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Posted by: Michael Mandel on August 01
This morning’s employment report shows the unemployment rate now up to 5.7%, while the private sector lost 76K jobs. Outside of health and social assistance, the loss was 110K.
Now, the unemployment rate never gets revised (except for some small fiddles for seasonal adjustment). The job number does get revised, and is likely to be revised down.
But the real question now is how long the weakness in the labor market is likely to last. After the 2001 recession, private jobs kept falling and didn’t turn up until 2003. That was a heck of a long time. In large part, that was the result of a surge of outsourcing to China and other countries, which drained away any strength in the labor market recovery.
The problem this time will be the weakness in consumer demand, so that we won’t get any bounceback in retailing or any consumer-related areas.
I’m not sure I know the answer yet…it’s something I’m going to keep an eye on.
BTW…I’m still thinking about whether it’s the right time to buy in the stock market
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.