Unemployment figures

Posted by Ray on January 21, 2010 under Main | Be the First to Comment

As I have stated previously, the decline in claims was primarily because of seasonal holiday hiring’s, but we know that seasonal hiring’s will always come to an end. All of the V shapers out there had been on their bandwagon about how temporary workers were a bullish trend, I took the other side of that trade. It looks as though I was correct, so far.

It was not hard to figure out when Best Buy said that they were going to increase hiring for the holiday season, but they even said it was going to be temporary hiring. Other firms made similar claims in the retail sector and, frankly, why in the world why any company, whether in manufacturing or in retail, hire anyone full-time right now? Demand is not there, if it were pricing power would be alive and well, it is not, and there is simply too much uncertainty about the ‘recovery.’ No one will hiring when the government is talking about higher taxes and a new mandate for health insurance. Couple that with really bad consumer demand and you have a perfect storm for really bad employment numbers in the short-term.

Maybe this will change now that Washington is worried about their jobs come November, if MA can go red, any state can go red. However, their damage is done and we know what they want to do which means employers will not hiring permanently until they are sure about the legislative agenda, in their minds at least, will be less anti-business. However, government is only part of the problem the real problem is the economy, stupid, it is still in bad shape and not getting much better. I agree that the data is a whole lot better than a year ago, we all agree about that, but less bad is not good and I am not sure how that got confused.

We will not have confirmation of my thesis for a few weeks, we need to see a trend and we need to see January’s employment report. However, the DOL report showed some confirmation as one state boldly said, a “Increase (increase means more unemployed) due to holiday shutdowns.” There were also a bunch of no comments, not unusual, but I am willing to bet it is or has something to do with the temporary hiring for seasonal help. The bottom line is that unemployment is a huge leading indicator, I have never changed my view on this, and the higher the number gets the worse its impact will be on the economy in the medium term.