Yet Another Gruesome Employment Report

For most of the past decade, I've happily ignored the payroll report on the first Friday of every month. The market often got very excited about it, but the headline payrolls number was generally unreliable and full of more noise than signal.

The unemployment number, however, wasn't. And the 7.2% unemployment rate -- which rises to a whopping 13.5% if you use the broader figure which includes the underemployed as well -- is very, very scary. We knew we would almost certainly see these numbers at some point in 2009, but the fact that we got there by the end of 2008 really underlines just how bad this recession is becoming.

The fact that unemployment is rising fast has no silver linings. Does it mean that companies are reacting fast and decisively to the recession, laying off workers in good time to avoid closing their doors entirely? There's not much evidence of that. Instead, it means higher unemployment payments, lower consumer sentiment and spending, and the continuation of a vicious spiral which is reaching Charybdis-like proportions.

If you're desperate for good news, you can cling to the 5-cents-an-hour increase in wages, but don't expect earnings to rise in 2009 by anything like the 3.7% they went up in 2008. Or maybe you can take solace in the fact that the headline payrolls figure (if you ignore the unemployment figure) was at least in line with expectations. But for me, that just means that economists and forecasters have finally woken up to grim reality.

Maybe the only real upside to this report is that it should light a fire under Congress to pass a stimulus package sooner rather than later -- including the release of the second tranche of TARP funds. Let's start getting money out the door now: that's more important than haggling over what goes where.