Friday, December 07, 2012


I would just like to touch on today's labor report on jobs. Unemployment fell another .2% to 7.7%. On the surface this appears to be another sign of a strengthening economy, but it may not hold up under closer scrutiny.

The labor participation rate actually fell to one of the lowest readings since they have kept track of it, work week hours were unchanged and by now you would think Sandy is in the mix as to how it has impacted data.

Also there were so many revisions to the prior data, that I don't see how you can come away with any confidence in what the government data is saying or depicting.

The nascent housing recovery is bolstered by lowest lending rates in history, yet sakes are nowhere near their peaks. AT same time the price paid is to those who seek a fair return without risk, and there we have an nasty dilemma, you could have a $Million in saving at the bank or Money Market and barely make enough to make ONE TRIP TO THE GROCERY STORE.

The efforts of the FED, which are outside of its mandate, are to force investors into risky assets like the stock market and junk bonds. This has worked to raise prices of these assets and add to household wealth, but I think a good bit of this is in Retirement accounts, not liquid that would be spent into the economy.

What we have is an economy still 4 years after rates hit 0%, on LIFE SUPPORT. And IMHO these FED policies are adding to the already maladjusted and imbalanced economy, has destroyed the normal levels of investment in plant and equipment that help create lasting good paying jobs.

We have a SMOKE and MIRRORS recovery, that cannot sustain itself where the FED will raise rates even .25%.

Until we regain some balance, and where natural correction can be allowed to take place, more of the same is what we can expect,

The Fiscal Cliff makes for good debates, but even ANY agreement is going to kick that can far down the road and not make much of a difference.

Any substantial rise in tax rates, rise in costs to employers to hire and retain employees....will not go well for the economy and job market.


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