Sunday, February 6, 2011

For the Bears - U.S. unemployment dropped to 9%, but job creation remains weak

On Friday, the US government unemployment rate fell to 9%, from 9.4%, but payrolls increased by only 36,000 in January. Although estimates suggested an increase of 140,000, the results may have been negatively impacted by severe weather conditions. Additionally, Federal Reserve Chief Ben Bernanke said this past week "Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established".

MY TAKE: Consider the following: 1) unemployment rate declines include both people finding work, and people exiting the work force, 2) many economists believe job growth of 250,000 per month is needed to sustain an economic recovery and 3) the percentage of people in the U.S. either working or looking for work (16 years and older) is 64% - the lowest level since 1984.

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