Employment Data or should I say Unemployment Data

Today's unemployment numbers I think are going to look good compared to what the picture will look like down the road. Another 467,000 jobs cut and an unemployment rate of 9.5%.

There are many factors helping push the unemployment number higher:

• High gasoline prices
• High food prices
• High debt load costs
• Extremely high health care costs...which gets worse with more lay offs
• Higher property tax rates despite lower housing values. Mine went up over 30% in the last 2 years.
• High college tuition
  
• High utilities (electricity, water, etc). Some areas have experienced about a 100% increase in water costs.
• Higher sales tax rates
• Higher etc, etc, etc......

You ask how this will make things worse? The average American is getting squeezed to the limit. They are buying necessities only and have literally stopped buying the bubble creating items that started all this mess (housing, furniture, tvs, disposable cars, easy credit). An example: my trips to Sam's Club. I used to see at least 1 flat panel TV being pushed through the checkouts almost every time I went. Since the beginning of the year, I honestly don't think I have seen one being sold. I average about 1 trip a week.

Driving around Houston, I see many shopping center strips 100% empty and very dead mall parking lots. These are all signs of uncertainty by the consumer and business owners. Keep in mind, Houston has been relatively immune to the big downturn experienced by other major cities.

There are too many un-sustainable jobs. So many jobs that were created in the last 10 years are jobs that supported the bubble creation. Now that the consumer is retrenching, paying off the debt created by the bubble, and buying only the necessities, these jobs are in jeopardy.

This bubble is so big that it will take much more than a 'microwave' fix. The commercial real estate problem that is around the corner will not get the support from the government as the housing problem did. Fist of all, the Government is tapped out. Secondly, the public is sick of bailouts. Third, banks will have to adjust commercial mortgages down to reasonable levels or risk losing the whole mortgage. There will be large write-offs that could be devastating.

Many local municipalities based their budgets on the inflated property values. Well guess what, we are seeing many that could fold soon. Homeowner associations will feel the pinch as well.

I think all the problems will snowball until the average person gets their balance sheet in positive equity and we return to pre-bubble circa mid '90s. There will be a lot of pain, but that is the reality we face.

I don't think we should be fooled by the 'green shoots' touted all day long on the major media outlets. More layoffs (public and private), downsizing, and small business closures could get us to a 12% unemployment rate easily by mid 2010.