Republicans are hammering Obama because the unemployment rate is about to go over 10% (Gingrich says the stress tests “have already failed” because they were based on a lower number), and many Democrats in Congress are getting anxious about a tough reelection if the numbers don’t get better soon (and therefore are less willing to stick their necks out for the president).

But my money is on much better numbers turning out for August, maybe even coming back under 9%.  Here’s why:

  • Summer Jobs that typically are filled by high school students this year are going to be picked up by displaced workers, even though overqualified.  Teenagers unable to find jobs will have less money for games, clothes and to save for the Fall, but nevertheless they will not be claiming unemployment benefits.
  • Stimulus package: Construction projects will finally start coming online.  Not the big rail and infrastructure projects to be sure, but definitely the smaller ones, such low-income housing weatherization and city roads.  Also tax incentives for energy efficient windows and solar energy have kicked in, and these retail type contracts are ramping up as banks start lending again and contractors start marketing them aggressively.  Then there is the undocumented worker factor: A sizable portion of construction work used to be done by illegal immigrants (20% ??), especially with small 5-10 person contractors.  Many of these workers have gone back to their homelands, so for every 9 legal construction workers that were laid off, about 10 will now be hired back for a comparable project.
  • College grads: More than usual they will go into volunteer work (unpaid or sponsored by the expanded Americorps), delay graduation, pursue graduate degrees, travel for a wile if they have the resources, or stay with their parents (without collect unemployment).
  • Chinese stimulus: We’ll start feeling the effect of Chinese projects on our durable orders numbers.
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