Study in contrasts
Google announced earnings yesterday and the Fed informed us that unemployment is still rising. What to make of this seemingly contradictory information? Nothing much beyond the fact that we are still in the early days of a recovery.
Google’s announcement that it had earnings of $1.97 billion in Q4 on revenues of $6.67 billion is a strong indicator that business is beginning to do the work of marketing its wares, which eventually results in revenue, new jobs and all the rest that goes with a recovery. Google’s numbers were 17% higher year over year.
The Fed, meanwhile, released disappointing news that initial joblessness claims increased to the tune of 482,000 new claims last week. That number was up from the 440,000 expected and while there were technical reasons for the increase, it didn’t feel good. The U.S. unemployment rate is stubbornly stuck in the ten percent range and you can expect it to stay there until demand improves across the board. Complicating the task of growing jobs is the dismal fact that in the last decade American manufacturing has been hollowed out.
According to The American Prospect, 42,400 factories decamped these shores for dim sum in the last decade. If you have read this space before you know this statistic because I used it recently. Nonetheless, it bears repeating and repeating. The Prospect article argues that among all the industrialized nations of the planet, ours is the one without an industrial policy.
Other countries have well defined industrial policies and they execute on them which is why we import so much (check out our trade balance) of what they export. I suppose some enterprising new-classical economist will someday try to argue that we lead the world in exporting whole businesses rather than mere products but even then one would have to ask what we got for these exports and why our trade balance looks like a bad cholesterol report.
So there is good news in the economy but unemployment might stay high for a long time as we look for ways to reabsorb the predominantly blue-collar workers who lost out in globalization.