Monday, December 22, 2008

Where the Unemployment Is

It is easy to fall into the trap of over-aggregating trends in the economy. When thinking about unemployment, many consider a downturn as a period when the entire economy is more or less impacted equally. Not so.

The reckless money printing that fuels a boom usually ends up in the capital goods sector first, thus when the Federal Reserve takes its foot off the money printing machine, even for a brief period, it is the capital goods sector that will experience the greatest number of layoffs and lost jobs.

Richard Ebeling has put the numbers together to show that the current readjustment period is no different. The heavy losses are where you would expect them to be, in the capital goods sector. Ebeling's full report is here.

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