Watch #4: A Jobless Recovery?
by Jerald Cumbus (JCMach1)
Last week on MSNBC, a respected Wall Street analyst for Bear
Stearns who was retiring predicted that the U.S. economy would
indeed enter into a recovery during 2002. He clearly
believed that there would be some recovery evident by the
4th Quarter of 2002. His expectations are that corporate
profits and stock prices will rebound at that time.
However, there was a disturbing element to his prediction:
he believed that the recovery would do little to change the
deteriorating employment outlook.
This view is a far cry from most of the New Year's prognostications
that have popped-up over the past week. One moron (who
shall remain nameless) on MSNBC even predicted there would
be solid evidence of a recovery in the next couple of weeks.
Many of these folks must have gotten the memo from
Karen Hughes who stated earlier this week "there is some indication
of good news" about the economy.
The SPIN of course does not stop there. The conservative
media whores spun
the rise in unemployment
to 5.8% as a positive. Hello! Reality check!
Unemployment continues to rise. There are bound to be
week to week fluctuations. The thing that is easiest
to see is the continued downward trend.
The Dow did of course regain some ground this week causing
the media to wet themselves predicting a rebounding stock
market. Not sticklers for detail, they neglected to
consider last week's tax selling and subsequent reinvestment
this past week. The news was screaming "rally," but
anyone with a brain should be able to figure out what was
The "rally" died a premature death this weekend with AOL/Time-Warner
changing guidance for corporate profits. Released
on Saturday, this bucket of cold water should will govern
most of the early trading next week.
Another factor in the Street's exuberance was December's
Consumer Confidence report. While it showed some recovery,
most of the gain was caused by the dramatic fall of gasoline
prices. That trend is about to hit the fan. OPEC
announce a cutback
in production by 1.5 million barrels. Couple this
with cold weather in the U.S. and oil
prices surged to just over $22 a barrel.
In other news, the Depression
Watch Economic Depression Indicator for the week of January
7, 2002 rose dramatically this week to 61.53 (+10.58).
The rise in unemployment and a deterioration in the trading
value of U.S. currency caused the worsening of the indicator.