Category: ECONOMICS 5.0

I don’t know about you but whenever someone uses the word "resilient" to explain what's behind a rebound in consumer spending -- I always cringe. What exactly does that mean? Typically, the term is heard in the following context. An analyst or economist, when pressed to justify an unexpected jump in household shopping, will often respond by saying "it looks like consumers are showing amazing resilience."

"Showing amazing resilience?" Where’s the insight in that observation? How does that explanation enlighten anyone?

By definition, someone demonstrating resilience means they are resourceful, imaginative, or creative in their actions. OK, we get that. But it seems to me it is such a vacuous term when used to explain consumer behavior.

Nonfarm payrolls were reported to be down 80,000 in March, following declines of 76,000 in both January and February. Three consecutive monthly declines in payrolls is a noteworthy development, and a strong indication of recession. Those recent monthly payroll data are depicted by the orange line to the right in the accompanying chart.

A review of the historical record (red line, green line, blue line) shows consecutive declines in nonfarm payrolls being characteristic of the past three recessions. Recession months are in bold.

The red line in the attached chart shows the monthly changes in nonfarm payrolls during the economic slowdown that included the recession which officially started in 1981.

Nonfarm payrolls were reported to be down 63,000 in February following a 22,000 decline in January. Those two consecutive monthly declines follow increases in nonfarm payrolls that averaged 80,000 in the fourth quarter of 2007 and 71,000 in the third quarter of 2007. Those recent monthly payroll data are depicted by the orange line to the right in the accompanying chart.

A review of the historical record (red line, green line, blue line) shows consecutive declines in nonfarm payrolls being characteristic of the past three recessions. Recession months are in bold.