Busch: Were The Bush Years Really That Bad?

Friday brings us to the favorite part of the month when we sigh and think: were the Bush years really that bad? Seriously, the August US unemployment rate was expected to increase to 9.5% from 9.4% in July and non farm payrolls are expected to have declined 230k. Data came out 9.7%, NFP -216k, but July was revised an additional -29 to -276.

From a low of 4.4% in October of 2006, the number of unemployed has soared to about 7 million in the United States. It’s one of the contributing factors for why President Obama is seeing his approval ratings sink.

The recovery is based primarily on inventory rebuilding and industrial order pickup with US exports accelerating. Factory orders and ISM manufacturing have shown improvement that leads me to believe they will resume hiring soon.

Unfortunately, the average non farm weekly hours was unchanged at 33.1.

The good news is that average hourly earnings increased 0.3% and this puts more money in the pockets of workers.

However, consumer spending is still lacking.

This is why there is consternation over the lack of job creation even with growth returning this quarter. It’s seen as either unsustainable or lackluster going forward.


Remember over the last two recessions, the Federal Reserve didn't start to raise rates for an entire year after unemployment peaked.

With the Fed indicating that unemployment will peak next year in Q1, this means that the Fed won't look to raise rates until Q1 2011.

The markets have been perplexed by the rally in gold in the face of lower US bond yields and a relatively firm US dollar. The answer may lie in central banks keeping their foot on the monetary gas and indicating their foot is going to stay there for a long time. Also, the finance ministers of the G20 have made it clear that they don't want to exit credit easing too soon.

These politically controlled credit easing programs will likely stay in place much longer than the central bank controlled credit easing programs. It’s a problem for 2011, but not today.

Today, the headlines will scream "Highest Unemployment in 26 Years!" and that’s all that matters.


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Andrew Busch
Andrew Busch


Andrew B. Busch is Global FX Strategist at BMO Capital Markets, a recognized expert on the world financial markets and how these markets are impacted by political events, and a frequent CNBC contributor. You can comment on his piece andreach him here and you can follow him on Twitter athttp://twitter.com/abusch .