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The U.S. economy added a better-than-expected 195,000 non-farm jobs in June, and employment gains in May and April were revised upward by a combined 70,000. The unemployment rate stayed at 7.6%. The size of the labor force rose by 177,000. Average hourly wages rose 0.4% to $24.01, according to MarketWatch. However, the U6 unemployment rate rose to 14.3% from 13.8% in the prior month. This rate includes people who are only working part-time but want to work full-time, or have become so discouraged they have dropped out of the labor force.

Prior to the report, analysts had expected the stock market to react negatively to good news, because it might imply that the Federal Reserve would hasten its attempt to curtail massive money printing -- the factor that has been holding the market up. However, prior to the market's opening, stock futures are very strong, despite the good news. European Central Bank President Mario Draghi said this week that Europe will continue its easy money policy, setting off big rallies around the world. Today's U.S. market may not be too meaningful because trading is expected to be thin in the post-July 4th session.

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Comments

Visduh July 5, 2013 @ 11 a.m.

It will be a long, long time before that unemployment rate comes down to anything "acceptable." The structural barriers to having businesses hire people are many and varied, and keep many folks in a sort of limbo of self-employment, temporary employment, and independent contractor status (paying little or no self-employment tax.) The system is just not working the way it was/is intended and the result is persistent unemployment or underemployment.

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Don Bauder July 5, 2013 @ 11:04 a.m.

Visduh: Exactly. It will be a long time before the unemployment rate goes to 6.5%, which was the original level at which Bernanke said he might begin turning down the money gusher. Later, fearful that 6.5% unemployment might actually arrive some day, he said the Fed would be flexible. The Fed intends to keep printing money even if the economy recovers. There is no excuse for this. Best, Don Bauder

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MURPHYJUNK July 6, 2013 @ 7:49 a.m.

will the sequester furloughs be figured into the next equation ?

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Don Bauder July 6, 2013 @ 8:06 a.m.

Murphyjunk: Well, some say that the stalemate in Congress is a major reason for the Fed's extremely easy money policy. Since there is little help on the fiscal side, the Fed is obliged to provide the monetary stimulus, goes the argument. That interpretation is letting the Fed off easy. Some have asked about my own investment strategy. I am still buying blue chip stocks yielding 4% or more, sometimes a little less than 4%, sometimes as high as 8% (pipelines, etc.) If interest rates keep rising, I may buy some more muni bonds, but I am not going out 15 or 30 years and won't stand for paying a huge premium and getting a low return. So it will be some time, I think, before munis and other bonds are attractive. Since bonds and cash are dead money unless there is a depression, blue chip stocks with good yields are the best bet, in my judgment, which has been right so far but could turn out to be wrong, of course. Investing on the basis of compound interest is still the way to go, in my opinion. And that means stocks...now. Best, Don Bauder

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Ponzi July 8, 2013 @ 4:32 p.m.

Economist Laura D’Andrea Tyson believes “the immediate crisis facing the United States economy is the jobs deficit, not the budget deficit. The magnitude of the jobs crisis is clearly illustrated by the jobs gap – currently around 12.3 million jobs”

Twelve million is how many jobs the economy must add to return to its peak employment level before the recession and to absorb the 125,000 people who enter the labor force each month. Even if job creation were to double it would take more than a decade to close the gap.

What is puzzling then is while job creation is low and wages stagnant, business health is back to normal and corporations are earning record profits. The DOW recovered its losses from the recession and it reached an all-time high of 15,000 in June. During the lean years of the recession, businesses learned to become more efficient and relied increasing more on automated solutions. When the recession ended, companies brought in machines and software solutions, but not new people.

In a Wall Street Journal story titled “It’s Man vs. Machine and Man Is Losing” Kathleen Madigan reported “Real spending on equipment and software has soared by 26% while payrolls have remained essentially flat. For all the talk of uncertainty, the increase in orders is a sign that companies are optimistic about the future. After all, no executive would expand production facilities if he or she thought customer demand was about to stagnate.” Job growth between 2000 and 2007 was only half what it had been in the preceding three decades.

In a speech last year, former U.S. Treasury Secretary Lawrence Summers declared that “the biggest economic issue of the future would not be the federal debt or competition from China but the dramatic transformations that technology is bringing about."

Many people believe that outsourcing to China and other countries are why we are losing jobs. This has been true for the past 15 years but the trend is reversing. According to a May, 2009 story in Forbes magazine, Former Clinton Secretary of Labor Robert Reich explains “factory jobs are vanishing all over the world. Even China is losing them."

Nobel Prize winner Wassily Leontief predicted “the role of humans as the most important factor of production is bound to diminish in the same way that the role of the horses in agricultural production was first diminished and then eliminated by the introduction of tractors."

Automation, advanced artificial intelligence software, algorithms, robotics, 3D printing, and other technologies are accelerating much faster and eating away at routine ("pattern") jobs, including white collar jobs. The movement away from human capital to machines is why the rich are getting richer and the middle class is vanishing.

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Don Bauder July 8, 2013 @ 6:32 p.m.

Ponzi: What Tyson, Summers and other economists are NOT saying is that Wall Street loves this very slow economic growth that leads to the Fed printing money. The economists are afraid to say the truth -- that Wall Street is thriving as a result of Main Street's pain. If the economy recovered briskly, the Fed would have no excuse for running the printing press. Also, as banks started lending, the oceans of money the Fed has created would turn into inflation. Now, it turns into asset inflation; our leaders prefer asset inflation to product and service inflation, despite the miserable experience we have had with real estate and stock market bubbles. I am afraid that high unemployment and, more importantly, little or no income growth for the middle class, are here to stay; Wall Street wants it that way. Best, Don Bauder

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