Jobs Growth
As an economy expands, the increased sales and production create demand for more potential sales and this drives businesses to create new jobs. The U.S. Bureau of Labor Statistics compiles a monthly report on the number of jobs created and the unemployment rate. The unemployment rate does not always move in unison with jobs created, as population growth means that jobs must be created to maintain the unemployment rate at current levels. Also, if more citizens join the workforce in looking for work, this can increase the unemployment rate even though jobs have been created. The key to jobs growth is a strong economy. When a business is able to see that its future sales targets could be higher if it had more employees, this will drive job trends for the near future.
Popular Consumer Confidence Measure Falls to Lowest Level Since December 2007
By Michael Lombardi, MBA for Profit Confidential
Consumer spending in the U.S. economy looks to be in trouble.
A popular measure of U.S. consumer confidence, the IBD/TIPP Economic Optimism Index fell 2.4% in May. It registered at 45.1, compared to 46.2 in April. What’s problematic is that this consumer confidence measure is only 0.7 points above the reading in December 2007, when the U.S. economy entered into a recession. (Source: Tipponline, last accessed May 7, 2013.) A reading below 50 indicates consumers have a pessimistic view of the U.S. economy.
This U.S. consumer confidence measure essentially has three different components. It asks consumers three questions: 1) how will the U.S. economy perform in the next six months; 2) what is the status of their personal financial outlook; and 3) how confident are they in federal economic policies? Of the three components, two witnessed a decline. Consumer confidence toward the U.S. economy had the biggest drop in May, down 8.5%.
As we all know, consumer confidence is essential to consumer spending, as consumers tend to hold back on their purchases if they believe economic conditions will become worse.
Another major obstacle in front of consumer spending, consumer credit in the U.S. economy grew at an annual rate of only 5.7% in the first quarter of 2013. If this rate remains the same, then 2013 will post an increase in consumer credit, which was lower than the credit expansion rate of 2012. (Source: Federal Reserve, May 7, 2013.) When consumers borrow less, they spend less.
Adding to the misery of consumer confidence, jobs growth in the U.S. economy isn’t anywhere close to what it really should be. Last month, … Read More
Central Banks’ Gold Purchases in 2012 Most Since 1964
By Michael Lombardi, MBA for Profit Confidential
According to the International Monetary Fund (IMF), in February, the central bank of Mongolia increased its gold bullion reserves to its highest level since August of 2008. The country has been purchasing gold bullion for three consecutive months—its reserves have increased from 1.5 metric tons to 5.8 tons, or about 287%. (Source: Bloomberg, March 26, 2013.)
Similarly, the central bank of Russia has been purchasing gold bullion. It bought seven tons of the yellow metal in February to bring its total gold bullion holdings to 796.9 tons.
Turkey, the country which has started to use gold bullion as collateral, increased its reserves by 5.7 tons in February, bringing its total holdings to 375.7 tons.
According to the World Gold Council, central banks around the world purchased 534.6 tons of gold bullion in 2012, which was the highest amount since 1964.
How long can this buying spree by central banks continue in the gold bullion market? Consider China, for example. The country’s central bank holds only 1.7% of its reserves in gold bullion. (Source: “World Official Gold Holdings,” World Gold Council, March 2013.) And China has the biggest reserve in the world—worth more than $3.0 trillion.
But compared to the gold bullion holdings of other major central banks, China is still far behind. The U.S., Germany, and Italy hold more than 70% of their reserves in gold bullion. Imagine what would happen to gold bullion prices if China even just tried to double its gold reserves.
In the backdrop of the gold bullion buying spree, central banks around the world are printing paper money, working to depreciate their currencies to jumpstart … Read More
Jobs Market Growth? 1,422 Mass Layoffs Took Place in February 2013
By Michael Lombardi, MBA for Profit Confidential
The so-called “recovery” in the jobs market isn’t sustainable. I don’t disagree that there has been job creation in the past few months, but when I look at the spectrum of the jobs created in the U.S. economy, I become skeptical. Jobs growth in the U.S. economy has been in the low-paying retail sector.
