Once again, the expectations for January’s employment were high and once again they came up woefully short. Only 36,000 jobs were added, which wasn’t even close to the 150,000 expected by economists. It was almost a repeat performance of last month, but this time it was even worse. So what does it mean?
Stocks Shrug
We still seem to be in the “glass half full” market as described by David Tepper several months back. If the economic news is good, stocks will rally for obvious reasons. If the news is bad, investors can take comfort that the Fed has their back and will keep unloading their torrential rains of money into the financial system. The market capped off an excellent week and went up Friday despite the poor jobs report.
I am of the opinion that these consistently weak jobs reports are a negative for the economy and the markets. When so many people are having trouble finding work for so long, that can never be a good thing. The U6 statistic came in at 16.1%, which was actually an improvement from 16.5% from the previous month. Remember that this is the underemployment rate, or as I call it, the real unemployment rate.
9.0%???
The published unemployment rate fell all the way to 9.0% from 9.4% last month. This would seem to be great news, but it really isn’t. It means that a ton of people gave up looking for work last month and dropped out of the labor force altogether. Remember that only 36,000 jobs were added last month, so how could the unemployment rate have fallen so much? This is why looking at the U6 is the better option.
Right now nothing can stand in the way of the bulls bidding up stock prices. One of these days, news like this employment report will matter, but it sure doesn’t now. In order for the market to sustain strong percentage gains for the next few years, the employment situation absolutely must improve, otherwise consumer spending will not have the fuel it needs to grow. This is an economic fact that irrational exuberance can’t cover up forever.
Employment Remains Fly in Ointment is an article from: 
