Unemployment Numbers Sinks Stocks
Jun 6, 2011
Posted by Jody Eisenman | Filed under Uncategorized
After Tuesday’s numbers, investors and economists awaited this past Fridays’ unemployment numbers with a healthy amount of trepidation. Unfortunately, the number was a disaster. “Highlights” included the following:
- Payrolls grew at the slowest pace in eight months
- Employers added just 54,000 jobs versus an estimate of 165,000
- The overall unemployment rate jumped to 9.1%
- The percentage of unemployed people who have been without jobs for more than 27 months is now 45.1%
This last number is truly both incredible and depressing. What it shows is that jobs are not coming back. I believe that this number is at an all-time high. Predictably, the White House tried to put a positive spin on these numbers, with Austin Goolsbee, Chairman of the Council of Economic Advisors, calling it “a little bump in the road”. The stock market saw this differently. Pre-market Friday, Dow futures dropped over 100 points on the news. Although stocks mounted a rally, by the end of the day the Dow had dropped 97 points, with the S & P falling 12.78 to close just above 1300. Stocks have now fallen five weeks in a row.
Meanwhile, money continues to flow into treasuries as a flight to quality. Ten year treasuries are now below 3% yield, and the two year is down to .42%. Additionally, the US Dollar continues to depreciate, with losses of about 20% in a year. The question is, how long are foreigners going to continue to buy our debt while losing money overall?
