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The Jobs Report Does Not Bode Well

The jobs report and slowing car sales may be the start of a general slowdown but we will not really know until end of July

By Joel Ross | joelross | Updated on June 04, 2016

joel-rossIt is still not clear what to make of the May jobs report. Even if you add back Verizon, the number is very poor. With the downward adjustment of March and April, May might not be an outlier. Car sales have dropped, energy jobs are not ready to return until oil hits $55 and cap ex by companies is still way below what should be happening. The messages are clearly mixed, but trending lower possibly. Europe continues to struggle to stimulate its economy but there is little left that Draghi can do and as the strikes in France show, there is little political sup[port for the kind of labor reform thatg is required to make Europe a well functioning zone. Italy is hopeless maybe for decades as there is no backing of the prime minister to reform labor laws. Greece will be toast for years to come. Portugal is barely solvent and Spain can’t get its political act together.

China is in a major debt crisis and the only hope it has to bail out is for a massive restructuring of loans by banks and government support to the banks to help cover the losses. There is still not the massive effort needed to shutter state owned companies. China will be a serious basket case for a few more years. To make matters much worse, Xi is moving the country back to 30 years ago before political and economic reform, and he is consolidating his own power as dictator. The only question is will he be assassinated in the next 2 years and will such an event shift things back to the reform era. His potentially being assassinated is a actively discussed rumor in China, and it may be feasible since he has ruined and jailed many powerful people.

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