Jobless rate falls to 9.7 percent in January – its due to discouraged workers not true gains

February 5, 2010 by · Leave a Comment
Filed under: Economic News 

This news does sound good on the outside but when you read into the report you find that we still shed 86,000 jobs after you add in the gains.  Also and this is the biggie, the drop to 9.7% is because people simply gave up looking for work and fell off the unemployed rolls and are just not being counted.  If you look at the U6 number in the report, you will see the “discouraged” works and unemployed together and that gives a much more accurate picture.  The U6 number is well over 15% and that is a pretty big number.   The stock market slid under 10,000 and we could be in for a major correction going forward.  I’ll keep you posted.

Reuters, New York – KEY POINTS:

* The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. Annual benchmark revisions to payrolls data showed the economy has purged 8.4 million jobs since the start of the recession in December 2007.

* Analysts polled by Reuters had forecast payrolls gaining 5,000 and the unemployment rate to edge up to 10.1 percent. Median estimates from the top 20 forecasters expected payrolls to be unchanged last month.

* A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.

COMMENTS:

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL

RESEARCH.COM, SHREWSBURY, NEW JERSEY:

“It indicates a certain form of stabilization but there’s not a bounce that everybody was looking for. Going into this with the ADP data, the Challenger data, and the initial claims data people were kind of negative.

“What is throwing people off is probably the 9.7 percent unemployment rate — the drop in the unemployment rate –, which is positive but is not coming from new jobs created its coming from people dropping out of the work force.

“It’s a series of conflicting data … The positive take is basically it wasn’t a total disaster, but the flip side of it is you’re not seeing a recovery.”

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