Unemployment is the New Recovery and Retail Sales are Horrible

Comment: Thanks for a total of "1 2009 Depression Shirt order" and the 1 great donation to this blog. ( I will be removing the shirts this week)
I don't know when the term "pink slip" originated. The term is at least a century old. It refers to a "you're fired" notice.

The American economy shows no signs of reversing its relentless increase in the rate of unemployment. Jobs are disappearing at a rate not seen since the 1981–82 recession.

Companies continue to cut costs by laying off workers. This is the main source of the increase in corporate earnings – not increased output, but decreased output. How is this profitable? Because of increased output per surviving worker. In the midst of recession, businesses are learning how to cut costs. Labor in most businesses is the #1 cost. Cut labor, and you cut costs faster than by cutting anything else.

Workers see what is happening. They are working harder because they are facing pink slips.

To understand how bad things are today, and how much worse they are likely to get, we need to survey some ancient history.

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WHAT WE CAN EXPECT

The economy is not in recovery mode. The best news that the media can present is that the rate of contraction is slowing.

There is no good news on the unemployment front. The rate keeps climbing. The statisticians have this hope: the job market will get so bad that workers presently looking for jobs will drop out. If they stop looking for jobs, they are removed from the unemployment statistics. Unemployment refers to people out of work who are looking for jobs. So, when someone drops out of the job market, he lowers the rate of unemployment. If enough people quit looking, the statistic looks better.

Then there is the underemployment factor. This is getting some attention, but not enough. Businesses have cut workers' hours. They don't want to lose workers, since there are costs of firing, such as an increase in the firms' state unemployment insurance rate. There might even be a lawsuit for discrimination.

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Retail sales unexpectedly dip 0.1 percent in July
WASHINGTON (AP) -- Retail sales outside of autos turned in a disappointing performance in July, underscoring concerns about the timing and durability of a recovery from the worst recession since World War II.
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