You can tell it’s summer by the number of “out of office” replies you get in the returned e-mail box. It seems like everyone is on vacation…if this keeps up I might go myself. If anyone has a suggestion on where I could go, preferably a place with no cell phone reception, please let me know.
We had several important economic releases this morning. GDP (Quarter over Quarter, Annualized) was expected to shrink at a -5.7% pace. The actual number was very close to that, coming in at -5.5%.
Personal Consumption and Core PCE came in very close to their estimates as well. The numbers that surprised this morning were the employment data. Initial Jobless Claims was expected to be 600,000 for the week…the actual number was 627,000. Continuing Claims was expected to be 6.714 million the actual release was 6.738 million.
The jobless numbers have got to be high on the head-ache list for the Fed, the Treasury, and the politicians. I told you a while ago that I’d try to avoid writing about politics, but it’s a difficult thing to do now that politics is smack-dab in the middle of my capitalist system. You can’t avoid considering politics in any discussion about the markets now that the government has weaseled its way into so many corners of the free market system.
You can try to spin the news all you want to say that you’ve “save or created” one hundred sixty thousand jobs or so (as the administration did last week), but it’s difficult for me to hear that argument over the steady drum-beat of more than 600,000 people per week hitting the unemployment line. We joke around here that the government has now spent and/or made guarantees of around $11 Trillion and they’ve only “saved or created” 160,000 jobs…so far that equates to $68 million per job. Where do I sign up for one of those saved or created jobs? Heck I can remember back when it was big news that contractors were charging the government $400 for a hammer or $1,000 for a toilet…my how things have changed.
The number of Americans currently drawing unemployment benefits is still running near record highs. Keep in mind that this report doesn’t count ALL people that are out of a job, it just counts those that are receiving unemployment benefits. Some people run out of benefits before they find a job so they don’t get counted on this list.
GDP on a quarter-over-quarter basis was -5.5%. You have to go back to 1981 to find the last time period where GDP shrank at a comparable rate. I thought this graph provided a bit of perspective so I wanted to include it. There’s really not much to say about it…the chart speaks for itself. It’s tough to envision an economy rebounding while it’s still firing more than 600,000 people per week. Keep in mind that the US Workforce is roughly 150 million strong. 600,000 is almost half-a-percent of the overall work force. We’ve seen initial jobless claims running higher than 600,000 per week for the last 21 consecutive weeks. The numbers are getting pretty large.
That’s all the news this morning. The Treasury market is up in price a bit on the news, but it’s not a terribly strong move. The 10-year treasury is trading around a 3.67% currently. The Fed’s doing nothing, the markets doing nothing, I may go fishing.
If you have any questions on this material just let me know.
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