The US economy has shed 131,000 Jobs in July after having shed 125,000 jobs in June. DJI Futures turned negative dropping almost 100 points in the minute following the announcement and Gold has risen almost 1% or $11.00/oz to $1207/oz in the ten minutes following the announcement in what we have come to expect as a typical flight to safety.
A Reuters survey of economists had forecast the US economy to shed only 65,000 jobs in July.
Update
Ok... I've had a chance to take a deep breath and checked out a bit of the reporting by the mainstream media outlets and after reading between the lines, I think that there is now an increased chance we could be headed down the "double dip recession" path.
It appears that as the stimulus packages dry up, so do the jobs, and although unemployment in the US has not increased from last month and remains steady at 9.5% it's pretty hard to see how the US economy is going to create jobs at a rate even close to the rate at which they were lost during the GFC.
Local and state governments in the US are grappling with massive deficits and have shed 202,000 workers in July after a drop of 252,000 in June. The only bright light seems to be in manufacturing which saw gains of 36,000 in July and 13,000 in June, hardly figures to be breaking out the champagne out over.
Whilst it's a given that some 144,000 workers had been let go by the Census Bureau and there are those who claim this serves to distort the figures somewhat, the fact still remains that these 144,000 people no longer have jobs and there's another 200,000 temp workers still on staff at the Census Bureau that will eventually be let go and when the are, (let go) they'll need jobs too. The real question is, will the private sector grow fast enough to create all the employment required to make any sort of dent in the unemployment numbers or will unemployment continue to remain high for the foreseeable future?
The Fed don't have much left in their arsenal, with rates at almost 0% all that is left is more Quantitative easing, (just a fancy term for printing money from thin air). The concern here is, the more money the Fed prints the less appeal it has as a reserve currency, in fact I wouldn't be too surprised to see China offload more US Dollars over the coming months anyway considering the rumblings from them in over the past couple of months about the size of the US sovereign debt and the speed at which it is growing.
No comments:
Post a Comment