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The Recent Employment Numbers Raise Some Flags

Be careful to assess the total risks and don't get far out on the limb.

By Joel Ross | Updated on April 07, 2012

The just released jobs figures reinstill a caution flag to where the economy is headed. If you look at the real unemployment and underemployment figure at 14.5% and the labor participation rate which is at approximately 63% and the lowest in decades, then you need to also look at other indicators. House prices continue down. Credit card debt went down last month. The brokers say over 30% of potential homebuyers fail to close due to not being able to get a mortgage. The price of gasoline is rising and summer is coming. That likely means $4.50 or in some $5.00 or more. An Iranian official just stated that Iran could now produce a weapon if it chose. Maybe it is true. Panetta said months ago that Israel will be ready to attack in April. Syria goes on massacring its people and the world sits and just wrings its hands. The election is really underway now and it is clear Obama has absolutely no intention of dealing with the deficit or entitlement spending. Cities continue to go bankrupt or are still using bubble gum and baling wire to make believe they are balancing their budgets. EPA has effectively ended the future of the coal industry in the US. Spain is once again raising serious issues about the European debt crisis.

I could go on and on, but the point being what appeared to be a growing recovery may not be one at all. Or if it is, then it will remain very fragile and could be knocked off the rails at any time. It is very possible that the hiring over the prior three months was simply a positive combination of weather and the over firing that occurred in 2008-2009, and companies now hiring back just enough to restabilize their staffing. We will have to see what the next two months brings to be sure what the real trend is. Maybe the stock market got a bit ahead of itself and all of us started to get too optimistic.  We need 6-8 more weeks to really know.

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