Last week when it was announced that only 54,000 jobs had been added in May, based on the press coverage, you would have thought that the news indicated that the economy was headed off a cliff! In our June 6^th article we talked about the fact that we all need to re-adjust our perspective on this recovery. This was abundantly clear last week as the pundits and pollsters were rabid about how bad the jobs news was.

Here is the perspective we need: This was the worst recession in modern history, certainly the worst since the Great Depression in the 1930s. This recession lasted 70 percent LONGER than the historical average. Because of this, you can safely assume that this recovery will take at least 70 percent longer or more for full recovery. And, as with all historic recoveries, none of the data will show a continuous straight line of improvement.

Recoveries occur in a “hiccup” fashion. We will have two to three months of good data followed by a month or two of bad data. This is how it always works. So we allowed ourselves too much enthusiasm when the jobs data for February through April of this year was very positive. This caused national angst when the May numbers were announced where only 54,000 jobs were added. Again, let’s keep this in perspective. [Read more…]