I won’t beat the drum about the Bureau of Labor Statistics monthly payroll report, other than to remind people it is based on a near-real time model that is noisy, error-laden, has a huge margin of error and is subject to repeated revisions. Drawing a broad conclusion and then making an equally broad pronouncement about any single jobs report is sheer folly.
The U.S. continues to be in a post-credit-crisis recovery -- that means more de-leveraging is to come and because of this, expect mediocre growth, job creation and retail sales for some time to come.
The prescription -- as noted in these pages for three years now -- is to replace monetary policy as a key economic stimulus with a robust fiscal policy, primarily focused on infrastructure. Fund it all with bonds that mature in 50 or 100 years to take advantage of record-low interest rates.
The huge debt overhang from cheap money and the absence of a traditional fiscal policy in the post-credit crisis period, are really what the “new normal” has been. The sooner we complete private deleveraging, refinance public debt, and return to traditional fiscal (rather than monetary) policy, the better off we all will be.