Money Supply – click for larger image
Last week’s dispiriting jobs report has led to pervasive pessimism about the state of the US labour market specifically and the pace of the recovery more in general.
So it was quite refreshing to see a research note land in my inbox this morning from Milton Ezrati, senior economist and market strategist at Lord Abbett, a fund manager, laying out the case why the labour market recovery is actually proceeding ahead of schedule compared to other recoveries.
Mr Ezrati’s argument is based on measuring this cycle’s labour market recovery with the average time that it taken a variety of labour market indicators to rebound after gross domestic product hits its trough during previous cycles.
Japan’s cabinet on Tuesday agreed Y7,200bn ($80.6bn) in stimulus spending intended to shore up a fragile economic recovery with measures including support for employment, easier financing for smaller companies and promotion of environmental protection.
Announcement of the package, which is to be implemented in the first quarter of 2010, had been delayed since last week after a tiny but vocal coalition partner in the new Democratic party-led government demanded more generous spending. More on ft.com.
Forget commercial real estate, the next shoe to drop is private equity. Apparently, private equity firms themselves are not the problem, it’s the companies they own, which employ some 7.5 million workers in the US alone. Private equity firms buy up struggling companies, aiming to turn them round and flog them off. The purchases are often highly leveraged using short-term loans, which are coming due. One estimate is that half of those companies will fail between 2012 and 2014.
Roubini argues further unemployment is on the way and Jeffrey Immelt, GE chief, has joined predictions of a second stimulus in the US. So the IMF’s speech this weekend was timely: Strauss-Kahn said the IMF should provide global financial insurance