The weekly report of Initial Unemployment Claims dropped by an unexpectedly large number of 37,000 to 391,000. This is the lowest it’s been since April when high gas prices stalled the economy. It seems things haven’t been as bad as we thought with the government having revised second quarter GDP upward showing a 1.3% growth instead of only 1%.The Bureau of Labor Statistics also revised March job growth up by 192,000 additional jobs, that number would be a good month by itself.
The new normal standard for labor statistics says that anything under 400,000 claims per week indicates significant job growth. That’s the good news, the bad is that retailers are expecting a mediocre Christmas season and are planning to hire a small fraction of the usual seasonal workers. Part of the reason for this is that they already have the help. Retailers have so many people working part time that they can simply increase hours to cover the seasonal demand. That isn’t bad news if you have a job, and you might not need that second seasonal job if your hours are increased. So really, this may not be bad news at all, but could signal a sort of recovery in itself depending on how good retail sales turn out to be.
Things might look gloomy for JC Penny and Walmart, but the parallel economy of high end retailers are expecting another great year. The stores where the top 10% spend their 40% of the retail dollar are doing just fine thank you. The bottom 90% continue to drift toward a lower standard of living with an increasingly smaller share of the pie, even as the pie shrinks. Okay the pie did grow by 1.3%, but we all know where it went. The rest of us can eat cake.
Much has been made of the recent weakening of China’s manufacturing sector, but China has been moving for sometime to reduce its dependence on exports and this is probably the only significance of the downturn. To illustrate the point, China passed a new milestone in the third quarter on its way to world domination. For the first time ever there were more new corporate bonds issued that were denominated in Chinese Renminbi rather than in Euros. The USD still dominates the world with fully half of corporate bonds issued in green backs, but the issuance of Dim Sum or corporate bonds valued in Renminbi for investment outside of China are also growing unabated.
The right likes to talk about all the opportunities there are in a downturn, “when you’re given lemons, make lemonade”. So if you’ve been hit by the lemon truck or more specifically you’ve been given the permanent vacation by the heartless corporation you worked for, you can look forward to getting a Hallmark card to commemorate the occasion. Hallmark has a whole section devoted to the cards, and with 400,000 Americans put out of work every week, they have identified a truly big demographic. At least Hallmark is creating jobs, if the cards aren’t made in China. I think I’d prefer to get an envelope with few Renminbi in it. www.prairie2.com