Employment Report Causes Bulls to Stumble Briefly

By on July 8, 2011

The Labor Department released employment statistics this morning which were pretty horrific.  Non-farm payrolls rose only 18,000, the weakest reading since September 2010.  This was significantly below economists’ expectations of gains approaching 100,000.

The DJIA lost as much as 150 points after the release, but closed the day with a small loss of 62 points.  Market participants must have faith that the Fed will come to the rescue with more money printing gimmicks.  President Obama will also push for increased government spending to create work for the hordes of idle Americans.

It may not matter that much for the bull market’s advance if jobs in the U. S. aren’t being created.  As long as shareholder’s profits are rising stocks can climb this wall of worry.  Profits are much more dependent on global economic growth than they used to be, so economic reports issued by the government have less meaning to investors than in the past. 

Unemployment rates below 6% may sadly be a thing of the past.  Increased use of automation and robotics are being overlooked as a cause of high unemployment.  Companies just don’t need as many people anymore to generate output.  Managers are being very careful with hiring because it entails a huge expense.  New technologies are enabling corporations the ability to bypass this expense without hindering productivity.

2 Comments

  1. Amanda Faulk

    July 9, 2011 at 10:18 pm

    You are right about unemployment. Many people incorrectly believe it is solely a matter of a struggling economy. I’d add the demographic changes in the U.S. during the past decade have a lot to do with the unemployment rate as well. The prolific breeders are exactly our best and brightest.

  2. Hugh Jorgin

    July 11, 2011 at 8:01 pm

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