Dow Jones and positive reports

Reports are still important for Uncle Dow

In brief: Optimistic report on the labor market in America may at some time to calm the financial storm in the country.

The main question is: Will the recovery last year the U.S. economy after the end effect of public support? All the more likely seen a positive response. In April, the employment rate of payroll has increased by as much as 290 000 people, or 0.2%, which was the highest monthly increase over the past four years. Of these, approximately 66 000 people – this time the specialists of the Census, but still figures show a sharp increase in employment in the private sector.

There is other good news: employment data for the previous two months were revised upward, ie growth is observed for the past four consecutive months. Judging by the composition of income, rising production orders amounted to 44 000 and there is already the fourth consecutive month. Even the building shows signs of growth. Indicators of future demand for labor are optimistic: Temporary Agencies have no shortage of willing, everything else, has increased the average workweek. Although the unemployment rate rose from 9.7% to 9.9%. But it is not so bad. Report on the level of employment in the U.S., in fact, consists of two parts, one of which is based on a survey of employers, and another – on a survey of households. Because of different definitions and conventional sampling error sometimes they show different results. In this case, the household survey showed that the number of people employed jumped 550,000 people – is even more than in the report on the labor market. However, the number of people wishing to work (labor) increased even more – by 805 000 people. That is why the rise in unemployment. But the more people seeking to join the labor market, the better. It is too early to call the growth of sustainable, because to some extent the current improvement in the still reflects the influence of government anti-crisis measures. At the same time, it is hardly wait for the V-shaped recovery: the employment rate in April, slightly lower than last June, when, presumably, was the end of the recession, and wages are slow to grow. To create a sustainable cycle of income and expenditure required strong growth in employment in the private sector, which will help to improve other indicators.

But what then is not satisfied with the stock market at such favorable labor market data? Attention is directed to U.S. investors in Europe and not to their native country. It’s not a direct economic link between the U.S. and Greece. According to JPMorgan Chase, the share of euro zone countries accounts for only 13.6% of American exports – much less than the share of Mexico, much less Canada. Still other U.S. export markets are growing relatively rapidly. The real concern is the financial dependence. According to JPMorgan Chase, American banks have a direct risk of loss to Greece, Ireland, Portugal and Spain in the amount of $ 136 billion, but as shown by subprime crisis, banks with low risk still are in great danger because of their dependence on other banks can be hidden with the help of derivatives. The situation is more like 1998 than 2008. In 2008, the U.S. economy was already in recession, and the panic following the collapse of Lehman Brothers accelerated the downward spiral. In 1998, America’s economy grew, but Burst Asian crisis stopped the growth. Of course, the current recovery remains weak, and if in his way will be an obstacle, the Fed’s arsenal is not there money to clean it up. Hardly, she will go to non-traditional measures, fearing the displeasure of the Congress, which is already considering reducing its independence. In the Obama administration will not remain opportunities to introduce new measures for financial incentive. However, the April report on the labor market suggests that the risks to recovery, despite what is happening in Greece is declining, not rising. The probability of slow, L-shaped decreases rapidly.

Ukrainian Globalist
2010-05-16 19:21, Economics.

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