April employment information for U.S. is positive surprise

The Labor Department announced today that April saw 290,000 jobs added to U.S. payrolls (as compared to expectations of 180,000).  Additionally, March job creation was revised up to 230,000 from the originally announced 162,000.  For the last 4 months, job create has averaged about 140,000 per month.

It is important to consider that the U.S. continues to experience an economic recovery that is stronger than most economists and market observers were expecting.  This is just one piece of data that investors must digest, as concerns over a possible debt default by Greece (the costs of a Greece bailout are similarly concerning) spread over Europe and the world.

We simply remind investors not to lose sight of the hard economic data (like job creation) in the midst of all of the attention given to items like dramatic market swings and chaos in Greece.

U.S. unemployment for November

Last week saw improvement in U.S. unemployment numbers, as the unemployment rate declined from 10.2% to 10%.  However there is still much with which to be concerned.  Key is that the rate which reflects both underemployed and those who have just given up looking for a job is still over 17% (17.2% for November vs. 17.5% for October). 

Other unemployment notable facts include a 28.5 week average length of time without work for all umemployed persons.  Also, 38.3% of those unemployed have been jobless for at least 27 weeks.  These measurements are at record levels since such recordkeeping began in the 1940's.

We think unemployment and its implications for consumers is still very concerning.  We may not see the full impact of unemployment until government stimulus for things like auto purchases, home purchases, possible job tax credits and the like have run their course.

U.S. unemployment now over 10% for first time in 26 years

In October U.S. unemployment rose over 10% (to 10.2%) for the first time in 26 years, and only the 2nd time since the 1948 employment record keeping began.  Behind this headline number we examine additional concerning details:

• the rate of unemployment rises to 17.5% when including those who have stopped looking or are working part-time since they can't find full time work
• although unemployment in management and professional occupations is only 5%, the rate in production is about 15% and the rate in construction is about 20%

Although the 3rd quarter U.S. GDP was recently announced at a preliminary estimate of growing at an annual rate of 3.5%, the jobs report shows this growth has yet to reach Main Street America.  Further, some now estimate additional increases in unemployment such as Moody's Economy.com who sees the rate peaking at 11% in mid-2010.

In the meantime, Congress and the White House have been focused solely on healthcare legislation.  Expect this to change in the near future as voters this week sent a signal of dissatisfaction with election of Republican governors in New Jersey and Virginia.  Although the White House claims to have saved or created 640,000 jobs with fiscal stimulus, the math by observers reveals the cost-to-date of each such job to be $92,000.  A jobs credit bill is now being discussed, but the already record-high U.S. budget deficits make any such action challenging for lawmakers.

The big question for the economy and investment markets seems "Will U.S. consumers continue to spend as concerns about unemployment grow amid a diminishing ability of government to do anything about it?"  We shall see.