So are we out of the woods yet?

In the last couple of days there have been a few good news stories about the economy. The US lost 11,000 jobs in November, which sounds like bad news until you read on and see that the pundits were predicting more than ten times that. Paradoxically, their unemployment rate actually dropped. The paradox is resolved when you realize that the unemployment rate is based on the number of people actively seeking employment... but more on that in a moment. In Canada, we had a net gain of 79,000 jobs. And gold is down, which is usually seen as a sign of improved confidence in the economy (or at least the value of the US dollar).

However, we shouldn't assume that it's going to be clear sailing from here on in. For instance, looking at the American stats, there's still a net loss of jobs... which implies that the drop in the official unemployment rate may be because of people who have given up looking for work and have gone back to live with their long-suffering parents. And the job stats do not necessarily reflect quality; if an auto worker is laid off from a $50,000 a year job, but two fast food workers are hired at $18,000 a year, that is a net gain in employment, but it isn't really a favourable economic indicator. Note too that retail sales on Black Friday fell short of expectations (don't get me wrong, I'm no fan of the crazy consumer culture that surrounds that day, but it is an indicator of public confidence). And on the international front there may still be some shocks awaiting us. Canadian Silver Bug reminds us that the Dubai crisis may not be the last, and identifies Japan, the UK, and Russia as potential trouble spots. And of course, a default by any of those countries would have dramatic effects on the global economy, which might mean big trouble ahead... although I suspect creditors might be willing to renegotiate things before it gets to that point, because they could stand to lose a lot from the secondary effects of such a default.