Unemployment claims were up slightly and upwards of a million people fell off the backside of the unemployment system and this held the unemployment rate steady. Job losses were put at 85,000 in December despite predictions that government hiring would offset private sector out sourcing but the collapse of local governments produced more layoffs than the Federal stimulus created.
Big corporations are sitting pretty with a lot of cash on their balance sheets but they are not investing in the US. The hiring of Temp workers is up but that’s not good news, normally this would signal growth but it is really just a continued effort to drive down wages and force more worker productivity. The pace of out-sourcing has also picked up as the influx of cheap USD has led to more growth in countries like India. UPS has laid off 1800 managers and administrative staff indicating a sharp drop in business across all sectors is expected.
China surprised everybody by raising interest rates slightly and it’s letting it be known that they will be raising them more. There are several possibilities: China could be afraid of inflation but more likely they are planning to continue to cut exports to the US and need to cool growth. This could be either because they have made a deal with Obama since he imposed steep tariffs on several items that China had been dumping into the US market or they expect the US economy to collapse. The geniuses that run some American hedge funds continue to predict that China will crash instead. China has now passed Germany as the world’s largest exporter of merchandise and car sales in China now exceed the USA by a third.
Last year was the worst year ever for the FDIC by far. The total payout to clean up just the first wave of bank failures outstripped the total for all five years of the Reagan/Bush banking collapse by six billion Dollars in 2009 alone coming in at 35 billion. This doesn’t count the huge failures that occurred in 2008. The head of the FDIC has said publicly that the peak will come in 2010 and they have doubled their budget. The feds are officially watching over 460 banks with the expectation that they could fail, some bank watchers put the real number at around 2000.
The good news is your deposits are safe since the Feds will just print more money. The bad news is your paycheck may not clear if you still have one.