Longtime readers know that my overall outlook for the U.S. economy is grim.
To me, it appears clear that our current economic decline did not start in December 2007 but rather in 2001 when our typical boom and bust business cycle pattern gave way to a, more or less, continuous bust only briefly interrupted by the main thrust of our historic and phenomenally immense and delusional late-cycle credit and housing bubble.
Without the credit and housing bubble our “jobless recovery” would have been a “recovery-less recovery” or, more precisely, no recovery at all.
To put things in perspective a bit, during the “recovery” period following the dot-com bust our economy regained all the jobs lost in the recession and even added 5.622 million new jobs.
Unfortunately though, over the same period the workforce population grew by over 19 million individuals.
Worse yet, since the start of the housing recession in December 2007 our economy has lost 5.73 million jobs.
So we are below the actual employment level seen in late 2000 and we are sliding still further… an unprecedented trend for the post-WWII U.S. economy.
Nonetheless, all we have is history to compare against in order to determine when and how this latest cyclical decline (possibly another sub-cycle in a longer trending decline) will play out.
In an effort to gain a fairly timely and accurate account of the trend I have formulated the “Sunshine Indicator” (click for much larger image) which exploits a pretty solid relationship between industrial production and the national unemployment rate.
Currently the indicator is still flashing “decline” but it will be interesting to see its pattern shape up over the next three months.