I’m happy to report that Hurricane Matthew has come and gone, and left our region with relatively light damage. But to all of our readers still in its path, or anyone who may have had a more difficult experience, best of luck and we hope for a speedy recovery process.
Now, let’s shift to the big news of the day – the latest reading on the job market. Many investors are wondering whether it shows that America’s job engine is running out of gas or chugging along just fine. So here’s my take …
First, the U.S. economy created only 156,000 jobs in September. That missed forecasts for 172,000. It was also down from 167,000 in August and 252,000 in July. Continued job losses in manufacturing and a decline in government jobs hurt the numbers, as did a slowdown in growth in the leisure and hospitality sector.
Second, average hourly earnings growth came in at 0.2%. That was less than the 0.3% gain economists were expecting.
Third, unemployment rose to 5%, rather than held steady at 4.9% as expected. One reason is that more Americans re-joined the labor force. They would only do so if they thought looking for a job would actually result in finding one, or at least that’s the theory of many Wall Street economists. But the trend definitely bears watching because investors have gotten used to seeing better and better numbers for a long time.
Indeed, I continue to believe we’re very late in the economic and credit cycle. Growth in sectors like real estate and autos is starting to slow due to the tightening of lending standards and other problems I’ve spent the last several months highlighting.
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| Markets couldn’t seem to figure out what to do with the jobs data. |
Ongoing weakness in the manufacturing and industrial sectors is a headwind as well. We got more evidence of that from today’s profit warnings out of Honeywell International (HON), a conglomerate with significant aerospace and building systems operations, and PPG Industries (PPG), a maker of paint, chemicals, and products for the auto sector. Both stocks plunged on the day.
Bottom line: Markets can go up and down for a lot of different reasons. Today, they couldn’t seem to figure out what to do with the jobs data, swinging up and down several times during the course of trading.
But ultimately, if we don’t have strong underlying economic growth and a robust labor market, we don’t have the underpinnings for widespread, healthy gains. Throw in the fact we’re at a challenging point in the credit cycle, and you can see why I think caution is still warranted when it comes to investing.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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we may have reached debt in the global economy.
I enjoy your emails. Thanks
I miss Mike’s daily, or near-so commentaries. Also, he seems to have given up on reading readers’ comments and reprinting the gist of some of them. Is this because of Mathew this week, at least? Understandable, if so, and we did get Safe Money Report, at least. Please let us have more comment.
We is the small graphic showing closing prises no longer published with your end of the day summary?
Folks,
Why are we held in the dark about how many “new jobs” are part time and how many are full time? I find it annoying when we are not given the whole story. I guess they do not want us to know what is going on. Regards
BIGWEEDS,
You hit the nail on the head!
Interesting. What to do about REM ETF. Buy, sell hold?
Mike, for once I somewhat agree with your reasoning or at least quoting statistical numbers. However the fact that 90 plus million disappeared from the work force and never returned is a big question mark. Were these workers the ones which had good pensions and retired early or were forced into early retirement? The method of counting the unemployment rate in this country is a farce to say the least. I personally believe a lot of older employees were laid off to never be rehired due in part to the cost of medical insurance place wholly or partially on the employers. It’s also because of a global economy and competition with low wage countries. I do believe our government is good at the smoke and mirrors game trying to convince the populous all is well but the people know better. There are the fortunate workers which are still employed but also a lot of unfortunate working part time or trying to survive on public assistance. With the spiraling government and private debt I personally fail to see the rosy picture trying to be portrayed. How much of the GDP is being purchase on credit and could this be another bubble about to pop? Only time will tell. Speaking for myself, the employment situation is definitely not good and the upcoming retirement looks much worse. Yes the government numbers look good but where is the investigative reporting to verify those numbers.
(Don’t tell the people how bad it is, tell them how good it is. Do you remember which former president told Mr. Obama this?)
Yes all is great in a make believe fairyland right before the set comes crashing down!!!
What about declining corporate profits for the last several years???!
The valuations are overstretched . Who can deny this?
The real unemployment rate is closer to 23%. When their unemployment ins ran out they are on the street or with their mother. Also the part time help is the highest in history thanks to obamacare. You haven’t mentioned the 35% corporate rate (Hillary wants to raise it more)which is driving corporations out of here and jobs with it. Add to that ridiculous regulations and the small business person facing paying a $15 minimum wage & obamacare forcing them to pay for insurance they can’t afford. My tax guy says it is killing every small business person he knows including himself. Obama never had a job before he became president (I don’t call shilling for acorn and giving an occasional lecture at a university a job) Now we have a choice, Hillary, who was fired from the law firm she worked for in Arkansas for bad conduct and lying, then flunked the DC bar. Then worked for the government where everything she touched was criminal. She promised the people from upstate NY 200,000 jobs but lost 8,000. Those emails put our troops & covert people in harms way but it was convenient and covered the foundation crap. Then we have a man, Mr Trump who is a successful businessman. Has the most remarkable children anyone would be very proud to claim as their family. Will fix the Iran fiasco. Stop giving billions to countries that hate us. Give our vets the money Obama is giving to the Syrian refugees. Give us back the America we lost. Obama fired 197 of our top 4 & 5 star generals that didn’t agree with him & Hillary who when she was in the WH fired anyone caught wearing a uniform in her site. Left OUR men in Benghazi to be tortured for 4 days. (What difference does it make) The thought of Hillary as commander in Chief of our armed forces is criminal. She has put our men in jeopardy too many times already. The president has brought in thousands of young 80% male refugees (not the Christians that are being persecuted).who have a fondness for raping and bombing with more on the way. Hillary has plans for 8,500 more. Isn’t that special!!!
