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1.0% Q2 GDP | 4.98% avg. 30-year mortgage | 10.2%Unemployment

Truer U.S. unemployment rate hits recent high of 17.5%

Fri, 06 Nov 2009 11:03:41 -0500

Each month, as regular readers know, I like to unpack the new unemployment number and get behind the data. The news this month continues to be grim. Indeed, it is climbing rapidly toward record-grim territory. The official U.S. unemployment rate in October rose to 10.2 percent from 9.8 percent in September, the Labor Department's Bureau of Labor Statistics reported Friday. But the truer measure of unemployment -- a total count of everyone who should be working full time but is not -- hit 17.5 percent in October, the highest level in modern times. The official unemployment number -- 10.2 percent -- represents only a certain kind of unemployed American. The Labor Department calculates the monthly figure with data provided by a rotating monthly survey of 60,000 households, which are asked specific questions, such as, "Have you looked for work in the past X weeks?" and by jobs data provided by

Stocks mixed at opening following unemployment news

Fri, 06 Nov 2009 09:55:56 -0500

Wall Street opened mixed this morning following the Labor Department's announcement that the official U.S. unemployment rate has hit 10.2 percent, the highest since April 1983. In the first 15 minutes of trading, the Dow is slightly below even. The broader S&P 500 is just above water and the tech-heavy Nasdaq is up three-tenths of 1 percent. Meanwhile, gold has popped above $1,100 per ounce. Today, I'm going to be unpacking the October unemployment number, diving into the data and talking more about what it means. So check back. -- Frank Ahrens Sign up to get The Ticker on Twitter

Cracking the 10% unemployment barrier

Fri, 06 Nov 2009 07:01:37 -0500

At 8:30 a.m. today, the Labor Department will release the October unemployment figure. Most forecasters expect the rate to rise from 9.8 percent in September to 9.9 percent in October. But they've been wrong on the downside before during this recession, so 10 percent is a solid possibility. Last month, the economy cracked a positive psychological barrier -- the Dow rose back through 10,000, the first time it had touched the five-digit number since it was falling down through it a year earlier. Dow 10,000 was hailed as a sign of recovery from this long downturn, though it passed back down through 10,000 shortly after and didn't pop back up again until yesterday. So goes our recovery. But if the official U.S. unemployment rate hits 10 percent, that is a psychological barrier of another kind -- a very bad one. What will it mean? First, it will mean that one

New jobless claims lowest since January -- what does that mean for tomorrow's monthly unemployment number?

Thu, 05 Nov 2009 09:53:02 -0500

New jobless claims filed last week fell to their lowest number since January in data released this morning. That's the good news. The bad news is: 512,000 new people still filed for jobless claims. That number is down from the 700,000 and 800,000 weekly numbers we were seeing at the depths of this recession, but it still has to get down into the 400,000s before jobs can actually start being created. Some 7.2 million jobs have been lost since this recession began in December 2007. What does this number signal for tomorrow's monthly jobs number? That's the big question. The official U.S. unemployment number stands at 9.8 percent and rising. Most economists and the White House expect the number will crest above 10 percent. Economists predict tomorrow's number will tick up to 9.9 percent. When it hits 10 percent, you should expect it to hang there for several months before

The case for the Fed raising interest rates

Wed, 04 Nov 2009 14:12:38 -0500

Any minute now, the Federal Reserve is scheduled to release its most recent statement on interest rates and minutes of its Federal Open Market Committee, which lets us inside the Fed's heads as they predict the U.S. economy. The Fed is widely expected to leave the target for its bank lending rate at historically low levels of zero to .25 percent. Those who believe this is a good idea say that it could be disastrous to raise the interest rate while the economy is still trying to recover and unemployment is 9.8 percent and rising. But some economy-watchers are making the case for the Fed to raise its key rate: -- In Forbes, Brian S. Wesbury and Robert Stein predict a doubling of inflation over the next 18 months because the Fed flooded the system with new money last year to stave off a liquidity crisis. "Loose money is never

Strong stock rally underway

Wed, 04 Nov 2009 11:20:17 -0500

UPDATED at 11: 20 a.m.: Stocks are staging a strong rally this morning, as traders anticipate that the Fed will keep interest rates near their historic low levels this afternoon. The Dow is up 1.3 percent, at 9,900, as it attempts to creep back to the 10,000 level. The broader S&P 500 is up 1.2 percent and the tech-heavy Nasdaq is up 1 percent. Stocks open up 10 a.m.: Wall Street is up at opening today, as traders anticipate an optimistic report on interest rates from the Fed's Open Market Committee at 2:15 p.m. In the first 15 minutes of trading, the Dow is up six-tenths of 1 percent. The broader S&P 500 is up nearly seven-tenths of 1 percent and the tech-heavy Nasdaq is up three-tenths of 1 percent. The FOMC releases its statement today following two days of meetings on interest rates. Forecasters expect the Fed to keep

Gold blows through record highs, closes in on $1,100 per ounce

Wed, 04 Nov 2009 11:12:05 -0500

Gold is shooting toward $1,100 per ounce in trading today, already having blown through its record highs. What's going on? I wrote a lengthy piece on the price spike in gold in late September, when gold was on its big rise. You can read that piece by clicking here. The reasons for gold's continued spike today are the same as then: fear. Fear of a continued devaluation of the dollar, fear of the massively swelling national deficit and debt, fear of consumer inflation, fear of anything that isn't a hard asset. You want fear? Check this out: The government of India on Monday bought 200 metric tons of gold from the IMF, nearly half of the 403 tonnes that was up for sale in September. India bought all this gold at the height of the market, with no bulk discount. This of course drove up the price of gold. There

