The Economy Guy

Stocks, the Dollar, Gold, Oil and gasoline all moved sideways today – very boring.

Bonds got scared by the PPI, and increased interest rates – bad news for us all.  However, the scare of inflation remains even thought the argument of deflation versus inflation rages.

In the news today….

Retails Sales – rose in June by 0.6%.  Where did this increase come from?  From increased gasoline prices paid at the pump, and (surprisingly) increased sales at auto dealers for new cars (this is a one time bump, unless the government comes out with some incentives that just can’t be resisted.)  Without these two areas, retail sales rose 0.3% – an increase which is good, but a fairly poor increase.

Unemployment – the truth – from Mort Zuckerman of the WSJ.  Zuckerman went on to say that the first Stimulus package was a failure because it didn’t create jobs – as had been promised – it only produced pork for the politicians.

1. 185,000 workers in the June number were the product of statistical sampling, but could not be verified by the government.
2. Companies are asking employees to take unpaid leave.
3. 1.4 million unemployed workers weren’t counted because they’re not searching for work.
4. Part-time employment has doubled to 9 million.
5. The work week is 48 minutes shorter than when the recession began.
6. The number of long-term unemployed (4.4 million) is at an all-time high.
7. There were no wage gains in June.
8. The goods-producing sector lost over 223,000 jobs just in June.
9. When business picks up, businesses will just add hours to existing workers, rather than create new jobs.
10. Old business lines are being eliminated entirely, not shrunk down, decreasing the odds that the unemployed will be able to find work.

I couldn’t have stated it more eloquently.  The US economy is in a mess.

Unemployment rate – “will continue to climb for several months.”  This quoted from President Obama today.  Can we believe what the President says?  I think not.  He said that unemployment wouldn’t exceed 8% if the Stimulus Bill was passed (in a big hurry).  That was a lie – or was he just mis-reading the economy as VP Biden stated?  A major sector of economists predicted unemployment much higher than 8% when the President made that statement – so the current situation couldn’t be “unknown.”  I, even, predicted 10% unemployment rate by year end long before the President made his 8% statement.  

So, if the President is wrong this time around, it will be longer than “several months” before we top out on unemployment.  This is an interesting prediction model to use:  Predict the opposite of the President’s statements.

President not a citizen?? – this is the gift that just keeps giving.  An Army Major has filed a court case so he won’t go to Afghanistan on the orders of a President who is not legitimate.  I feel this is a gimmick, but fun for the press to follow.  Naturally, only the conservative press will follow this story.

PPI – The Producer Price Index (or wholesale price index) jumped 1.8% last month.  The “experts” are saying this is nothing to worry about, but the markets thought differently, as interest rates rose.

Here are the last numbers for today:
Dow Jones 30 Industrial – 8360 (up 28 points)
10 Year Treasury Bond – 3.45% (up 0.10%)
Euro – $1.3940
Gold – $923 (no change)
Oil – $59.52 (down $0.17)
Gasoline $1.65 (up $0.01)