Economic Outlook: Unstoppable cliches

The U.S. economy turned a high-drama cliche into reality last week with the gross domestic product rising with unemployment rising at the same time.

The question that springs to mind is, "what happens when an unstoppable force meets an unmovable object?"

Greater productivity is supposed to bring with it a more jobs, but that equation maybe too agrarian for the post-modern era. Greater productivity means more jobs on a one-to-one ratio if technology stands still and only when the luxury of labor is affordable.

In the post-modern era mass layoffs are met with a profound realization among employers that productivity does not suffer as much as they might have thought during layoffs. As such, employers are slow to hire back on the realization that their factories are running reasonable well without a larger workforce.

As such, U.S. unemployment soared to 10.2 percent in October, a figure economists predicted would not occur until sometime next year. This figure was released a day after the Labor Department said productivity had risen 9.2 percent in the third quarter, the largest increase in six years, and labor costs per unit had decreased 5.2 percent.

For many economists, the critical release this week will be trade balance figures that come out Friday. The recession has had managed to highlight the ironic discrepancy that good times are not healthy as far as the U.S. trade balance is concerned.

The U.S. trade imbalance shrank through the much of the recession as international business declined, most pointedly in trading with China and the Organization of Petroleum Exporting Countries. With business on the upswing -- the gross domestic product rising 3.5 percent in the third quarter -- economists predict the trade gap grew from $30.7 billion in September to $32 billion in October.

"Lacking exports to pay for oil and Chinese televisions, sustainable growth remains below the three percent necessary to pull down unemployment," wrote Peter Morici, economics professor at the University of Maryland and a former chief economist at the U.S. International Trade Commission.

"Simply, annual productivity and labor force growth are two and one percent, respectively. GDP growth must exceed the sum of those numbers, or businesses can meet new demand while unemployment hangs above 10 percent," Morici wrote, predicting big industrial firms, like Caterpillar, will thrive as China's economy grows next year.

In the meantime, the sliding value of the dollar may have limited impact on the U.S. economy as Europe and Japan are struggling, making a potential boon a lost opportunity for U.S. exporters, Morici wrote.

If the dollar falls, in other words, U.S. exporters can benefit, but not if their customers are going through hard times.

In market movement Monday, the Nikkei 225 in Japan gained 0.2 percent, while the Shanghai Composite index in China added 0.36 percent. The Hang Seng index in Hong Kong rose 1.73 percent, while the Sensex in India added 0.59 percent.

The S&P/ASX in Australia rose 1.76 percent.

In midday trading in Europe, the FTSE 100 in Britain rose 0.33 percent, while the DAX 30 in Germany gained 1.61 percent. The CAC 40 in France lost 0.04 percent, while the DJ Stoxx 50 rose 1.56 percent.