Paul Krugman Is Wrong

New York Times columnist Paul Krugman is beating his drum, sounding the alarm that a "third depression" is upon us, an economic catastrophe similar to the Panic of 1873. I disagree. I think we are in the eye of a financial storm - experiencing the calm oasis that exists between the canyons of a "double dip" recession. In August 2008 the recession hit the U.S. like a jackhammer. You'll know the end when you see it: those who have buried their heads in the sand will finally come to grips with global digital and green technologies. There will be major changes in the auto industry (Ford and TaTa will lead by example) and newspapers will finally disappear.

While we undoubtedly WILL see deflation, I don't think it will reach the scale that Mr. Krugman anticipates. (At least, I HOPE it won't!)

U.S. private employers added just 13,000 jobs in June, according to a report published Wednesday that suggested expectations of a big drop in the government's upcoming nonfarm payrolls report were on target.

"It's all about the double dip," said David Dietze of Point View Financial in Summit, N.J. "The concern is that the fledgling, fragile economic recovery is going to backtrack and we're going to be back into the soup."

The ADP Employer Services report also said May's gain was revised marginally higher to 57,000 from the original estimate of 55,000.

That revision was basically the only good news, however, in a report that under-shot expectations of a rise of 60,000 private-sector jobs in June.

It also supported fears that the short and tepid recovery from the worst recession since the 1930s was fizzling.

The ADP report is often seen as a precursor to the Labor Department's big monthly jobs report due out Friday. ADP's data only includes jobs created by private companies so it can vary widely from the Labor Department data, which also includes government jobs.

In fact, Friday's government report is expected to show employers cut a total of 110,000 jobs in June.

Emerging-market stocks decreased after the U.S. Conference Board’s gauge of confidence among U.S. consumers fell to 52.9 this month from a revised 62.7 in May as Americans became pessimistic about the outlook for the labor market and the economy. The Standard & Poor’s 500 Index slid 3.1 percent yesterday, bringing the drop for the quarter to 11 percent. There's more disturbing international financial news...

Tags: global economy, Paul Krugman