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The Next U.S. Jobs Report Could be Awful for President Obama

After almost two and half years of adding jobs to the economy, could the next U.S. jobs report reveal a decline in employment? Money Morning's Chief Investment Strategist Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." Friday to discuss that and more. He analyzed job projections if the Bush tax cuts expire for the […]

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June U.S. Jobs Report Ends Bleak Second Quarter

June's U.S. jobs report released today (Friday) deflated the brief celebratory mood that followed Thursday's upbeat employment data, and ended a second quarter packed with weak economic figures.

The U.S. Labor Department reported Friday that employers added a skimpy 80,000 jobs in June, much less than analysts' estimates of 100,000-125,000. The jobless rate remains at an elevated 8.2%.

The fresh data concludes a dismal second quarter.

In the first quarter of 2012, the average number of monthly jobs created was 226,000. In the second quarter that average fell to a measly 75,000. While job gains in April and May deviated little from estimates, June's data was significantly lower than anticipated.

"Today's report is the rotten cherry atop the half-baked economic news of the last few months," TD Bank's Chris Jones said in a note.

Roughly one-third of the jobs added in June were in temporary services. Manufacturing added 11,000, marking its ninth straight month of gains, while growth in factory jobs dropped off sharply in the second quarter. Healthcare jobs grew by 13,000 and financial services added 5,000. Meanwhile, retailers, transportation firms, and the government slashed jobs.

Friday's lackluster report came on the heels of some encouraging data.

On Thursday, ADP's employment report showed that private employers added 176,000 jobs in June — far exceeding economists' expectations of 95,000. Small businesses and service firms were responsible for most of the gains.

Another optimistic sign Thursday was the decline in the number of first-time applicants for jobless benefits. First-time claims dipped by 14,000 to 373,000, while the four-week average slid by 1,500 to 385,000.

Any optimism had faded Friday after the U.S. jobs report came out. The Dow Jones was down more than 180 points by noon.

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Recession 2013: This Report Shows We're Already Headed There

Recent reports have indicated a downturn in the U.S. economy. Coupled with fears stemming from the Eurozone debt crisis, they've fueled speculation about "Recession 2013."

In fact, former President Bill Clinton said he thinks we are already in a recession – and that was before the latest U.S. unemployment numbers were released, painting an even gloomier picture.

By now most of you have heard about the awful numbers in the discouraging U.S. jobs report for May, where only 69,000 jobs were added – nowhere near the 150,000 expected.

But what's worse about the U.S. jobs report is the trend of long-term unemployment.

Even though the national unemployment rate has dropped from its October 2009 high of 10.1% to its current level of 8.2%, the long-term unemployment levels have not seen a similar drop.

Without improvement in these numbers, fears regarding another recession will become reality.

How U.S. Jobs Trend Will Spell "Recession 2013"

Long-term unemployment, measured every six months, reached a peak of 46% of the unemployed population during May 2010.

That number has only fallen to 42.8%, or 5.4 million of the total unemployed, and has risen of late.

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April's U.S. Jobs Report a Far Cry from Where We Need to Be

Expectations ahead of April's U.S. jobs report were that it could deliver some good news about the U.S. economy. A robust number would have alleviated worries the economy is faltering the third year into a tepid recovery. But that is not what we got. The jobs report, released before the bell Friday, showed a net […]

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What U.S. Consumer Spending Data Is Telling Us

The markets slid yesterday on news that U.S. consumer spending increased by 0.3% in March, while income rose 0.4% over the same time frame. This is the first time since December we've seen income rise faster than spending.

I can't say I am entirely surprised.

As prices for "must haves" like gasoline and food continue to rise, consumers are digging into their savings to cope. This is not small potatoes, given that the average family saved a mere $38 out of every $1,000 in take home pay last month, according to the U.S. Commerce Department.

I can't help but have huge concerns about Team Bernanke's plan; no amount of stimulus is going to overcome the struggle most families are having – which is to boost savings and shed debt.

Here's the thing… if consumers can't save, then they can't buy. And if they can't buy, they can't build up the nation's wealth, which is predicated on consumer spending.

All three sets of figures in isolation really don't tell you much. But when taken together – spending, income, and GDP – they suggest our economy is too weak to put millions of Americans back to work, much less in jobs for which they are appropriately qualified.

