Unemployment Recovery? I Think Not

unemployment dataAfter another rather broad range of trading, Friday we saw the Dow close in red, ending the week as a whole down a few percent. The S&P closed pretty much flat, and the NASDAQ had a much better day than the others. Considering the range of trading today, and despite a what is usually a heavy buying option expiration Friday, the Dow was still able to close in the red. At this point it's hard for me to argue the point that indeed a pull back is here and I believe we're going to see that manifested even more so the next couple of weeks.

Hopes for a bettering job market were frustrated Friday by a new job report. All 50 states were studied, and as a result, 39 of the states had continuing job loss numbers. Out of those states, many of the larger states (California, Florida) reported record high unemployment numbers for the month of May. Michigan came in the highest with an unemployment rate estimated to be at 14.1%. Oregon was close behind, as was California, whom is struggling with a 11.5% rate as well as had the largest amount of total jobs lost for May (68,900). By the way if you have lost a job ResumeRabbit.com can be a great resource for finding a job, you can post your resume there.


I have always said that a recovering job market is the road back to stability. Unfortunately, as we continue to see more diminishing jobs at the large rate we've been experiencing, there is no way we can expect an increase in discretionary income or consumer spending. As such, I don't see much hope for a quick turn around in GDP numbers.

Earnings season is going to play a crucial role on how powerful this pullback becomes. Strong earnings showing hope could quickly turn around the pull back and possibly push us up into new highs, but I see that result being pretty unlikely. However, disappointing numbers would most likely send the market down faster. That mixed with the good possibility of deflation could be a recipe of disaster. As a result, I expect to see this pull back continue into next week and I will be looking to take some larger positions. Happy Trading.

2 comments:

  1. Anonymous Says:

    a lot of econ news out this week.. what are your takes on housing and consuming spending reports? if there is another MOM increase, looks like it will provide another dose of green shoots.

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