August 25, 2009

Predicition: Jobless rate will rise in August

The Bureau of Labor Statistics on September 4th will release the August unemployment figures. Expect the seasonally adjusted numbers to head back up.  That's in addition to further possible layoffs coming from other companies. I fully expect the jobless rate to climb in August to 9.6%, or more. I'm not big on pessimism, but...

In July auto makers typically lay off shifts for part of the summer. That affects the seasonal adjustment. And this year, a lot of layoffs that happened were prior to the regular layoff period, and they were more permananent than in other years. Just as the July statistic did not account for this and therefore understated the real unemployment, the August numbers will be back to reflecting reality.

If that's the case, then the DJIA will probably take a hit.  Consumer confidence likewise will be affected.  Those hoping for a V-shaped recovery or even a U-shaped one could be disappointed.  Some are calling for a W recovery now (ironic, given the monicker of the last POTUS).  I still thinka hockey stick recovery is a distinct possibility, which means years before the job losses reach the mid 2007 employment levels.  It could be well into 2013 before that happens.  Of course that assumes no further unhealthy Obama shocks to the system.

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