Consider this: in February, there were 1,422 mass layoffs in the U.S. economy, involving 135,468 workers. Looking closely at the layoffs, 295 of them occurred in the manufacturing sector, sending 39,407 individuals back to look for jobs and seek unemployment insurance benefits. (Source: Bureau of Labor Statistics, March 22, 2013.)
There are more than five million Americans working part-time, not because they want to, but because they can’t find a full-time job. (Source: Federal Reserve Bank of St. Louis web site, last accessed March 26, 2013.)
What’s ahead for the U.S. jobs market? As curt as it sounds, more misery is in store for the U.S. jobs market. Hewlett-Packard Company (NYSE/HPQ) says it will cut 15,000 more jobs—part of a three-year layoff plan that will decrease its workforce by 29,000. (Source: Business Insider, February 27, 2013.) And Hewlett-Packard (HP) is not the only company that’s downsizing and sending its employees back to the jobs market; some of the other major companies are doing the same.
Why is corporate America laying off workers? The answer is simple: its corporate earnings are suffering, and the only way companies can drastically make a difference when revenue is soft is to cut expenses; this will lead to more pressure on the U.S. jobs market. In the first quarter of … Read More
Dismal Fact Behind Today’s “Official” Unemployment Rate
By Michael Lombardi, MBA for Profit Confidential
I’m sure the politicians will have a field day with this today…
The U.S. Bureau of Labor Statistics (BLS) reported this morning that the U.S. economy created 236,000 jobs in February 2013. The U.S. unemployment rate dropped to 7.7% in February, decreasing from 7.9% in January. (Source: Bureau of Labor Statistics, March 8, 2013.)
I’m sure the stock market, backed by paper money printing, will rally on this “good” news. But there is something very important in the job numbers I want all my readers to know about…
The BLS reported that the underemployment rate (which includes people who have given up looking for work and people who want full-time jobs but who can only get part-time jobs) in the U.S. economy was at 14.3% in February—this number hasn’t really changed since October of 2012, when it was 14.5%. To me, this dismal fact shows absolutely no improvement in the unemployment situation in this country!
It’s obvious there are still many troubled spots in the U.S. jobs market. If they are not fixed soon, they will drive the U.S. economy into further deterioration. It is startling to know that 40.2% of all those unemployed in the U.S. economy have been without work for 27 weeks or more.
The tormented jobs market in the U.S. economy is the biggest hurdle to economic growth. For the year of 2012, the average monthly jobs growth was 181,000. But, as most economists will tell you, the U.S. economy needs consistent jobs growth of 250,000 per month for the economy to see any improvement.
The truth is that we don’t have jobs in the U.S. … Read More
Jobs Report to Come Out This Friday Could Surprise
By Michael Lombardi, MBA for Profit Confidential
U.S. economic growth is at a stalemate, and the biggest hurdle in its way is the jobs market. While politicians have been arguing the U.S. jobs market is improving, the average “official” unemployment rate for 2012 was above eight percent, and it still hovers around that same level today.
According to the Job Openings and Labor Turnover Summary (JOLTS) by the Bureau of Labor Statistics (BLS), on the last business day of December 2012, there were 3.6 million job openings in the U.S. economy. (Source: Bureau of Labor Statistics, February 12, 2013.) There are 12.2 million people chasing those jobs. Hence, we ended last year with a job-seekers ratio (unemployment workers in the jobs market to job openings) of 3.4:1.
Looking at the historical job-seekers ratio, it shows the agony of the jobs market. In December of 2000, this ratio was 1.1:1. It has improved from its highs of 6.7:1 in July of 2009, but we shouldn’t forget that jobs growth in the retail and service sectors (low-wage jobs) have been making the jobs market look good.
It’s also troubling that 38.1% of all those who are unemployed in the U.S. economy have been without work for 27 weeks or more. (Source: Bureau of Labor Statistics, February 1, 2013.) It’s obvious that there are many troubled spots in the U.S. jobs market. And if they are not fixed soon, they will drive the U.S. economy back into recession.
On top of this, as I have stated in these pages, companies in the key stock indices are expected to see negative earnings growth in the first quarter of 2013. (See … Read More
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