Unemployment falls, new jobs disappoint and Bernanke speaksJoe Wirbick
Last week’s jobs report was dismal indeed.
While our unemployment figures fell to 7.6 percent (the lowest figure since 2009), this was helped by nearly 500,000 Americans “leaving” the labor force. The current number of working-age Americans either with a job or seeking one has fallen to 63.3 percent (our lowest numbers since 1979).
While many of these out-of-work individuals may still desire employment, they haven't worked for 12 months and have not actively looked for a job over the past week. Thus, they are simply not counted. It's an easy way to “artificially” lower the rate.
Our new jobs numbers weren't much better. While experts were expecting a much higher figure, our markets created only 88,000 new positions. This accounts for just over 90,000 private jobs created, as well as the nearly 10,000 lost on the government side. Keep in mind, all this is before the sequestered cuts took hold, and we won't see those numbers until the April jobs report.
With all of this uncertainty, America waited with bated breath for the words of wisdom from our Federal Reserve chairman, Ben Bernanke. Perhaps he would he announce that the Fed should be doing more to create a stronger employment sector. Maybe the Fed has decided that the bond-buying program in which it is engaged isn't working and would be abandoned.
Instead, Bernanke spent the majority of his time speaking of the past: how we have fared these rough seas by spending trillions to help keep our banks and economy afloat and how the stress tests have worked and are showing that are financial systems are as strong as ever. He then reassured us that the Fed would continue with its $85-billion-a-month bond-buying program.
Even after our sad jobs numbers drove the market to its worst week so far this year, Bernanke's speech on Monday seems to have helped. The Dow hit a new all-time high of 14,716 on Tuesday. It appears as if we are still hooked on government spending. Whether it’s from Congress in the form of bailouts, or from the Fed by artificially lowering rates, we seem to need that money to keep things chugging along.
The big question no one has been able to answer is "what happens when the money well runs dry?” Can our economy handle the idea of no more handouts? I, for one, can't see us spending in this manner forever. Let's hope that they have planned ahead, that safety boats are in place and that our portfolios can handle the possible storm that might be on the horizon.