Further Improvement in Unemployment Confuses Keynesians

The U.S. unemployment rate fell to 8.5 percent last month and nonfarm payrolls rose by 200,000, according to the Bureau of Labor Statistics.

The hiring gains cap a six-month stretch in which the economy generated 100,000 jobs or more in each month. That hasn't happened since April 2006, before the start of the financial crisis.

Paul Krugman-like Keynesians remain totally confused. Keynesian economists surveyed by Dow Jones Newswires had forecast a gain of only 155,000 in payrolls and a jobless rate of 8.7%.

 Just last month while the hiring was going on Krugman wrote that we we are under depression conditions:

....under depression conditions — which is what we have now — inflation is very much a positive thing.

As for his call for more inflation, Krugman's last word on that was that he was worried about deflation, he is going to get smacked around big time in early 2012 with price inflation that will rocket even the silly core inflation index he watches.

Alreay, gasoline prices are starting the year off with a bang.They are at the highest-ever level for the start of a new year, ever.

The average U.S. price for a gallon of regular unleaded stood at nearly $3.28 on Jan. 1, according to AAA Daily Fuel Gauge Report.

That’s over 20 cents above the year-ago price and almost 63 cents above 2010’s starting level.

Bottom line, since Krugman doesn't understand how money impacts an economy, at major turns he tends to be way out of whack on his forecasts. Only Austrian business cycle theorists understand the manner in which central bank money manipulation can impact an economy. Bernanke money printing has been super-aggressive. This is behind the manipulated turnaround in the economy that was spotted first here at EPJ. The price inflation is coming.

(htRyanUnerwood)

AP: Economy Ends Tough 2011 on a Surprising Upswing

AP economics writer reports what EPJ readers understood months ago was coming:

The economy is ending 2011 on a roll.

The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the depressed housing industry may be under way.....Factories are busier. Stocks are higher.

Not bad for an economy faced with a debt crisis in Europe and, as recently as this summer, scattered predictions of a second recession at home. Instead, the economy has grown faster each quarter this year, and the last three months should be the best.

Here's what AP reports Krugman-like Keynesian economists were saying as recently as August:

When The Associated Press surveyed 43 economists in August, they pegged the likelihood of another recession at roughly one in four. The Dow Jones industrial average was lurching up or down by 400 points or more some days.

There was plenty of reason for gloom. A political standoff over the federal borrowing limit brought the United States to the brink of default and cost the nation its top-drawer credit rating.

This is I wrote on August 11:

Underneath the surface, though, the Fed is aggressively pumping money, which will create a new manipulated boom. The developing manipulated boom is what the insiders are seeing. Money is flowing and will work its way into the stock market.

I doubled-down in October. This is what I wrote on October 7:

Bottom line: Keynesians are clueless. The private sector continues to improve because of Bernanke money printing and the shrinkage is now pretty much at the local government level, as a result of declining tax revenues (which will also reverse itself in coming months). There is no double dip. The stock market and economy will soon go into a Fed manipulated boom, that will have Keynesians scratching their heads even more.