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The End of Uninterrupted Job Growth
By Jon Menaster | September 7, 2007
First off, welcome to September. I’m back from my vacation, and I’m slowly but surely getting back into the swing of things.
Second, we all knew this day had to come eventually. The labor department released the new jobs figures for August, and lo and behold, employers eliminated 4,000 jobs in August. The New York Times article also has some very alarming quotes, including the classic doomsday prediction:
“If the economy is not headed toward recession, it is very close to one,” said Mark Zandi, chief economist at Moody’s Economy.com.
Wow. Well, Mr. Zandi sure thinks the worst is around the bend. That quote doesn’t make any sense to me though - I hope the writer merely mistook some of Mr. Zandi’s words. How can the economy be very close to a recession but at the same not not be headed towards one? Is it just going to spring up and bite me in the behind when I’m not looking? Only time will tell, I suppose.
Want another choice quote? Coming right up:
Not only did today’s report show that there was no job growth last month, but it also found that the job market was significantly weaker in June and July than the government first reported. Revisions to earlier jobs reports showed that 81,000 fewer jobs were created than initially estimated.
So estimates are wrong? Who would have thought? Me, for one. But apparently the one-two punch of the end of uninterrupted job growth and the revisions to estimates showing far fewer jobs created in previous months than first assumed led to some blood shedding on Wall Street today. The Dow Jones is off more than 222 points, Nasdaq is off 50, and the S&P is off 22. All things considered, it could have been much worse. To be honest, I’m not afraid of a stock pullback. That may have something to do with the fact that I still have 30+ years until retirement, so cheaper stocks now is the equivalent of a fire-sale for me. I’m planning on holding my investments for a very long time. Those of you with retirement looming over the next few years may have more than your fair share of nail biting moments, but the last few years should have fattened up your retirement accounts enough to lessen the blow.
All this has led many to pontificate on where the Fed will be taking the interest rate:
Investors and economists are widely expecting the Fed to lower its benchmark interest rate by a quarter-point, to 5 percent, at its next meeting. Some economists said the August employment report raises the chances of a second rate cut this year, or a half-point reduction at the next meeting. And traders in the futures market are predicting that the Fed will cut the rate to 4.5 percent by the end of the year.
Will the Interest Rate move from 5.25% to a flat 5%? Will the economy move into a recession? Stay tuned, my friends, for another edition of “As the US Economy Turns”.
UPDATE: For an in-depth report of just how bad this job report was, check out this post over at the excellent blog Mish’s Global Economic Trend Analysis: Moonbats Active Again in Massive Jobs Disaster
Topics: Business, Finance, Investing, Retirement |