Economy | timiacono.com - Part 30

Payrolls Up 148K, Jobless Rate Down to 7.2%

The Labor Department reported that nonfarm payrolls came in well below expectations last month, up just 148,000 in September as compared to the consensus estimate of 185,000, and the unemployment rate fell from 7.3 percent to 7.2 percent as fewer Americans were counted as unemployed, but more workers left the labor force than found jobs.

September Labor Report

July payrolls were revised down, from 104,000 to 89,000, while August data was revised up,  from 169,000 to 193,000, resulting in a net gain of 9,000 for prior months in a continuing trend of the U.S. economy creating barely enough jobs to keep up with population growth.

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Blame the Fed

Here’s yours truly again in another interview, this one on the subject of the Federal Reserve with Mo Dawoud of Wall Street for Main Street. I followed up sessions with Marc Faber, Peter Grandich, and Fabian Calvo, all of whom had some interesting thoughts to share.

My interview runs for almost a half hour – the longest I’ve been in a one-on-one session such as this in many years. Time really flew and it was great fun.

Consumer Sentiment Drops to 9-Month Low

Though not as bad as the latest Gallup survey on the American mood noted here the other day, the Reuters/University of Michigan consumer sentiment index fell to its lowest level since January, down from 77.5 in September to 75.2 in the first of two readings for October.

The fiscal mess in Washington that now includes a government shutdown along with a looming debt ceiling crisis were the the proximate causes of the most recent decline, as similar events in mid-2011 and late-2012 also led to sagging confidence as shown below.

Consumer sentiment

Surprisingly, the current conditions index edged up, from 92.6 in September to 92.8 in October, but the expectations component fell from 67.8 to 63.9, its lowest level of the year.

The 12-month outlook continued its recent free-fall, tumbling another 15 points to just 71, its lowest level since December 2011 just after the last debt ceiling crisis. This gauge of Americans’ long-term outlook was over 100 as recently as a few months ago.

Survey director Richard Curtin noted:

Consumer confidence posted a surprisingly small decline in early October despite widespread awareness of the government shutdown. The muted response may be due to consumers giving progressively less credence to the economic scare tactics that have framed the debates over the past few years

To be sure, this can quickly change if the impasse continues.

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When Confidence Fails

Obviously, it’s going to be pretty interesting to see how this all works out but, so far, the degree to which confidence in the U.S. economy has been shaken by the latest fiscal showdown in Washington has few parallels as shown below via this item at Gallup.

This polling series began in January 2008, so, there’s no way of knowing how the recent decline (see here for the chart) looks in a broader historical context.

My guess is that, in addition to Lehman Brothers in 2008, Hurricane Katrina in 2005 and, possibly, the stock market crash in 2000-2001 were the only other events in the 21st century to prompt a bigger decline in consumer confidence.

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