Bad Number that Really Isn't That Bad

All of the data that is transmitted every week, is usually old news. Everyone knew we were losing jobs. Everyone knows that that GDP is falling. Everyone knew that the average work week would be shorter. But, did people realize the average work week would decline so precipitously over the past year?

Yesterday's news that the average work week declined to an average of 33.2 days per week, was actually quite alarming (but maybe not surprising). Apparently, it is the worst measurement on record (going back to 1964).

Giving this number more credibility is the criteria of the measurement. This is not a number that has to be indexed for inflation or adjusted based on increased population. This is simply a number that measures, without error, exactly that, the number of hours of average work in a week by an American worker.

This measurement is supposed to be considered a "leading" indicator by economists of the economy. It would seem to tell us that demand is in decline, and the economy is in for more pain. While this might true, there is another plausible explanation. The decline in demand, might simply be a reflection of reduced credit, for small businesses and larger corporations.

Demand is the key to any economic turnaround. Without demand our economy will continue to erode. Maybe it is simply that demand is so tied with the credit markets (as I believe it is), that demand will not return until businesses are sure they have the operating capital to continue business as usual. Without credit, there is an obvious pullback in demand. Let's hope this is the problem, and it is not a reduction in the need for goods and services of American Businesses.

For a synopsis and reaction to the labor statistics click here.