Payrolls fall

The unemployment rate hit 8.1% in February, according to a Labor Department report out this morning.  The numbers were not a surprise, and every sector lost jobs, though constuction has been hit the hardest.  The only moderately surprising news is that average hourly earnings continue to rise, presumably reflecting a concentration of job losses among less skilled workers.

The New York Times story reports:

Some economists expect that the nation's businesses could cut another two million jobs and that unemployment could reach 9 to 10 percent by the time a recovery begins.

Some economists?  I haven't talked to a single one who estimates unemployment peaking below 9%.  Unemployment is a lagging indicator--it will keep falling after output has bottomed out. And output is not yet ready to bottom out, for all of our public officials slapping happy face stickers over all their official reports.  The other day I was talking to another economics journalist at a lunch, and in re: Ben Bernanke's stated public opinion, asked whether he'd met anyone who actually believed that growth would recover in the second half of the year.

"No," quoth he, then added "and neither does Bernanke."

By which he claimed no special knowledge, but rather pointed out the obvious:  the Chairman of the Federal Reserve is not going to start screaming "fire!" in a market that is already primed to stampede.