Unemployment Hasn't Crushed the Green Shoots

Last Updated Jul 6, 2009 12:58 PM EDT

As a sendoff into the 4th of July holiday, June's rise in unemployment to 9.5% was plenty discouraging. The gloom was pretty well crystallized in this New York Times op-ed by Bob Herbert, which quoted the Center for Labor Market Studies at Northeastern University in Boston, as saying that if you measured not just the unemployed but everyone who is working less than he or she wants to, you get an "overall labor under-utilization rate [of] 18.2 percent." Any economic recovery that occurs with that kind of unemployment isn't a real recovery, Herbert says. "It's mumbo-jumbo."

The bearish economist David Rosenberg, formerly of Merrill Lynch and now with the Canadian brokerage Gluskin Sheff, piled on with an apocalyptic guest commentary in Barry Ritholz's The Big Picture. Among the many discouraging data points: There are now more than five unemployed or underemployed people for every job opening.

Yeah, all right. it's bad out there. If you have a job, hold on to it with both hands. But a lousy job market is not a straight shot to Great Depression II. Let's not forget how this works. As my fellow MoneyWatch.com blogger Charles Wallace points out, unemployment is a lagging indicator. You can see companies return to profitability, GDP increase and the stock market rally and still have unemployment rise, and in fact, that's the consensus prediction right now.

It's ugly. But we've had jobless recoveries before. And when you're trying to build financial capital for your future, a jobless recovery beats no recovery at all.