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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

August 5, 2011 at 10:00 AM

A better-than-expected jobs report, a dead-cat bounce on Wall Street

The economy added 117,000 new jobs last month, so that’s good news, right? Not necessarily to the stock market. The Dow tried early to bounce back from Thursday’s 500-point-plus dive, then quickly fell into negative territory, then came back. We should always be mindful of Paul Samuelson’s line that the market has predicted nine of the past five recessions. But this market has good reason for continued worry. Any positive finish today means little.

As to the jobs numbers: They’re not even in the 125,000-150,000 range needed to handle the natural growth of the labor force, much less make much of a dent in the 24 million unemployed and underemployed. The official unemployment rate ticking down slightly means nothing. Heidi Sheirholz of the Economic Policy Institute said, “the decline in the unemployment rate in July was entirely due to a drop in the labor force, not an increase in the share of workers with jobs.”

Beyond that, Eurozone troubles continue. And the debt-ceiling deal only sends negative messages: The dysfunction of the government of the world’s largest economy; federal budget cuts that will add to unemployment (our “socialist/Keynesian” government has cut 192,000 jobs over the past six months), and no further stimulus aimed at job creation. This latter is especially unfortunate because the flight to Treasury securities has driven down borrowing costs even further (so much for the bond vigilantes ready to destroy America for lack of austerity).

Links of the week:

  • The contagion of bad ideas || Joseph Stiglitz
  • Large spending cuts, starting too soon || Simon Johnson in Time
  • U.S. unemployment rate from 1948 until now || Wall Street Journal
  • Even marked up, sales of luxury goods surge || NT Times (tell me why we aren’t taxing the rich?)
  • 44 percent of Tea Partiers are on Medicare || GOOD
  • Lobbyists flood Congress’ spending-cutting super-committee || Daily Beast
  • The global economy comes to the end of its string || Washington Post
  • Robber-baron tax holiday still alive || Taibbi/Rolling Stone
  • American millionaires: 1,400 paid no U.S. income taxes in 2009 || Huffington Post
  • The four scariest economic graphs I’ve seen this year || The Atlantic
  • The big worry about China on the energy patch || Foreign Policy
  • Today’s Econ Haiku:

    Hold on to Euros

    They might be a good keepsake

    For eBay some day

    Comments | More in Debt ceiling debate, Eurozone, Global economy, Great Recession, Jobs/Unemployment, Stock market

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