Job losses in perspective
Source: http://www.investmentpostcards.com/2009/07/03/job-losses-in-perspective/Posted on Friday, July 3rd, 2009 | In Market Commentary
The US Labor Department yesterday reported the labor market had performed considerably worse in June than had been expected. Nonfarm payrolls (jobs) fell by 467,000, following a loss of 322,000 in May, whereas the unemployment rate edged higher to 9.5% from 9.4% in May.
The disappointing jobs report highlighted the severity of the downturn and suggested a bottom for employment is not near. As hopes of an economic recovery during the second half of the year dimmed, the stock market indices declined sharply for a third consecutive weekly loss.
Putting the job losses in historical perspective, Chart of the Day produced a graph comparing job losses during the current economic recession (solid red line) to those of the last recession (dotted gold line) and the average recession from 1954-2006 (dotted blue line). Strikingly, the chart illustrates that the current job market has suffered losses that are nearly three times as much as the average. As shown, if this were an average recession/job loss cycle, the number of jobs would have started increasing three months ago.
Source: Chart of the Day, July 3, 2009.
In a related video clip, Bill Gross, co-chief investment officer of Pimco, shares his reaction to the jobs report and the consequences for the US economy.
The slide in employment is representative of what the US economy faces for years to come, Gross told CNBC. A slow-growth scenario continues to play out as consumers who are losing their jobs or are in fear of facing unemployment cut spending and inhibit economic growth, said Gross.
“Much like we saw with the Depression, attitudes change, and so consumers and investors will now become conservative savers as opposed to spenders. Spending as driven by asset appreciation in terms of houses … that game stops, that game has stopped and we must now move in another direction.”
Source: CNBC, July 2, 2009.
Last 5 posts by Prieur du Plessis
- Prieur’s readings (November 21, 2009) - November 21st, 2009
- The lie of the investment land, according to Dylan Grice - November 21st, 2009
- Gross: Anything but .01% - November 21st, 2009
- The week ahead - November 21st, 2009
- Don Coxe webcast – updated (November 20, 2009) - November 21st, 2009
bill gross, co-chief investment officer, investment postcards, Market Commentary, The Macro Trader, U.S. Labor Department, United States
 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. |
No recommendations, either expressed or implied, are being made to buy, sell, hold or short any of the mentioned stocks. No legal, tax or accounting advice is expressed or implied. Always contact your attorney, CPA, or tax advisor before acting on any legal or tax issues. StraightStocks.com is not responsible for the content, products, or services of any of the advertisers on this site. StraightStocks.com receives compensation from advertisers on this blog. Services and products referred to herein are trademarks, registered trademarks, servicemarks, and/or registered servicemarks of their respective trademark or servicemark owners.