October sales: Ford up 3%, GM up 4%, Chrysler down 32%, Toyota down 3.5%

Tue, 03 Nov 2009 13:47:58 -0500

UPDATED at 1:47 p.m. with GM: Chrysler's October sales were down 32.3 percent compared to October of last year, the company reported moments ago, a number that came in worse than Wall Street expected. Moments ago, GM reported that October sales rose 4 percent, which just missed expectations of a 4.4 percent gain. Earlier this afternoon, Ford -- the only U.S. automaker to decline government aid -- said October sales were up 3 percent compared to last October, and up 21 percent from September. And Toyota, the world's largest automaker, reported that its October sales were down 3.5 percent compared to October of last year. If the numbers from GM, due out shortly, come in as expected, the industry could be on pace for a yearly sales rate of 10.2 million, which is what the auto industry needs for profitability. October of course was a clunker-free sales month, which makes

Instant analysis: Why Buffett spent $34 billion to buy a railroad

Tue, 03 Nov 2009 13:05:21 -0500

UPDATED at 1:05 p.m.: As I've written before, super-investor and world's second-richest man Warren Buffett invests like an 8-year-old boy in the 1950s: He either owns outright or has big stakes in Coca-Cola, Dairy Queen and candy and chewing gum giant Wrigley, which bought M&M-maker Mars last year. Today, Buffett completed his train set, offering a big premium of $100 per share to buy the remaining 78 percent of Burlington Northern Santa Fe railway that he didn't already own. It's a $34 billion deal -- Buffett's biggest ever. It was Buffett's big investment in Burlington Northern early last year that alerted me to the pre-recession boom in the U.S. freight railway industry. This is an industry that had grown so moribund in the 1970s and '80s that it was actually tearing up tracks, as companies switched their shipping away from railroads and onto 18-wheelers. But as fuel prices soared and

Stocks down at opening

Tue, 03 Nov 2009 09:51:29 -0500

Wall Street is down across the board this morning, as stock volatility continues. In the first 20 minutes of trading, the Dow is down three-tenths of 1 percent. The S&P 500 is down three-tenths of 1 percent and the tech-heavy Nasdaq is down nearly six-tenths of 1 percent. One stock that is up, and waaay up, is Burlington Northern railway, which has popped 28 percent at opening, in the wake of Warren Buffett's announcement this morning that he's going to buy the rest of what he doesn't own of the Western railroad giant. Buffett offered a big premium on the stock -- $100 per share -- to bring the rest of the railroad into his portfolio. I'll break down the purchase here shortly. -- Frank Ahrens Sign up to get The Ticker on Twitter

Stocks close up after wild ride

Mon, 02 Nov 2009 16:35:28 -0500

UPDATED at 4:35 p.m. Stocks finished positive today -- somehow -- after a day that looked more like a roller coaster ride at Six Flags. (And no, that's not a bankruptcy joke.) The Dow closed up eight-tenths of 1 percent, 211 points shy of the 10,000 level it reached last month but could not maintain. The broader S&P 500 finished up nearly seven-tenths of 1 percent. The tech-heavy Nasdaq finished up two-tenths of 1 percent. Midway through the first trading day of November, stocks opened up, then rose, then dove, then rose again, then dipped, then climbed back into the green at close. This follows Friday's big stock sell-off, following Thursday's big GDP stock surge. Phew. U.S. manufacturing performed better than expected in October and pending home sales rose in September for the eighth straight month, according to two sets of data released moments ago, bolstering hopes that a recovery

Bush economist: Jobs 'created or saved' figure touted by Obama is meaningless

Mon, 02 Nov 2009 11:54:25 -0500

Ed Lazear was the top economic adviser to President George W. Bush and much more of a free-marketer than the president, who ran up massive budget deficits. In an opinion piece in today's Wall Street Journal, which you can read by clicking here, Lazear argues that the "jobs created or saved" figure touted by the Obama administration, thanks to the $787 billion stimulus, is meaningless. His point: Reporting bias is typically at the heart of such claims, making the figures untrustworthy. He writes: Recipients have strong incentives to inflate their reported numbers. In a race for federal dollars, contractors may assume that the programs that show the most job creation may be favored by the government when it allocates additional stimulus funds. No dishonesty on the part of recipients is implied or required. But when a hire conceivably can be classified as resulting from the stimulus money, recipients have every

November 2, 2009

Mon, 02 Nov 2009 11:35:26 -0500

The Washington Post staff share their picks for reading around the Web. Seriously, stop worrying about hyperinflation The Atlantic | Megan McArdle offers a voice of reason countering the fears, commonplace on CNBC and in the blogosphere, that the nation is on the verge of a giant inflation problem. Asset inflation, price inflation, and the great moderation Interfluidity | Can rises in asset prices, such as the stock market, be just as much a form of inflation as rises in wages in prices? Steve Randy Waldman thinks so, and offers an unconventional way of thinking of the interplay between an overheated economy and asset prices.