They Really Think We Are Stupid

Whew! A bit dusty over here. I hadn't realized it had been over three months since I last posted something here but with all the news this week I guess I figure it's time to throw out my 2¢ once again.

The official unemployment rate is now at 9.8%. Nine point eight per cent. And this is just the "official rate" reported by Labor is the "U3." The truer rate is probably contained in the U6 which is over 17%.

It is December 2010 and this is the longest sustained stretch of unemployment over 9% since the Great Depression. While ADP in their monthly reporting of jobs added for November showed an estimated 93,000 new private sector jobs for November 2010, the official Department of Labor report showed only 39,000 jobs added in total for November 2010. This is in an economy that needs to add 100k - 150k jobs per month just to maintain status quo. Now we add in that two million people currently collecting unemployment will be losing their unemployment insurance benefits during December 2010 and another uptick in initial jobless claims for the last week of November and it is going to be a horrendous Christmas season for a lot of people in the United States.

Cluelessness or Cognitive Dissonance?

My apologies for not writing any posts for a while but I do get tired of having to repeat myself so frequently.

Once again we see the cluelessness of the financial reporters in a couple of articles from the past few days. First up was an AP story (via MSNBC) which reported on an analysis from Fidelity Investments on people raiding their 401Ks due to "hardships." This came on top of the Weekly New Unemployment claims report showing (Reuters via CNBC):

New U.S. claims for unemployment benefits unexpectedly climbed to a nine-month high last week, yet another setback to the frail economic recovery.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 in the week ended August 14, the highest since mid-November, the Labor Department said on Thursday.

Analysts polled by Reuters had forecast claims slipping to 476,000 from the previously reported 484,000 the prior week, which was revised up to 488,000 in Thursday's report.

But today's (Sunday, August 22) NY Times really steps in it.

Renewed economic uncertainty is testing Americans’ generation-long love affair with the stock market.

Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group. Now many are choosing investments they deem safer, like bonds.

If that pace continues, more money will be pulled out of these mutual funds in 2010 than in any year since the 1980s, with the exception of 2008, when the global financial crisis peaked.

Small investors are “losing their appetite for risk,” a Credit Suisse analyst, Doug Cliggott, said in a report to investors on Friday.