Responding to Friday's report on the October employment situation, my anti-doppleganger Nouriel Roubini had this to say to the Wall Street Journal (subscription required):
Today's employment report was consistent with my analysis that a good part of the economy is already in a recession: mediocre headline figure at 92,000 jobs with sharp fall in construction and manufacturing employment, flat levels of the leading temporary employment and flat retail sector employment. Only the service sector is still growing jobs. And note that both employment and unemployment rate are lagging indicators of the business cycles. So, it is pretty bad if the best we can do is 92,000 jobs even before an economy-wide recession has started. -- Nouriel Roubini, Roubini Global Economics
That may seem like a case of forecaster obstinance, but I'm actually with Nouriel in the following sense: If you really believe hard times are ahead, it is not so clear that you should be changing your opinion on the basis of incoming data. The following is a simple plot 12-month employment growth, from 2000 up through last week's October employment release:
I have to say, that looks pretty good to me: It appears that employment growth stabilized in 2004, and isn't showing much sign of falling off the pace. But wait. Let's travel back in time, and take a look at the situation in November 2000, just a few months prior to the recession that commenced in March 2001:
The yellow line in the chart above is the data through 2001 as we know it now, the yellow blue line the data that was available as of this month in 2000.
It is true that the employment trend was discernibly downward prior to the onset of the last recession. Those of us looking for signs that the economy is maintaining its footing might take solace in the fact that no such trend is apparent in the data today. But it is also true that the pre-recession information we were receiving in real time provided scant evidence of the utter collapse in employment growth that was to come. Given that history, I don't blame Nouriel for not yet being convinced that his forecast is wrong.