call.

I wrote on these pages months ago that the NBER would likely look first at November 2007 as the beginning of the downturn. I was a month off the mark, but it was obvious by early 2008 that the economy had slid into recession. For some strange and unknown reason, some so-called experts insisted we were heading into a recession as late as last week.

I called November for a reason. The unemployment rate always rises before a recession begins. But the most it ever surges before the onset of a recession is .7 percent. In March 2007 the rate was 4.3 percent and in November 2007 it was 5.0 percent. So we had reached the maximum rate, plus all the bad economic news began hitting in December 2007. However, since then the Bureau of Labor Statistics has revised its monthly unemployment rates. The rate grew from 4.4 percent in March 2007 to 5.0 percent in December of the same year. That's still a sharp rise while in a business expansion.

This fulfills my prediction made in September 2006 that a recession would unfold somewhere between the fall of 2007 and the following summer.

The jobs losses will continue to mount and this contraction could be the worst since 1981-82, or even since the Great Depression.