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ADP Employment Report: Job Gains Continue in March – But Still Not Healthy

The ADP employment report released today (Wednesday) showed more job gains for March as private companies continued hiring – but remain at a slower-than-necessary rate for a healthy recovery.

According to a report issued Wednesday by payroll-processing company ADP, the private sector added 209,000 jobs last month, pretty much in line with what was expected. That was slightly lower than forecasts for 217,000 jobs gained, and a decrease from 230,000 jobs added in February.

The number was slightly lower than the pace set in February. Industry analysts say the speed of adding jobs needs to move much faster to push unemployment down to a healthy level.

Small businesses, those with fewer than 50 employees, continued to make up about half of all private sector job gains, hiring 100,000 people.

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Real Unemployment Rate Could Give Obama Heartburn in November

A quirk in how the U.S. government calculates the unemployment rate has made the data look better than it is, some Wall Street experts are saying.

But in a stroke of bad luck for President Barack Obama, that same quirk will mask real improvements to the U.S. unemployment rate over the summer and into the fall, damaging his chances for re-election.

The official Bureau of Labor Statistics (BLS) unemployment rate has fallen from 8.9% in October to 8.3% in January. The number for February, released today (Friday), held steady at 8.3%.

"We think that the improvement over the last few months dramatically overstates the underlying improvement," Andrew Tilton, an economist at Goldman Sachs, told Reuters. "You will not see that rate of improvement going forward."

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Jobs in America: The Ugly Truth Behind Those Unemployment Numbers

More people have jobs in America this month than they did last month, so says the U.S. Bureau of Labor Statistics (BLS). But the headline unemployment rate of 8.3% isn't the whole story. It's not that there wasn't positive news. The addition of 243,000 new jobs far exceeded economists' expectations for an increase of 150,000. […]

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Rising Wages in China Good for Glocals, But Few Jobs Coming Back

Although some economists have predicted that steeply rising wages in China would bring some jobs back to the United States, the biggest winners will be the large multinational companies operating in China.

Last week the Guangdong province, where many of China's factories are concentrated, announced a 20% increase to the minimum wage. Combined with two earlier hikes in April and July, the total increase over the past 10 months is a startling 42%.

And with an eye toward booting domestic consumption, the government plans to keep the raises coming – on average 20% a year through 2015.

That extra money will get spent with domestic Chinese businesses as well as U.S. corporations with a strong presence in China – such as McDonald's Corp. (NYSE: MCD) – but is dramatically raising costs for Chinese manufacturers.

Between the wage increases and slumping global demand, the Federation of Hong Kong Industries warned on Tuesday that as many as one-third of Hong Kong's 50,000 factories could downsize or close by the end of the year.

As China's competitive advantage in wages erodes, some analysts have predicted a wave of jobs returning to the United States from China. A recent study by the Boston Consulting Group (BCG) forecast a return of 2 million to 3 million jobs by 2020.

But Money Morning Chief Investment Strategist Keith Fitz-Gerald doubts any repatriation of jobs will be quite so massive.

"Wishful Thinking'

"That's wishful thinking on the part of Westerners," said Fitz-Gerald, who operates The New China Trader service for the Money Map Press, who noted that "labor rates are still very, very low" in China.

Although Fitz-Gerald said a few "industries with little value-added" could see the return of some jobs to the United States as a result of China's rising wages, other factors will restrain a mass migration of jobs across the Pacific.

Despite reports of major labor shortages in the eastern coastal parts of China, Fitz-Gerald said there remains "vast undeveloped low-wage areas ripe for industrial expansion" in the western provinces of China.

"They have a 50-year initiative called the "Go-West' program that is designed to push labor from the eastern regions to the western ones," Fitz-Gerald said. "If the jobs are pushed west, there will be no great exodus of jobs from China."

The majority of jobs that do leave China, he said, will probably go to areas with even cheaper labor, such as Indonesia, Thailand, Vietnam and Mexico.

"That should make U.S. manufacturers very nervous," Fitz-Gerald said of Chinese jobs moving to Mexico. "The Chinese would be building stuff on our back doorstep."

With a factory just across the U.S. border, a Chinese manufacturer would save a lot of time and money on shipping.

"They could become even more competitive than they are now," Fitz-Gerald said.

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