Some of my random thoughts on the employment situation and interest rate.
Non-farm number from BLS (click to enlarge):
During the tech bubble, 3.17 M jobs were created during the peak year and 2.3M jobs were lost during the burst phase (01 and 02). It took a real estate bubble to restore the unemployment rate to "acceptable" level. During the real estate bubble years, only 2.5M jobs were created, while more than 7M jobs will be lost. These jobs, construction, manufacture industry (cars and heavy machines (real estate related)) and excessive service sector (financial service and retail services, both are inflated by the money illusion created by excessive leverage), will not come back in foreseeable future. On top of these, Census Bureau Population Estimates we are going to add about 2.5 million working-age (16 years old and up) citizens a year. We need to achieve 3M+ job creation per year for multiple years to restore unemployment rate back to normal. Unless another bubble is in creation, it is really hard to imagine the economy will be out of woods soon. Maybe a government spending bubble financed by higher tax and money printing or both will do. I think higher rate will be last thing Fed wants, if we have to borrow heavily in the foreseeable future. Therefore I really doubt Fed will put any hint of rate hiking in their statement for some time to come. After all slowing down the speed of losing job does not equal to creating new jobs to replace the ones that are permanently lost (at least 2-3M of the 8M job loss maybe higher).
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