US economy is in scary shape, no matter what Hank Paulson sez

Today on Jon Taplin's blog, a sobering reality check on US Treasury Secretary Hank Paulson's irrational exuberance at the G-7:

Treasury Secretary Paulson, meeting with the G-7 Finance Ministers in Washington, tried to reassure them that the U.S. economic slump was only temporary.

He said he told his counterparts that checks from the stimulus package would go out in May and June and that they would add 500,000 to 600,000 jobs to the economy. He said that the federal government was helping more than a million homeowners keep their homes.

I worry that Paulson is engaging in reckless speculation about the future of the American job market. That somehow a flood of $600 checks next month from the government is going to lead to the creation of 600,000 new jobs is pure fantasy. That money is going to be used to pay down maxed out credit cards or keep cars from being repossessed. As Floyd Norris points out, the real jobless number (chart above) number for working men in America is not 4% but 13%. When someone gives up looking for work, the government no longer considers them unemployed–thus the huge discrepancy in the two figures.