A number of news sources are commenting that the abrupt drop in unemployment seems to be inconsistent with other indicators that are either coincident or leading to unemployment claims. An example is from FT Weekend below, excerpted from an article by Joanna Chung :
Gabriel Stein, of Lombard Street Research, said that labour market data were a generally lagging indicator but there was “a curious dichotomy” in the developments. “What makes these numbers strange is that we have not yet seen anything like the economic weakness that they would imply.”
“In earlier recessions, job losses and an unemployment rate change of this magnitude was already associated with significant falls in activity. Yet so far US output growth has weakened, but on a four-quarter basis it remains positive.” There were a number of potential explanations, among them that a fall in employment and rise in unemployment had a limited impact. But it may also be that “we have still only seen the beginning of labour market carnage and that unemployment is going to get much worse”.
Let me first provide context prior to offering a suggestion as to why unemployment appears to be almost 'leading'.
I have been a President or VP of three companies founded by others and have been President and CEO of two companies founded by myself. As a fiscal conservative and a social liberal I prioritized the creation of a diversified work force. The C level suite was populated by middle aged women, the general staff represented by a proportionate minority. Even given this kumbaya approach to business development I did find myself a bit disenchanted by the process, i.e., employees attitudes and work ethics.
So, please take that into consideration when I offer up a possible explanation as to why unemployment claims seem to be coincident or marginally leading to other prognostication runes.
Simply put, employers hate their employees.
The entitlement syndrome exists on both sides of the labor contract. As much as it is reported that employees feel entitled to their positions and compensation and that the worker is forever musing as to what the employer can do for them, the employer sees the employee as an infestation to the pristine business model that delivers not only lucre but affirmation as to the employer's superiority to the huddled masses collected in his (as a male I will limit this to my gender for that is where my antedoctal experience lies) working establishment each morn. There is a disease in small business,and it is what I refer to as the castle syndrome. That is,many small businessmen believe that they are kings prior to their building of the castle and should be afforded the courtesy and respect that all sovereigns are deserving of.
This mentality of 'ownership entitlement' has for the first time with this generation come to a cropper against the reality that there is an economic comeuppance a-rising. In the face of distributing their wealth to their employees versus hoarding for themselves and looking for the exit liferaft, the women and children are seen as dispensable.
Cynical? Perhaps. Accurate? Oh hell yes.