Saturday, September 08, 2007

GET OUT OF YOUR HOUSE. AND TAKE THIS PINK SLIP WITH YOU.

Thursday’s (September 6th) Labor Department Report caught the financial world unaware. Very unaware. According to the New York Times article, “Unexpected Loss of Jobs Raises Risk of Recession”, economists were predicting the economy would add about 100,000 jobs in August.

Technical Knock Out. 4,000 jobs were lost.

These are indeed interesting times for the US economy. The Subprime mortgage market implodes. Housing crashes. And now employment slows.

DARE WE SAY THE “R” WORD. SOME ECONOMISTS ARE.

According to the NYT article:

But now, the odds of a recession in the next year have risen, to 25 to 50 percent, economists interviewed yesterday said. A recession is typically defined as an extended period in which the economy shrinks, leading to a rise in unemployment and a drop in consumer spending and business investment.

“People need to start thinking about the housing market not just as some ring-fence problem which is off on its own,” said Nigel Gault, chief United States economist at Global Insight, an economic research firm in Lexington, Mass. “They need to start worrying about the health of the broader economy.”


JUNE AND JULY EMPLOYMENT FIGURES REVISED DOWNWARD.

One of the most worrisome signs in the jobs report released yesterday was the government’s revision to its employment data for June and July. The new numbers show just under 70,000 jobs being created in each of the two months. Initial estimates had been an average of almost 100,000 a month.

In 2005 and 2006, the average monthly job growth was slightly above 200,000. The sharp slowdown this year suggests that some employers have already begun to see a downturn in their business and that others think one is on the way. With house prices falling in most of the country and oil prices having risen, consumer spending has slowed modestly in recent months.

WHAT IS UNCLE BEN TO DO?


Even prior to this unemployment news, most Federal Reserve Board watchers were predicting a .25 point cut in the Fed Funds rate at the September meeting, brining it down to from 5.25% to 5%. But some economists, like Gault of Global Insight, are predicting the Fed to cut the rate by .5 points.

Future posts will address general movements in the economy.

IT IS ALWAYS SOMETHING IN THE DESERT OF THE REAL!

0 Comments:

Post a Comment

Subscribe to Post Comments [Atom]

<< Home