Unemployment Falls in 16 States; Steady in 7 Others

Since early May we've continued to reference the peak and then improvement in new claims for unemployment. This past week was no exception. As recovery takes hold more and more states are seeing encouraging labor situations.

In states around the nation's capital unemployment is falling or holding steady.

Maryland's rate has remained at 7.2 percent since June. In Virginia, the rate has now dropped to 6.5 percent in August from 6.9 percent in July.

William F. Mezger, chief economist for the Virginia Employment Commission, said job claims were down as the pace of layoffs in his state decreased in August. "We had over 7 percent unemployment in June," he said. "We probably won't see it again in '09 the way it looks."

Nationally the report this week showed that initial claims fell another 12,000 in the Sept. 12 week on top of the surprising 19,000 drop in the Labor Day week.

With unemployment rates now falling in 16 states, the confidence spike should continue with consumers, small business, builders and investors.

Confidence Spike: Consumers, Small Business, Builders, Investors

Wednesday saw significant spikes in confidence from four important market groups:

1. The Consumer: On Wednesday the Rasmussen Consumer Index, which measures consumer confidence on a daily basis, rocketed to its highest level in exactly one year.

2. Investors: Also on Wednesday, the Rasmussen Investor Index spiked to its highest level in over a year. Investor confidence is up 28 points since Jan 1.

3. Builders: Confidence among U.S. home-builders rose in September for the third straight month. The National Association of Home Builders/Wells Fargo confidence index bounced to it's highest level in 16 months.

4. Small Businesses: Economic confidence among small businesses leaped to its highest level in 18 months in August as more owners expressed faith in U.S. economic recovery. According to the latest Discover Small Business Watch, their small business index rose 7.7 points from July, reaching the highest level since February 2008.

It is no wonder 2009 growth is coming on strong and the stock market might just be poised for a major leg up.

Recession is Over: Positive Economic Data Abounds

Fed Chief Ben Bernanke said Tuesday that indeed the recession of the past year is over. And positive economic data continues to punctuate assertions that the Q3 growth will be anything but lackluster:

1. On Tuesday, the popular ICSC-Goldman report's year-on-year measure jumped into positive ground -- 1.6 percent for the best showing in a year. The companion Redbook measure also showed sizable improvement in the Sept. 12 week, for the best reading since the spring.

2. A positive producer price report followed showing that the core rate of inflation continues to be quite tame at +0.2 percent, following a 0.1 percent decline in July.

3. More good news followed in the government's retail sales report for August. Consumer spending made a healthy showing mostly boosted by the clunkermania and higher gas prices. But other retail segments also signaled general health. All said, retail sales jumped 2.7 percent in August.


4. Manufacturing activity in the NY region continues to bounce. On Tuesday the Empire State index was reported to rise nearly 7 points in September to 18.88. New orders rose 6-1/2 points to 19.84 continuing to point to significantly increasing activity in the second half of the year.

Newton's Third Law and The Dow's Epic Rise

"For every action, there is an equal and opposite reaction."

Newton's statement implies that in every interaction, there is a pair of forces acting on the two interacting systems. The size of the forces on the first system equals the size of the force on the second system. The direction of the force on the first system is opposite to the direction of the force on the second system. Forces always come in pairs - equal and opposite action-reaction force pairs.

Last September 29th the Dow Jones Index posted its biggest point-drop ever. The drop wiped out $1.2 trillion in market value with the index slumping over 777 points, in the biggest single-day point loss ever.

But almost a year later the markets are up over 50% from their 2008 lows. And there is likely a lot more room for the markets to run even higher.

If one closely analyzes Sir Isaac's third law of motion and a simple stock chart for the last year, it does not seem far fetched that the market could be poised for a very significant leg up.

(click to enlarge) (Source: Google Finance)

Is GM's Money-Back Guarantee Good News?

Last week General Motors (GM) announced their new program that further attempts to boost consumer confidence in their vehicles. The money-back guarantee states that you can return the vehicle for any reason, no questions asked, up to 60 days after purchase.

