Drill For Oil And Cut Interest Rates

IBD Editorials ^ | September 5, 2008

[Kaslin]

Economy: Two things need saying about Friday's jobs data showing marked deterioration in the U.S. economy. One, it's not as bad as it looks. And two, it might get worse if policymakers do nothing.

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Start with the first point. Yes, the unemployment rate surged to 6.1% in August from 5.7% in July and 5% at the end of 2007. And, yes, the U.S. shed 84,000 jobs for the month, bringing the year-to-date toll to 605,000. Hardly a stellar performance, and one that certainly points to worsening conditions.

But it's also worth noting that 6.1% unemployment is pretty normal. That's right: Since 1970, the jobless rate has averaged 6.1%.

Again, that doesn't mean it's a good report. Far from it. Just that it's not a cataclysm, or as some foolishly suggest, a "depression." And other data in the report suggest things aren't so bad, at least not yet.

As Brian Wesbury, chief economist at First Trust, points out, aggregate hours worked — a key growth indicator — are off just 0.6% from a year ago. Every recession since World War II has experienced a decline in this number of at least 3%, year over year. We're not even close.

Moreover, average hourly earnings have risen at an annual rate of 4.3% over the past three months, while the share of U.S. industries reporting they're adding jobs hit 48.9% — the highest level in a year.

[mainestategop]

[mainestategop]

Some of us are a little young (thankfully so) to remember stagflation during the Democrat era.

[Kaslin]

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