Wednesday, November 25, 2009
Just in time for Thanksgiving, the Labor Department has given us some good news by announcing that the weekly jobless claims for last week fell to the lowest since the first week of January. The jobless claims dropped to 466,000. As I indicated in my November 13 blog, the number needs to get to about 400,000 to signal a real turning point, but it was a surprise to see the number go below 500,000 for the first time since early January. Another seemingly positive sign is that the number of payroll cuts expected in November is about 145,000 vs. about 190,000 in October. These seem to be trends that are going the right way. Consumer spending also appears to be increasing with the savings rate dropping from 4.6% in September to 4.4% in October. The only issue is that spending is outpacing income growth. Can this be sustained? All and all, it is nice to see positive news even if it is not conclusive.
Friday, November 13, 2009
“What is your job?” “Unemployed!” Imagine having to say that for more than a year. Millions of Americans are in this unenviable position. They are waiting for someone--government, big business, anyone-- to do something so they can have jobs. No job often means no health care insurance along with many other issues. How do you feel about yourself when you’re unemployed? For many, it leads to serious depression. The latest statistics say that the unemployment rate is now at 10.2%. This is, of course, misleading because it only includes those individuals who are on state unemployment. If you count Federal unemployment payments, people who have stopped looking and those who have taken lesser positions just to put food on the table, the number is more like 21%. These are just numbers, and are not personal. To the people who are out of work, it is very personal! It hurts! What it all means to me is that we have a lot of hurting Americans. We need to get a jobs program going. For the past month, the Obama administration has become more publicly vocal about the situation and seems to have acknowledged that job creation is now necessary. Congress for now seems mired in the Health Insurance Plan. It must be very frustrating to be unemployed at this time and listening to advisors and economists saying that this may be a “jobless” recovery. It seems to me that the idea that was broached by President Obama several weeks ago, of a tax credit for small and medium sized businesses for hiring people, makes sense. Doing something for the unemployed makes more sense than just preserving jobs. My next concern is with the jobs that have been “preserved” with stimulus money that will not be there in the future. Ultimately we need growth! My belief is that if Americans see job creation, a lowering of the unemployment numbers and a drop to below 400,000 in new weekly unemployment numbers, confidence would begin to be restored and we would move forward at a faster rate that in turn would create jobs. I think the next several weeks will be an important time in finding out about the willingness of consumers to spend money during the holidays. If they spend equal to or greater than last year, we may be headed in the right direction with the economy but not necessarily with jobs. Ed Mallon
Tuesday, November 3, 2009
When my children were little and we went traveling they would sing “The People on the Bus Go Up and Down” song. I couldn’t help thinking about this on Friday as October came to an end. During October the market was headed up and down each day. By the end of the month the DJIA was flat, the S&P 500 and NASDAQ had losses and basically nothing much had happened. The municipal bond market did take a bit of a hit during the month as interest trended up and the value of the bonds went down a bit. The announcement last week that GDP went up for the third quarter at a 3.5% annual rate, which was good news, was offset by the thought that this would not continue and was only because of “special Government assistance.” The good news that new weekly unemployment rates were dropping was offset by the total size of the number of people who are unemployed. The lack of new jobs was meet with the administration stating that if they hadn’t acted more jobs would have been lost and that they had managed to save about 650,000 jobs. It all seems to go back and forth. The real answer is that no one knows the real answer. It seems clear that new job creating is needed but the winter months historically are not good for job creating. If you go back to the 1973-1974 recession jobs did not turn up until March. With all of this said it would seem that the fourth quarter of this year may still look reasonably good. The Wall Street Journal reported this morning on their front page that “Jittery Companies Stash Cash.” They went on to point out that big businesses are hoarding money that they could be spending. They also noted the good news that many big companies have money available to hire people, when they are ready. Consumer spending is also down with the consumer also hoarding their money. It will take a sense of confidence in the government and the economy before all of this turns around. The upcoming holiday season may give us a clearer picture as to the confidence level. Ed Mallon