The Last Bear

This is were the moderate news ends. One month does not signal a trend and even economists are aware of that. Initial jobless claims are back on the rise, well they were last week and they will be next week and the following week. Three weeks in a row could signal a trend. Either way they are stuck in a tight range and could even breakout of that range to the upside.

Sure, it was a good thing that 151,000 people found a job. As a matter of fact, so far in 2010 the economy has added 874,000 jobs. Congratulations to those. In other words, so far roughly 10% of the jobs lost have been recovered. Right, most forgot that over 8 Million jobs were lost. Most also ignore the fact that the current economic environment will be as good as it will get this decade. The unemployment rate held steady at 9.6%, but that is the unemployment figure which is not quite accurate.


100,000 jobs a month are needed to keep up with population growth, October accomplished that for the first time in five months. The unemployment rate will inch higher next month, most likely to 9.7% or even 9.8%. Retailers hope for a good holiday season due to heavy discounts and added almost 28,000 jobs, temporary agencies added 35,000 jobs which will vaporize soon enough and of course restaurant hope to feed the shoppers and added 24,000 jobs. So, a total of 87,000 jobs come from seasonal, unstable and low income sectors. The health care sector was the bright spot and added 24,000 jobs. There were also net positive revisions over the past two months totaling 103,000.

The markets showed little reaction to the report and grinded moderately higher in a seesaw session during the first hour. This report will not mark the start of a new trend, but rather represents an anomaly in current data.The U.S. economy will start to contract over the next few months, and a majority of the 874,000 jobs added will be eliminated again. Employment growth this year was less than population growth and the average job creation figure for 2011 will be less than 30,000 per month.

Third quarter GDP growth came in at 2.0%, which is not enough for companies to hire people. Fourth-quarter GDP growth will remain below 2.0% and will slowly grind back to standstill. A second recession will emerge in 2011 and more job cuts are on the horizon as a direct result of that.

The Federal Reserve announced their QE2 program a few days ago, U.S. Fed announces QE2, $600 Billion of Treasury Purchases, and they do not like this job gain at all as it goes against their agenda. Hopes are high that the economy and the job market will turn around slowly, but that is all it will remain; hope. Hope does not provide employment and the consumer will disappoint this holiday shopping season.

Global economic growth will slow down in 2011, while inflation in the U.S. will spike as a result of the Fed's weak U.S. Dollar policy. Commodity prices will continue to grind higher and costs for consumers from food to energy will surge this decade and eat away the small disposable income consumers have left, if any.

Photo Credit: The picture in the top left corner was created by Francesco Marino and downloaded for free use at freedigitalphotos.net.