Where did US jobs go?
by Peter Switzer
On Friday, the Dow Jones index lost a big 253.31 points, or 2.2 per cent, and the S&P 500 gave up 2.53 per cent. You can blame the lack of jobs in August in the US. But should anyone be surprised?
August was a month of madness and only a lunatic employer would have gone out and hired new workers over those 31 days!
- Concerns that Spain and Italy were heading into Greek basket case territory with its debts and bond yields.
- The debt debate on Congress, which nearly resulted in default.
- The S&P downgrade of US debt.
- A wild week of selling on Wall Street driven by recession fears, which looked like it had the makings of another GFC-style market whitewash.
- Then the US was lashed by a hurricane, just to add to the chaos!
For the record, US unemployment stayed at 9.1 per cent in August but for the first time since World War II no jobs were created in any month!
This sets the scene for President Barack Obama who puts his job-creation plan to Congress on Thursday.
Confidence wasn’t helped on Wall Street when the Federal Housing Finance Agency launched legal action against US banks over sub-prime-related issues. Banks in the States have been slammed by the market recently and so the timing of this assault, be it justified or not, couldn’t be timed any worse if it had been thought out by Communists with a penchant for short-selling!
By the way, the latest from Greece is that it might not meet its fiscal targets, which some analysts think could hurt stock markets. I would have thought no one would have high expectations of our friends in Greece.
The only saving grace from all of this bad news is that the Reserve Bank won’t raise interest rates and it could be pushing them closer to their first, overdue cut.
One final word — a recession in the US isn’t a certainty and the next two months will be the test. If the economy resists a rebound and Obama can’t pull an economic rabbit out of his hat, then it will be up to the Fed and its QE3 option. I hope it doesn’t come to that.
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Published on: Monday, September 05, 2011
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