We know politicians just love to talk about job creation, but let’s be honest: The sign of economic progress is not jobs lost, but jobs eliminated. Now of course we want as many people as possible to have gainful employment, if they want it, but what a dynamic economy does so well is take a task and find ways for fewer and fewer people to do them. Some jobs get eliminated altogether, as businesses use technology to improve productivity.
So good news! Productivity in the 4th quarter surged to the highest level seen since 1982. Of course, it wasn’t due to some new technological innovation, but rather all the layoffs that we’ve seen. But the point is, American businesses are able to keep output high with fewer laborers. This will increase profits, and these profits will drive the investments and innovation that will find new jobs for the unemployed. Sure, it’s ugly now. And by all signs this recession will be extremely deep. But these indicators point to the mechanisms for our eventual turnaround.