Friday, April 3, 2009

U.S. Unemployment Rises to 15.6%

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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The Jobs Report was out this morning and it was pretty gloomy. While the headline number indicated that unemployment rose to 8.5%, a more accurate number is 15.6%. The second figure includes many (but not all) discouraged workers, those who have looked for work in the last year, but not during the last month, and part-time workers who wish to work full-time. It is the 15.6% figure that you should compare to the approximately 25% unemployment rate at the bottom of the Depression in the 1930s.

The initial read for March was a loss of 663,000 jobs (close to economists predictions of 654,000). There will be two revisions for this number in May and June and expect both of them to be down, although the worse and worst figures will get no press and the BLS is well aware of that. January's number, originally reported as a loss of 598,000 jobs, had its second revision down today and the number is now a loss of 741,000. So far, there has been a loss of 3.7 million jobs in the U.S. economy in just the last six months. Expect this number to be even lower after all the revisions have been done.

Last month every sector except health care had job losses. In previous Jobs Reports since the Credit Crisis began, government and education have supposedly added jobs. Manufacturing continues to be decimated with a loss of 126,000 jobs in March. The Obama goal of driving GM into bankruptcy should help make these numbers even worse in the future. Professional and Business Services, which held up much longer than Manufacturing, had a loss of 133,000 jobs last month. Retail lost 48,000 jobs (and is very vulnerable to much greater losses). Despite all the bailout money, Financial Services still lost 43,000 jobs. Construction lost 161,000 jobs and with a commercial real estate collapse just beginning unemployment there could rise much higher. Not only were a lot of jobs lost last month, but the average workweek fell to a record low as well.

The stock market is selling off slightly so far on the employment news, which is not surprising considering the big rally in the last two days. The positive reaction of stock markets globally at the beginning of the quarter should help carry the current rally for another month or two, although after a big surge, sideways trading or selling for awhile is inevitable. Whether the rally can survive into the third quarter is problematical. For the moment, investors should keep in mind the old stock market adage from the 1800s - 'sell in May and go away'.

NEXT: Geither Talks, Market Drops .... Again

Daryl Montgomery
Organizer,New York Investing meetup

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

1 comment:

AMIT said...

Ya this rate us going to increase much in the coming days.