A quote from GM's press release reads like this:

General Motors announced today that it will offer a Satisfaction Guarantee to eligible buyers of new Chevrolet, Buick, GMC and Cadillac vehicles. The guarantee allows customers to return their vehicle to their dealer between 31 and 60 days of purchase and receive a refund of the purchase price for the vehicle.

GM's idea is that the program will prove that their vehicles are just as good as their competition. That might be, but there is likely even better consumer news just around the corner and that just might translated to further good news for the auto industry.

As most entrepreneurs will attest it is almost always a good idea to offer a money back guarantee. And so it is extremely likely that several other major car makers will follow suit quickly offering very similar programs for their 2009 and 2010 models. The result? More hesitant consumers will see this as just one more reason to move from a very conservative fiscal stance to one that takes a bit more risk on a big ticket purchase. Why not? There will be nothing financially to lose for up to 60 days.

For GM, there is no guarantee that the program will only boost interest in their vehicles, but it does seem clear that if other automakers follow suit, the auto industry (and the economy as a whole), will likely benefit by this increased second half activity.

US Consumer Sentiment Continues To Improve

U.S. consumer sentiments since last month indicate a slight upward trend toward greater confidence in the country’s economy. Courtney Schlisserman reports in the Bloomberg Press that projections by Reuters/University of Michigan on “Americans’ perceptions of their financial situation and whether it is a good time to buy big-ticket items like cars and homes” rose 5.2 points, and that consumer expectations for the economy in six months’ time shows anticipation of more than 4 points, to 69.2 just since consumer sentiments in August. While these numbers do not show a huge increase, they do indicate a turn towards optimism at the same time that consumers are more focused on careful spending and paying off debt.

Most economic analysts are tentatively encouraged by this news and even in the shadow of a 9.7 percent unemployment rate, results from a recent Bloomberg News’ survey shows a predicted 2.9 percent annual rate of growth for the U.S. economy through this month. This week's beige book summaries and other recent indications show second half growth accelerating.

Fed Beige Book: Economic Outlook Cautiously Positive

On Wednesday, the Fed's Beige book was released for July and August. It summarizes reports from the 12 Federal Reserve Districts and pointed to economic activity that continues to stabilize.

Compared to the summary from the Fed's last report 11 out of 12 regions asserted that economic activity had either stabilized or improved. Even in the 12th region -- St. Louis -- their read-out pointed to a pace of decline that was moderating.

Almost all regions remarked that among business leader contacts in their territories, the economic activity outlook is now cautiously positive.

The reports underscore what we've been reporting here that clunkermania boosted auto showroom traffic and subsequent new car sales in all regions. Several regions confirmed that the program has also resulted in increases or planned increases in automobile-related production. Beyond the auto industry, most regions reported general improvements in manufacturing production.

Most territories also reported improvement in the residential real-estate markets.

It also came as no surprise that with labor markets on the mend, 8 of 12 regions report upticks in demand for temporary workers - usually a leading indicator of a return to job growth.

Good News Wrap - First Week of Sept

• Reflections on Recession-Proof Jobs and Life-Changing Careers

  Posted: Tue, 08 Sep 2009 02:47:00 +0000

  There is no doubt that many were examining their careers this Labor Day. Some were just thankful to have a job. Many were reflecting on changes they'd like to make. And still others have already made those changes and are just now headed into new careers. Over the weekend I read of three individuals who have made those changes and currently reaping the benefits.
  
  Eric Olinger, 36, of Longmont, CO had worked in lumber and hardware for most of his life. After being let go several times, Eric decided to take charge and find a recession proof job. His research pointed him at the nursing field. He entered nursing school at a community college and has just recently become a certified nursing assistant. He plans to continue his schooling and move further up the medical profession ladder. Eric bets, "People are still going to need medical care no matter what."
  
  Joseph Vogel, 52, of Aurora, CO was a certified master technician in the automobile industry. After losing his job at Ford, Vogel also decided to go back to community college to become a radiology technician. "Trying to go back to school at an older age is tough," he says, "but you can do it. It's frightening, it's scary, it's literally life changing, but you can do it." This past Tuesday, Vogel cleared a final certification test. His new job awaits at the University of Colorado Hospital.
  
