Data just released (see article titled ‘467K jobs cut in June; jobless rate at 9.5 percent’ by the U.S. Labor Department reports 467,000 U.S. jobs were lost in June, and that the unemployment rate is now 9.5% (a reported 14.7 million people) and ‘could hit double digits’.  Other important data includes:

•    if laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.5%;

•    approximately 46% of the unemployed have lost their jobs in the last 18 months; and,

•    the average work week in June fell to 33 hours, the lowest on records dating to 1964.

The article says “June’s payroll reductions were deeper than the 363,000 that economists expected and average weekly earnings dropped to the lowest level in nearly a year.  However, the rise in the unemployment rate from 9.4 percent in May wasn’t as sharp as the expected 9.6 percent”.  Query:  How can this make sense?  If the job losses were greater than expected how can the unemployment rate by less than expected?

The article seems to suggest that it is encouraging news that reported January, 2009 job losses were 741,000 (the most since 1949) and that the June reported number of 467,000 U.S. job losses indicates that the worst of the layoffs have passed.  First, for what it is worth in 1949 the U.S. population was just less than 50% of what it is today, so 750,000 jobs would have represented a larger % of the employable population then than it did in January, 2009.  Second and more importantly, how can anyone draw a conclusion from the reported June data that the ‘worst of the layoffs has passed’.  Any such conclusion, to be kind, strikes me as ‘just plain silly’.  June’s reported job losses are higher than those reported in May.  In my view investors need to increasingly spend more and more time thinking and worrying about the U.S. and world economies in the context of their investments and rely less and less on the conclusions reached by article writers, analysts and pundits.  Not to do that in my opinion is folly – at least one makes one’s own mistakes that way.

I continue not to see how U.S. consumers are going to begin seriously spending again until they gain confidence – and I can’t see how they can gain confidence as they see and experience continued job losses.  Following from this, I don’t see how the U.S. economy can begin recovery until the U.S. consumer again starts to seriously spend as they previously did.  None of this doesn’t strike me as being complex or ‘rocket-science’ – so what am I missing?

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