Unemployment rate troubling, but …
Source: http://www.investmentpostcards.com/2009/11/07/unemployment-rate-troubling-but/Posted on Saturday, November 7th, 2009 | In Investing Lessons, Market Commentary
The US Labor Department announced yesterday that the unemployment rate had risen to a 26-year high of 10.2% in October – an increase of 0.4 of a percentage point, even though the labor force contracted as well.
The graph below, courtesy of Chart of the Day, illustrates the unemployment rate since 1948 and provides some perspective on the current state of the labor market. As shown, Friday’s increase above the 10% level marks only the second time such a move has occurred during the post-World War II era.
Closer analysis of the chart indicates that the unemployment rate is a lagging indicator, peaking after the end of a recession. However, in the case of the previous two recessions the rate only peaked several quarters later following an improvement in real GDP. Asha Bangalore (Northern Trust) said: “A similar case is projected for the current recovery. Our forecast is for the unemployment rate to peak in mid-2010. At the same time, real GDP should continue to advance during the final months of 2009 and all of 2010.”
Source: Chart of the Day, November 6, 2009.
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Asha Bangalore, Investing Lessons, investment postcards, Market Commentary, Northern Trust, U.S. Labor Department
 About Prieur du Plessis (http://www.investmentpostcards.com)
Prieur du Plessis has 25 years’ experience in professional investment research and portfolio management. More than 1,000 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns. He has also published a book, Financial Basics: Investment. Prieur is chief executive and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and other African countries. Plexus is the South African partner of John Mauldin, author of the Thoughts from the Frontline e-letter, and also has an exclusive licensing agreement with California-based Research Affiliates for managing and distributing its enhanced Fundamental IndexTM methodology in the Pan-African area. Prieur is 52 years old and lives with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His recreational activities include long-distance running, motor cycling, traveling and reading. |
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