Stock Market Rise in Face of Anemic Job Situation and Slowing Economy Won’t Last Long

The jobs market in the U.S. economy is anemic; don’t for a second let the key stock indices make you believe the economy has improved.

While the mainstream and politicians are concerned about the numbers of jobs created in the U.S. economy, I look at their quality. Readers of Profit Confidential know this very well.

From my point of view, the quality of the jobs being created in the U.S. economy is very poor and deteriorating.

You see, with all the printing and easy monetary policy, one would assume, over time, the jobs market would improve. At least that was the original intention, but this is not happening. The problematic trend continues—low-wage-paying jobs are prevailing, while those that pay well are lagging behind in the jobs market.

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The Bureau of Labor Statistics (BLS) reported that there were 3.93 million job openings in the U.S. economy at the end of June. In May, this number was 3.90 million. On the surface, this is good, but looking deeper into the details, it shows the poor state of the jobs market.

Combined, retail trade and leisure and hospitality industries made up 28% of all job openings in the U.S. economy in June. In May, this number stood at 25% of all job openings. (Source: Bureau of Labor Statistics, August 6, 2013.) Going back a little further, in April and March, job openings in these industries amounted to 24.30% and 23.84%, respectively—clearly a rising trend in the wrong direction.

What about the jobs in construction and manufacturing? In June, combined, these industries made up only 8.9% of all the job openings in the U.S. economy. In March, this number was almost 10%—another trend moving in the wrong direction.

Consider this scenario: For a family who is earning minimum wage, or close to it, they can’t go out and buy a new car, nor can they afford to make payments on it or lock in a 30-year fixed-rate mortgage to “take advantage” of the low interest rates. This family is forced to keep their old car, hoping it doesn’t break down, and rent because they cannot afford mortgage payments…nor would they qualify for a mortgage.

It’s a known fact: consumer spending drives the U.S. economy towards prosperity. The quality of work created in the jobs market remaining poor adds pressure on consumer spending.

When I look at the poor conditions in the jobs market of the U.S. economy, and then look at the rising key stock indices, I see major disparity. Euphoria has certainly taken over this year for the stock market, and we know very well from the past that it won’t end well.

Public companies are sending warning signals, but no one’s listening. As of August 2, 61 S&P 500 companies issued negative guidance about their corporate earnings for the third quarter. This represents almost 80% of all the companies that have provided an outlook for their corporate earnings so far this quarter. (Source: FactSet, August 2, 2013.) The future is not looking good.