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.

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PowerSafe Technology Corporation (PSFT.PK) subsidiary Amplification Technologies Inc. (www.amplificationtechnologies.com) (ATI), is offering higher performance thermoelectrically cooled discrete amplification single photon counting solid state photodetectors. These photodetectors are mounted on a two stage thermoelectric cooler inside a hermetically sealed TO8 package and can be operated down to a temperature of -30oC.

Northern Trust (Nasdaq: NTRS) has been named the Best Overall Hedge Fund Administrator by HFMWeek in the magazine’s inaugural U.S. Service Provider Awards. The awards recognize

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This post is a guest contribution by Asha Bangalore * of The Northern Trust Company.

The recession is behind us. Real gross domestic product of the U.S. economy grew at an annual rate of 3.5% in the third quarter after a 0.75 drop in the prior quarter. This is the first increase of real GDP after a string of four quarterly declines. Real GDP has declined in five out of the six quarters of the recession.

The Business Cycle Dating Committee of the National Bureau of Economic Research will make the official announcement after it confirms the turning point based on revisions of economic data. This recession is the longest on record in the post-war period and the deepest also. Real GDP has declined 3.8% from the peak in the second quarter

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Investors are approaching the week with “itchy trigger fingers”, according to chief investment strategist for Northern Trust, Jim McDonald. After last week’s housing and manufacturing data checked the market’s 7-month advance, the pits are wary going into a week set to be dominated by more reports on leading economic indicators.

The Labor Department’s monthly report due out Friday will be paramount to many, addressing concerns over unemployment. Compounding the uneasiness will be reports on industrial output, pricing, consumer confidence, factory orders and construction spending. Investors will also be watching for new outlooks in anticipation of 3Q earnings data next month, which should indicate the relative health of companies.

Last week’s losses were chalked up to poorer-than-expected performance in commodities, home sales and durable goods orders. The DJIA, S&P and NDAQ were down roughly 2% by week’s end, despite encouragement from the Fed and a seemingly rosy unemployment report showing job

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This post is a guest contribution by Asha Bangalore* of The Northern Trust Company.

The tone of the policy statement and details are largely close to expectations. The federal funds rate was left unchanged at 0%-0.25%. The statement reiterates Chairman Bernanke’s opinion that an economic recovery is underway, representing a significant departure from the August policy statement which noted that “economic activity is leveling out.” The outlook for inflation remains favorable in the Fed’s opinion due to “substantial slack” in the economy. In addition, the stability of longer-term inflation expectations was cited to rule out the case of an inflationary threat.

The last paragraph of the Fed policy statement is devoted to the outlook of monetary policy. The Fed left the stance unchanged to read as follows: “The Committee will maintain the target range for

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As mentioned before, Paul Kasriel, award-winning chief economist of Northern Trust, rates highly on my list of must-read economists. Sharing a review of the economic outlook, Paul has just published a PowerPoint presentation entitled “The shoals of depression have been avoided, but the economy still faces strong headwinds”. I found it useful to flip through the slides, and I am sure you will also enjoy them.

Click here to access the presentation.

Source: Northern Trust, September 2009.

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This post is a guest contribution by Asha Bangalore* of The Northern Trust Company.

The National Bureau of Economic Research (NBER), the arbiter of business cycles, officially announced the trough of March 1991 on December 22, 1992 and the trough of November 2001 on July 17, 2003. Based on this history, there is a lapse of roughly 20 months before the Business Cycle Dating Committee has announced the date of a business cycle trough. Real gross domestic product had risen in the second quarter of 1991 (see chart 1) and the fourth quarter of 2001 (see chart 2) and stayed positive until the next recession.

Real gross domestic product is projected to show an increase in the third quarter of 2009. Real gross domestic product is a quarterly estimate.

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This post is a guest contribution by Paul Kasriel* of The Northern Trust Company.

On November 7, 2008, Bloomberg LP sued the Federal Reserve Board under terms of the Freedom of Information Act to obtain the names of borrowers of funds from the Federal Reserve as well as lists of the collateral posted by the borrowers. On August 25, 2009, a U.S. District judge ruled in favor of Bloomberg, ordering the Federal Reserve Board to turn over to Bloomberg the requested information within five days. At this writing, the Fed has yet to comply and has yet made a decision to appeal the ruling. The Fed has been reluctant to reveal the names of its borrowers allegedly out of a concern that such a revelation could have an adverse competitive impact on the borrowers.

The reason I bring this up is that it is similar

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Northern Trust Corp. (NTRS) on Wednesday declared that it has completed the final step to free itself from the government bailout program. The Chicago-based custody bank paid $87 million to repurchase stock warrants issued to the federal government as part of the Troubled Asset Relief Program (TARP).

With this repurchase, Northern Trust has paid a total of nearly $1.71 billion to the Treasury under TARP. This includes repurchase of preferred stock issued to the government and preferred dividends. According to the bank, the total payments represent a 14% annualized return on investment to the US taxpayers.

The $700 billion bailout program was launched by the federal government to help revive deteriorating credit markets during the height of the financial crisis. The government provided capital to institutions in exchange of preferred stock and warrants to purchase common shares.

Most banks still have short-term debt guaranteed by the government. However,

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This post is a guest contribution by Paul Kasriel* of The Northern Trust Company.

We hear a lot of concern that the Fed’s mushroomed balance sheet over the past two years is setting the stage for a 1970s style inflation here. So long as we have a fiat (a.k.a. Chrysler?) monetary standard, the threat of hyperinflation always lurks. But is the stage currently being set for such an eventuality? I do not think so.

Chart 1 shows the behavior of changes in the M2 money supply over the past 50 years on a year-over-year basis. After the Lehman crisis in the summer of 2008, M2 growth accelerated sharply. By January 2009, the year-over-year growth in M2 reached 10.1%. Although not quite matching the 13-1/2% M2 growth often reached in the 1970s, if sustained, 10% M2 growth certainly would have the potential to push inflation significantly higher.

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