Job cuts – job cuts

Job Losses:

The U.S. Department of Labor reported today that employers shed 85,000 jobs in the month of December. That loss puts the overall U.S. unemployment rate at a double-digit rate of 10.0%. This loss was a much greater loss of jobs than the expected loss of just 11,000.

For the month of November, a previous job loss was revised to an actual job gain of 4,000.

Analysis: The unemployment rate (rather than the job losses number) remains the most important number for the economy and for investors. No jobs = no money = no spending = no economic expansion.

I have been waiting for this number for many months now. This is because employers typically add jobs in December to accommodate the Holiday Season buy-fest that usually ensues. I felt that December would be a litmus test for employers’ appetite for adding workers. Yet, jobs have failed to materialize; and this result has happened in the midst of a beneficent convergence. That is, we already know that Holiday sales were better than expected. It is also likely that the economy expanded in the fourth quarter. Yet, there was no improvement in the unemployment rate.

We need to see improvement in the unemployment figure to officially put the recession behind us. While we need to see a change in the capitalist structures of the United States in order to officially declare the recession behind us and dead.

Importance grade: 10. There is no single greater statistic right now for investors than the unemployment rate.

I hope that everyone has a great weekend!

Jason