Mike, it is collapsing the only thing it’s keeping it up is low interest rates rates and reserve fractional banking, and watch out for q/e 4, it’s the only way they can go. China view on America on your government war mongering idiots, l just hope trump wins, you might stand a chance, but unfortunately these plonkers are puppets its up to the elites and your shadow government. Myself l am in sunny Brisbane on my daughters I pad.
Hi Mike
Happy you all made it through. On the jobs and future prospects fronts our choices couldn’t be more clear. For many years now through several administrations we have consumed more than we have made and we have borrowed more than we have earned. At some point we have to stop and consider this direction and now at this time we get a chance to vote on it. We can keep on going with more of the same but at what cost. Amongst us are broken homes and dreams for many ordinary folks who are looking for hope and inspiration. This election is not so much about individual leaders as it is about change or no change. Many elites are happy with the way things are going, after all they are all right. But what about those who are left behind and feel unrepresented. Do we as a nation want to turn our consumption led economy around and start to make stuff again. Do we want our families to have real jobs again and do we want to have a future we can leave our kids. I want to see this change because otherwise we will go broke with many facing poverty
It amazes me how the elite press can torture Trump and yet give Bill Clinton a free ride. Neither levels of past behaviour are acceptable, but this contest is not about dirty laundry. It’s about fixing the country up. I don’t know why the important economic issues don’t receive the same level of coverage.
BLS numbers are totally fabricated. Actual unemployment is North of 20%. There are only 2 types of people in America. Everyone is one or the other. 1st is individuals who produce more than they consume. 2nd is individuals that consume more than they produce.
Since the under producers vote and outnumber the more productive, we have a budget that has 75% mandatory spending on promises that soon cannot be kept. The new President only can play with less than 25% of the budget that’s not on automatic. Good luck.
Soon the FED will begin buying stocks with printing press money. That will be the final nail in the coffin of our fiat money system. We need the reset for any possible improvement.
Auto industry is in a bubble along with many other sectors. Airlines are making money only due to $50 oil. As soon as oil adjusts upward the airlines will all be in bankruptcy. That higher oil will cause havoc across the economy.
Bright spot is the temporary pull back in gold. If you are paying attention is is a great time to buy some. Harry Dents $700 gold prediction may actually happen but at that point there will be no sellers and mark-up over spot will be $300 or more. If you wait you will be cut out.
The entire economy is running on massive infusions of FED money.
Mike you put in a lot of work to throw out a few stocks that gain a few points. It simply is no longer worth the risk of a flash crash to make a few percent with the risk.
John Eastman
Why have you eliminated your financial box all this week with the closing information of the markets and gold? I miss it greatly. Please reinstate that info box in your daily afternoon comment email.
you’ve been spot on for a long, long time, larson. you’re long predictions are playing out as you said. keep it up and watch out for those hurricanes down there.
I am still waiting for the Fed to learn to follow the money. The economy is driven by consumer spending. There are two types of consumers: debtors and savers. The debtors won’t drive anything as they have their debts to pay off. The savers are holding out until they can spend some of the earnings from their savings. So, as long as those savings earn next to nothing, spending will stay next to nothing. The Fed with all their overly complex models can’t see the forest for the trees. Or don’t want to see for political reasons. Shame on them.
Why are you still relying on the phony unemployment rate put out by the Feds? 95 million are out of the work force making it at least 10%…or more. Labor participation rate is the lowest since the Depression at 63%. Pleas stop perpetuating the same phony stats the Feds have been putting out for the last 8 years. thanks.
Point well made. But 95 million compared to US population of 324 million is 29%.
Labor Participation rate was 66% in 2008 vs today’s 63%. The last time it was this low was in 1978, and remember there are a lot fewer ‘willing’ stay at home moms. 100% – 63% = 37% unemployed.
Whichever way you cut it, the official rate is a bold faced lie.
