Thursday, October 8, 2009

New Jobless Claims.....a good statistic?

Yahoo! Finance tries to portray the new jobless claims data as a good sign the economy is recovering. They say:

  • The number of newly laid-off workers filing first-time claims for jobless benefits fell to the lowest level since early January, as layoffs ease a bit amid a fledgling economic recovery.
But what is this "lowest level" since early January?

  • The Labor Department said Thursday that new claims for unemployment insurance dropped last week to a seasonally adjusted 521,000, from the previous week's upwardly revised total of 554,000.
Wow, that is better than economist expected. However, does that mean the economy is recovering? In my opinion this is still not good at all. Losing 521,000 jobs in a month is like the entire state of Wyoming losing their jobs. This IS NOT A GOOD SIGN. When we start creating jobs, like President Obama pledged to do (cough, cough), that is when the economy is recovering. Not when we lose 1 million American jobs every two months.

Well if we are not recovering why does the stock market continue to rise day in and day out? This question has a simple answer. LIQUIDITY. Helicopter Ben continues to run the printing presses at full speed driving down interest rates and making money in America essentially free. This newly created money needs something to flow into and where do people put their money when they are worried about inflation? They put it in assets that perform well during an inflationary, silver, stocks, and other commodities. This is why the market keeps rising, why gold is hitting new highs, and why the dollar continues to fall against the world's currencies. Do not fret though, you haven't missed the party. We still have another couple years of horrible deflation to fight through before the inflation party really gets rolling so don't believe the hype.

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