What Work?

After a weaker than expected December employment report revealed that the U.S. economy is not creating enough new jobs, the NASDAQ and the Dow moved lower. About time too.

Both indices seem to be on fire in this New Year, leaping forward on up days and barely sinking on down days, if at all. It feels like some aspects of “irrational exuberance” have perhaps returned and the markets’ collective memory of what that phenomenon led to magically evaporated. So it’s nice to see the markets respond “intelligently” to negative news.

The visionary Wall Street Sages and Gurus proposed that anywhere from 136,000 to 200,000 jobs would be created in December, but non-farm payrolls increased by a measly 1000. Quite a short fall. Quite a miscalculation. And more than disappointing.

Not only did the markets take the news hard, but the U.S. dollar took a dive as well. In fact, the news sent the Euro to an all-time high against the weary Greenback, settling in around the $1.28 mark. Essentially, world currency traders perceive a standstill in American corporate hiring as a standstill in the economy. A fair assumption.

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The Bureau of Labor Statistics also stated that 300,000 people gave up their search for jobs and dropped out of the pool of available workers. I guess they resigned themselves to the fact that America is still losing jobs and finding one is growing increasingly more difficult. Weak holiday hiring by retailers was also to blame for the negative news. Manufacturing continued a 41-month slide by losing another 26,000 jobs. Hmm.

Here at PROFIT CONFIDENTIAL, we can’t seem to forget a couple of key points. By now, half the world knows that this is an election year. Since President Bush took office, 2.3 million jobs have evaporated. Coincidental to the Republicans; more ammo for Democrats. The administration insists that stronger economic growth will lead to “more meaningful job creation on a sustained basis, “but with 8% GDP growth touted and shouted to the world in recent months… show us those “meaningful” jobs!

Seems like the term “jobless recovery” is more apt than ever. Appears that we are seeing either a new economic recovery theory in practice or the boiling over of a Bear market rally.

I get the sneaking suspicion that we will hear a lot more about the jobless recovery.