IS AMERICAS JOB ENGINE RUNNING OUT OF GAS OR CHUGGING ALONG well first of all every month in this country 300,000 or more young adults reach 18 looking for a full time job , another 300,000 or more baby boomers retire every month, then throw in the fact that those 300,000 of newly retired should create 300,000 in jobs each month but were seeing only paltry gains i think in May of 2016 the u.s. created 8,000 jobs and in sept. of 2016 156,000 jobs then lets figure in a more realistic number of 250,000 or more per month losing their jobs and lets not forget about the 300,000 or more per month of illegal aliens (liberals call them undocumented workers) who come here looking for work add them all up and the conclusion is ……. WHAT JOB ENGINE … were not chugging along i think the correct word is sputtering if this is americas new job engine of the progressive liberal administration of BARACK OBAMA and HILLERY CLINTON then this engine needs to be completely overhauled and rebuilt
Heres my take,just blowing,the FED the invisible hand,Lets say the75% of stock is owned by the invisable hand(IH) and they dont want to sell anything, the DOW will stay static much of the time.Look at it lately.Now who would like to invest even for 2 days,not me.Something must give,up or down I dont know but the last 3 weeks we have gone nowhere,but it looks like a wedge so something is going to happen soon.Hold on to your knickers.Hope none of you guys got hit hard with the hurricane.Holding UVXY and SVXY
Lack of incentives for the super-rich so called captains-of-industry to create domestic US jobs is one of the major problems of the so called trickle-down-economics (aka Supply Side Economics) of the conservatives. According to trickle down economics, blindly giving the super-rich huge tax cuts will entice the super-rich captains of industry to expand their businesses to create more domestic US jobs. The problem is that blindly giving huge amounts of money to the super-rich, including the idle rich, to the rich who are outsourcing jobs, to the hedge fund shorting rich, to the rich who are hiding money offshore, to the rich building automation technologies to eliminate jobs, and so on, only enhance the lost of domestic jobs. The more money is poured on these super rich, the more domestic jobs will be lost. As if this is not bad enough for domestic jobs, the baby boomers are starting to retire in ernest. 10 thousand baba boomers are retiring per day. 200 to 300 thousand baby boomers will be retiring per month. If appears not all of these baba boomers jobs will be restaffed with hiring young people, as only 160 thousand new jobs was created last month when 200 thousand jobs were opened from baba boomers retiring.
Similar to the former Soviet Russia, the lack of incentives from merit based system resulted in weak economic performance. Giving the super-rich captains-of-industry huge tax cuts without requiring them to create enough new domestic US jobs results in a lack of incentives for these super rich to exert enough effort to create new domestic US jobs, as it is hard to create a lot of new domestic jobs. It took the US more than 200 years of industrialization, innovation, invention, and hard work to create the jobs for the modern US. It took about 30 years of trickle-down economics (aka Reganomics) to outsource and to automated a lot of these jobs that took 200 years to create. It is a lot easier to tear down something than to build up something.
There are a lot of new types of domestic jobs that needs to be created, but there are no incentives for the super-rich to create them, as the tax code don’t incentivized them to do so. For example, the next president should propose the creation of 100 thousand new jobs to rebuild the Internet, so that the Internet becomes safe to use. One time year ago there was a proposal for doing Internet 2.0 that will have a lot of security features added to it, but the free-market did not have the drive to carry it out, as safety features are usually not in the interests of the free-market (i.e. the free-market has a hard time to invest in safety features for nuclear power stations.) I think even a lot of ten year olds can come up with projects that will create millions of new jobs.
I think the USA, and the world is headed for a 99% economics collapse. The national debt is pulling us under, and obama is laughing his fool head off.
During George W. Bush’s tenure 1,281,000 jobs were created. That is a rate of 13,344 per month. To this point 9,965,000 jobs have been created under Obama. That is a rate of 110,722 per month. These data do not reflect the 4,892,000 jobs lost in 2009 as a result of the Bush recession and charged to Obama. If reapportioned the figures would be a loss of 3,611,000 jobs under Bush or -36,615 jobs per month and 14,857,000 jobs created under Obama or +165,078 jobs per month. In either case the creation of 156,000 jobs per month and a continuation of current policies should be a welcome relief from the past political narrative.
“252,000 in July”. By my calculations of the population increase between census of 1990, 2000 and 2010 we need a quarter million new jobs every month to have every ‘new’ person employed. Even if we consistently had 250,000 new jobs every month, what small fraction of that are ‘livable’ wages with $$ to spend on non essentials?
As I have been saying, US entry into and insistance to remain in a global economy, has only caused the US internal economy, over time, to level out to what the world economy average is, well US not at what the world enconmy average is yet; however US economy is leveling out to be like the world average, at BEST. The US economy and standard of living has been steadily going DOWN over last 50 years bringing the US down, in many ways; and IF US continues in its ways, (social and economic) will now go down at a more rapid pace. US really started going down 100+ years ago. Now US lost it. Economic conditions across the board for the majority, will just get worst, this hurting businesses and EVERYTHING across the board. Just observing, tells not good ahead. Not a pretty picture.
Decline in Government Jobs is a GOOD thing!
I like the Badge!!1120xray