Today's May Jobs Report: When Bad News is Good News
When bad news is good news for stock markets you know just how convoluted the current economic environment is.
According to the May jobs report out today (Friday), the U.S. unemployment rate ticked up to 7.6% in May from 7.5% in April, the first increase since the start of 2013. And, markets rallied on the news. The Dow Jones soared more than 200 points by mid-day.
Some will say the May jobs report was good news – thousands of out-of-work people returned to the work force, and the 175,000 jobs added beat expectations.
The reality is we're just treading water. And the labor force participation rate is still at 30-year lows.
But the real good news is the jobs report means more U.S. Federal Reserve support, which will fuel markets already hitting record highs.
Three Ways to Brace for a Double-Dip Recession: Going for the Gold
The last time the U.S. economy suffered through a double-dip recession, this country was struggling to overcome the fallout from an Arab oil embargo, Vietnam War-era deficits, and an inflationary spiral that just wouldn't let go.
That 1981-82 double-dip downturn – the result of an economic "shock treatment" aimed at curing those ills – consisted of two recessions that were separated by a single quarter of growth.
The current backdrop is very different from the one that was in place back then, but the threat of a double-dip recession is no less real. Indeed, with each passing week, and with every new economic report that comes out, the possibility that the U.S. economy will backslide into a double-dip recession seems to become more of a probability – or even a likelihood.
"For me a 'double-dip' is another recession before we've healed from this recession [and] the probability of that kind of double-dip is more than 50%," Robert Shiller, professor of economics at Yale University and co-developer of Standard and Poor's S&P/Case-Shiller home price indexes, told Reuters. "I actually expect it."
Stubbornly High Unemployment Shows U.S. Economy Still Plagued by "Jobless Recovery"
While a surge in corporate profits reflect an improving economy, several government reports show that the United States continues to be plagued by a lingering "jobless recovery."
Most analysts, including President Barack Obama, are predicting a strong May jobs report due out today (Friday) with more than 500,000 new jobs added to the U.S. economy.
"We expect to see strong jobs growth in Friday's report." Obama predicted in a speech in Pittsburg on Wednesday.
Weak Job Market and Low Inflation Stall Fed's "Exit Strategy"
Any speculation that U.S. Federal Reserve Chairman Ben Bernanke had his finger on the "exit strategy" trigger has been silenced.
Bernanke yesterday (Wednesday) faced the House Financial Services Committee to instill public confidence in the Fed's ability to exercise a smooth exit strategy and quell continued fears of a tightening monetary policy.
The Federal Open Market Committee (FOMC) "continues to anticipate that economic conditions — including low rates of resource utilization, subdued inflation trends, and stable inflation expectations — are likely to warrant exceptionally low levels of the Federal Funds rate for an extended period," he said.
Plans to Hide Commercial Real Estate Losses Won't Avert a Double-Dip Downturn
Sooner or later, mounting losses on commercial real estate could crash through the market's 2009 optimism and send the economy and stocks into a double-dip downturn.
The major problem is that lawmakers and regulators are setting up investors into believing that commercial real estate (CRE) losses are being effectively addressed. The truth is that escalating losses are being hidden as part of a campaign of optimism in a desperate gamble that a robustly reviving economy will save the day.
To protect yourself from another investment beating, here's what you need to know.
Latest Report Shows the Jobless Recovery Still Endures
Stocks have staged surprise rebounds after seemingly poor payroll reports half a dozen times in the past year. But the one time that there was better-than-expected job news, on Dec. 5, the market tanked. Go figure – it's a great example of how upside down the logic is on Wall Street.
To help us interpret the jobs report of last week, I turned to my favorite independent labor analysts, Philippa Dunne and Doug Henwood. Here's their view of the latest numbers, which they considered the most positive in months – despite the many problems highlighted by the latest jobs report.
Unemployment Report Set to Reflect the Bitter Face of a Jobless Recovery
New statistics from the Labor Department today (Friday) will likely confirm that the U.S. economy is in a deeper hole than previously thought.
Economists expect that the national unemployment rate rose to 10.1% in January from 10% in December. More importantly, however, the number of jobs lost from April 2008 to March 2009 will be revised upwards by 824,000 – the largest margin in 18 years, according to Bloomberg News.
Most of those losses came from companies that closed or went out of business, which would undermine the popular birth/death model for joblessness. That model is based on the assumption that hirings at newly formed companies generally offset the job losses associated with company closures.
Low November Job Losses Shock, but The Jobless Recovery Continues
November payrolls fell by much less than expected – declining by just 11,000 – and the unemployment rate fell to 10.0%, the U.S. Department of Labor said Friday. But while it's becoming more apparent that the U.S. job market is closer to growth, caution is still the buzzword as the jobless recovery continues.
When growth does return the consensus is that getting back the roughly 7.2 million jobs lost since the recession began in December 2007 won't be an overnight phenomenon.
"I think it's a little bit premature for champagne, but after enduring two years of really bad news, let's enjoy this one," Jay Bryson, an economist with Wells Fargo Securities (NYSE: WFC) told CNNMoney.com. "You've got to walk before you start running. I don't think we're walking yet, but we're starting to get back up on our feet."
U.S. Economy Will Dodge a Double-Dip Downturn, But Won't Escape Unemployment Woes During 2010 Jobless Recovery
[Editor's Note: This is Part I of a two-part story that examines the U.S. economy's prospects for 2010. It's also the leadoff story for Money Morning's annual "Outlook" series, which will forecast the prospects for gold, oil, banking, and top investing trends in the New Year. Part II of the U.S. economy story will appear tomorrow (Wednesday).]
Historically, the U.S. stock market has been one of the key leading indicators of a U.S. economic rebound.
With the Standard & Poor's 500 Index up more than 60% from its March lows – and the Dow Jones Industrial Average up nearly 40% – prognosticators are finally confident that the U.S. economy will dodge the "double-dip" recession that has been the focus of much fear since the Bush and Obama administrations launched their financial counterattacks on the worst financial crisis since the Great Depression.
Unemployment Rate Cracks Double-Digit Barrier at 10.2%, Boosting the Odds of a "Jobless Recovery"
Welcome to the jobless recovery. The U.S. unemployment rate zoomed to an unexpected 10.2% in October, piercing the double-digit barrier for the first time in 26 years as employers continued to slash payrolls even as the nation's economy continues to improve. The jobless rate pierced the psychologically important 10% barrier for the first time since [...]