GDP Is Up....

...Buts its not going to offset the horrible labor markets. When was the last time people were jumping up and down in Times Square when the non farm payrolls were released and it showed that less jobs were lost in the economy? Were ordinary people giving high five's when the GDP was announced last Thursday? Listen. There is no way that people are getting excited over DOW 10K or that Goldman is back close to $200. Ordinary Joe's are not exhibiting the same euphoric emotions that the people who ring the bell at the NYSE are showing. Sorry! Where are the jobs? People are not getting excited over the number of jobs that were saved by the Stimulus. BTW. How do you actually forecast/quantify that anyway? Isn't that like Bush/Cheney stating that all of the eavesdropping, wiretapping, raids, and overall suppression of constitutional rights was done to save American Lives and they can prove it because there has been no hits to our country since?

Back to GDP.

GDP grew at 3.7% annual rate from 1992-2000, while the base unemployment rate fell from 7.4% to 3.9%. If you think that the economy grows at similar 3.5% rate over next eight years, do you think unemployment will likely fall from 9.8% to 3.9%? No way! Most people think that if we get 3.5% GDP growth for the next 8 years the unemployment rate will fall only to 6.3%, which is still high. This is structurally a much different economy then it was the 90's. I don't think we are getting anywhere near 4% unemployment anytime in the future. Someone should alert Mr. Market to that fact.

Many are calling for the Fed to not raise rates until the unemployment rate reaches close to 7%, which could be some 8 years from now. So keep the printing press greased up.