If you look at the economic commentary over the past several months, the emphasis has been on the downside. With good reason. Sure, the U.S. economy is showing signs of improvement. But the Mediterranean sovereign debt crisis threatens to implode. Europe is sinking into recession. The American housing market remains in the doldrums. Households are still trying to get out from under their debts. The downside risks are too many for sustained optimism.
What if that’s the wrong lens to look at the economy. No, I’m not minimizing the downside risks. Yet what if the U.S. economy is becoming the economic engine that keeps the global economy out of recession? Certainly, today’s employment number was headed in the right direction.
Total nonfarm payroll employment rose by 243,000 in January, and the unemployment rate decreased to 8.3 percent, the U.S. Bureau of Labor Statistics reported today. Job growth was widespread in the private sector, with large employment gains in professional and business services, leisure and hospitality, and manufacturing. Government employment changed little over the month.
Of course, there are still millions of Americans looking for work. Nevertheless, the chart at the top of this post by Doug Short (his charts are always worth studying) offers an intriguing suggestion that the resilience in the stock market suggests he unemployment rate will continue to improve.
But I think it’s the Facebook initial public offering that is the most heartening sign that the economy’s upward momentum is sustainable. Yes, it’s fascinating to see how much wealth will be created by the Facebook initial public offering. (Watch Paddy Hirsch explain an IPO.) That’s not the most important story. The IPO is really about the digital economy is gaining momentum. The gains reflect the rise of social media, the spread of the mobile Internet, the massive computing power and big data projects, the advances in software.
It takes time for major technological innovations to spread throughout an economy. For example, computers are commonplace in the workplace, yet the personal computer is only three decades old. In the early 1990s the U.S. economy emerged sluggishly out of recession. It was the first jobless recovery, with little sizzle. But the Silicon Valley start-up Netscape — which popularized the Web browser that is now an essential part of everyday life — went public in 1995. The dot-com boom and the Internet Age were born that day. Netscape signaled the wealth creating opportunities of the Internet.
Another digital cycle is in the offing. This time the truly significant event is the introduction of the Apple Ipad. It’s the “Netscape moment” for the mobile Internet market. The Ipad is a visible symbol of the rapid embrace of wireless data — video, images, content, data and communication — throughout the global economy. Horace Dediu of the Asymco blog has created a powerful chart to illustrate the speed of technological adoption today — and how the triumphant companies in most cases don’t last long.
Companies are being forced to restructure their operations around the mobile Inernet and social media.
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