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:
Today’s Econ Haiku:
Hold on to Euros
They might be a good keepsake
For eBay some day