  Laura Woods, of Hygiene, CO has been a real estate broker for the last several years. Her career in real estate wasn't unsuccessful, but in a round about way taught her that what she really wanted to do was teach. Woods just landed and has started as a full-time fourth grade teacher. When asked if she has any advice for others looking for work or considering a change, Wood says, "Go for it. You only go around the block once, and you're not going to know what you truly love unless you try different things."
  
  When I began to reflect on these three individual I thought, how did these folks get the job they wanted even amidst all the gloomsters out there claiming there are no jobs to be had?
  
  Then I stumbled upon a new book, "Get the Job You Want, Even When No One's Hiring" by Ford Myers. The top Amazon review is quoted below:
  

  There is nothing I dislike more than reading a self-help book that turns out to be filled with re-warmed platitudes and stale ideas. That is definitely not the case with "Get the Job You Want, Even When No One's Hiring". Ford R. Myers gets straight to real time solutions, with a step by step approach that gets the job done. Finding yourself unemployed is not a pleasurable circumstance in the best economic times. In today's environment it can be downright terrifying.
  
  From new graduates to those displaced later in their careers, this book is the best tool in your job search arsenal. So buy it, read it, do the exercises, regain your confidence and get out there, armed with a realistic strategic plan to do what needs to be done to "Get the Job You Want When No One's Hiring".

  If you are searching for meaningful work on this Labor Day, I truly wish you Good News and Good Fortune.

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• Employment Index Makes Monster Jump

  Posted: Fri, 04 Sep 2009 03:52:00 +0000

  Wednesday we pointed to three reports that reflect job market improvement. On Thursday another encouraging sign emerged.
  
  The Monster Employment Index for August was released. It recorded its highest monthly rate of improvement in four years spiking 6% higher than its July reading. The report -- produced monthly by the popular online jobs bulletin board -- registered increased job availability in a majority of industries, occupations, and regions.
  
  The Monster Employment Index is a dynamic gauge of U.S. job demand based
  on a real-time review of millions of employer work opportunities selected from a large representative sampling of corporate career Web sites and job boards, including Monster's own listings.
  
  During August positive indications were broad based with online job postings rising in 15 of the Index's 20 industry sectors and 18 of the 23 occupational categories monitored by Monster.
  
  In an press release, Monster's senior Vice President Jess Harriott reflected on the report: "The significant jump in the Monster Employment Index in August offers encouraging signs of improvement in the US economy with the demand for managers and professionals as well as sales and office workers picking up in time for the fall hiring season."
  
  Indeed we would agree that the second half of 2009 will be characterized by surprisingly strong economic growth.

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• Merry Christmas In September - Jobs Outlook Continues to Improve

  Posted: Thu, 03 Sep 2009 03:21:00 +0000

  On Wednesday, two jobs related reports continued to show a labor market on the mend. The Challenger, Grey, and Christmas report showed corporation layoff counts fell sizably in August, to 76,456 versus July's 97,373.
  
  
  The more closely watched ADP employment report also showed improvement on Wednesday. And Tuesday, the ISM manufacturing report also showed employment improvement for 4 months in a row.
  
  More employment reports (including new jobless claims and overall unemployment) are on the way Thursday and Friday. Don't be surprised if they also point to an improving jobs climate.

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• US Economic Growth Rate Now Likely Near 3.7% Annually

  Posted: Wed, 02 Sep 2009 02:58:00 +0000

  We've continued to point to the ISM Manufacturing Index as a superb indicator of what is occuring in theoverall US economy. In addition to reporting the manufacturing sector conditions, the ISM's PMI index has an impressive track record in GDP growth correlation. A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. On Tuesday the PMI was reported at 52.9 by the ISM and thus indicates growth in the overall US economy for the fourth consecutive month.
  
  Additionally, a reading above 50 percent indicates that the manufacturing sector of the economy is generally expanding. Tuesday's reading of 52.9 represents an end to the 18 months of decline in that sector. The August reading is the highest since June 2007. Much of the PMI reading was caused by significant strength in the New Orders Index, which was driven to its highest level since December 2004.
  
  Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee punctuated their report by stating, "If the PMI for August (52.9 percent) is annualized, it corresponds to a 3.7 percent increase in real GDP annually."
  
  The report is the strongest indicator yet that second half growth is coming on strong.

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