Irrational Expectations – Predictable Disappointments (#12)

The latest employment figures released from the United States and Europe were “disappointing” to the top economists and analysts. Who according to their calculations had anticipated much better job numbers.  All we can say is that their expectations seem irrational to us as their calculations are not based on what we consider ground level economic reality, but more on obtuse economic theories that do not make sense to us, nor after 5 years of implementation seem to be working at all for the economies, as we have been anticipating and stating all along.

It is inconceivable to us as to how the beleaguered economies are expected to produce real jobs when the fundamental issues facing these economies have not been corrected yet.  These fundamental issues, in our view, simply are: global trade and economic activity that is significantly down since 2008 and has not yet recovered; the Western consumer who on the whole is indebted and financially insecure; and Central Banks plan of boosting recovery by massive financial stimulus and record monetary easing that excessively inflates stocks, bonds and real estate markets, but does little to spur street level economic activity.

In this global economic environment, real job recovery is most difficult at best, and practically impossible at the worst. And when one analyzes the jobs data, it becomes apparent that most jobs created and being reported, are part-time in nature, and of entry level quality and compensation. That means that employers are being cautious, still reluctant to commit to hiring on a permanent basis, and not at all sure of near term economic prospects.  

So to expect healthy jobs and economic growth numbers, in this on-going recession that is caused and maintained by financial imprudence, structural mal-adjustments in global trade and consumption, is to us being simply irrational, and therefore setting oneself up for disappointment.