News from the Front

Today was the big day when the U.S. jobs report for September came out. Rampant speculation led up to today on the level of job creation or lack thereof in the economy. As part of the report, the Labor Department reported that they had overstated the jobs created from April 2009 through March of 2010 by 366,000. This is a remarkable admission in itself, because even with these numbers, job creation looked dismal. The consensus leading up to the announcement was that, net, no new jobs would have been created. The report indicated that for the fourth month in a row, the economy shed jobs. While this is not good, much is to be blamed on federal and local governments that shed 159,000 jobs, about 77,000 of which were temporary jobs for the decennial census. The good news to me was the fact that the private services sector employment figures rose by 86,000 after rising 83,000 in August. In addition, temporary help services, a good gauge of permanent hiring, rose 16,900 after a rise in August of 17,700. On another front yesterday, the Labor Department announced that the initial claims figure for state unemployment benefits was 445,000, a drop of 11,000 from the previous week. The four-week average of new jobless claims fell 3,000 to 455,750. The trend here is good, with new claims under 450,000, but the four-week average is still over 450,000, and that needs to drop. Clearly, the major issue facing the U.S. at this time is jobs. This is not a harbinger of good things for the Democrats in the House or Senate. Lack of jobs means more pain and less consumer confidence. The Federal Reserve, because of the jobs report, will likely begin a stimulus program of their own. Back in December of 2008, the Fed dropped the overnight interest rate to near zero. Since then, it has pumped about $1.7 trillion into the economy by buying mortgage-related and government bonds. It seems likely now that they will add an addition $500 billion of purchases. The Fed next meets on Election Day, strange as that may seem. It appears that the idea of stimulus from the Fed sits well with Wall Street and has been driving the stock market up for the last number of weeks. Had the jobs report been better, the Fed would not be likely to increase the stimulus and the market would have retreated. Like Alice might see in Wonderland, a good jobs report is bad and a bad jobs report is good! I think we are moving up a long hill, even if it is slowly. Ed Mallon