“Recovery?...or Eye of the Storm” - August 20, 2009

The markets are still jittery due to uncertainty on many fronts. And today’s jobs claims won’t do a lot to help.

We’ve been going through an economic hurricane since last summer. Although the stock market was up 50% since March and many indicators from unemployment to GDP showed signs of improvement in recent months, reported sightings of a recovery coming this year were absurdly premature.

The truth is that the indicators cited were not good…they were simply less bad than previous numbers. And less bad doesn’t equal good.

· The number of people receiving unemployment compensation tops 9 million, and 1.5 million of those are at risk of running out of their benefits.
· 1/3 of those unemployed have been out of work for 6 months or more.
· By the end of this year, nearly 40% of the workforce will have been unemployed at some point in the last 18 months.
· The number of people involuntarily working part time is at an all-time high…and those people will be hired back first before new jobs are created.

Jobs will materialize when materials start disappearing off store shelves. And that won’t happen until consumers are convinced this storm has passed.

Like in the eye of a hurricane, there are glimmers of sunshine. But that’s all they are. People who get hurt in hurricanes are typically those who get hit by the backside of the eye wall…because they go outside not realizing the rest of the storm is still coming.

Right now, the data is very clear…we are in the eye of the storm.