1.) Initial unemployment claims have remained stubbornly high for the entire year; they have essentially leveled off in the 450,000-475,000/week range and simply refuse to budge.
2.) Announced job cuts have been fairly steady:
What this means is simple:
Job cuts announced by U.S. employers fell in October from a year earlier, signaling that a lack of hiring rather than an increase in firings is restraining the labor market.
My guess is there are the following reasons for the lack of hiring.
1.) Lack of overall demand; the economy is growing slowly.
2.) It hasn't really hit profits. In fact, overall earnings are in good shape.
3.) Small business is still hurting.
4.) Legislative uncertainty.
In reality, I think the primary reason is overall slow demand, with all the other issues a distant second.
4 comments:
Of the reasons listed, I've heard "legislative uncertainty" an awful lot outside this blog. It's also utter BS.
It's not uncommon for a business with a legitimate problem to say something entirely different in order to get something they want. It's like someone with a headache saying what they think the doctor wants to hear in order to get the drugs they want.
Honestly, like any business will actually pass on an opportunity to make money because of uncertainty over a slow-moving ship like Congress. Has anyone? As a supplier, some of my employers' customers are medical industries whining about the HCR bill, but they're pushing ahead with new projects anyway. If there was any SERIOUS concern about the "socialist takeover of America", wouldn't the derivatives market would be flourishing with politically motivated bets? I'd think someone in Wall Street would find a way to, say, hedge against a corporate income tax increase -- except there isn't one on the table.
It's much more simple. As noted many times on this blog, no one wants to take the first step to get the economy kick-started. But businesses aren't going to say THAT, because it won't get them the sort of dialogue that leads to the yummy perks they want.
Initial claims has got to be the most disappointing statistic all year. It's so close to going below 400k but it stopped just short.
NDD - In the past you've made the argument that once oil prices reach some level things go downhill pretty quickly.
Given that QE2 seems to be driving oil prices up again to YTD records (and likely beyond), what does that say to you about subsequent reactions both in the broader market and employment/GDP/housing?
That is, could one side effect of QE2 be high oil prices -> negative GDP?
Anon at 3:26
Yes, spot on. I'll have more to say later today.
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