While today’s jobs number shouldn’t come as a huge surprise — we have been outside consensus repeatedly, and I have been writing here that double-digital unemployment is in our near future — the speed with which it is happening should give people pause. Granted, a 535,000 person reduction in payroll today is different than a similar number twenty years ago, a point too many commentators gloss, but there is no question this unwinding is happening faster and more savagely than any in memory.
Note: I’m not saying faster than any since WWII, or since the Depression, or whatever. I’m saying that this unwinding of the U.S. [sic.] and global economy is happening faster than any since glaciers covered the NYSE.
Think about how long it took in the Depression to get from the market crash to marked global economic shrinkage â€“- four years — and how long it is taking today — three months. The speed with which carnage slices through this tightly-linked economic system of ours, both globally and locally, is remarkable and unprecedented.
Optimists will say that this means we can get through this faster than any previous downturn, especially any of this consequence. After all, if you compress three years of economic damage into three months that does cut out a lot of time for screwing around. Mr. Market is saying, You’re forecasting double-digit unemployment and a 5% GDP contraction? Why wait twelve months — let’s do it this quarter.
On the other hand (and this is closer to my view), the optimists are akin to saying that one high-speed highway collision is better than a bunch of low-speed ones. Hey, you got it over with quickly! The trouble is, of course, a few low-speed dings are not only survivable, but may turn out to be merely cosmetic — while one high-speed crash tends to destroy the vehicle and its occupants.