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The jobless rate soared to 5.5% in May from 5% a month earlier, the highest level since late 2004 and the biggest jump in more than two decades. Economists had expected a rise to only 5.1%.
Oil, meanwhile, returned to record territory with a vengeance after an analyst predicted that crude would hit the $150-a-barrel mark by July 4. Crude futures rocketed up $10.75 to settle at $138.54 a barrel, exceeding the record price set about two weeks ago. It was the biggest one-day rise in dollar terms in the New York Mercantile Exchange's history.
Put it all together, and worries resurfaced that consumers would buckle from the double whammy of rising unemployment and soaring gasoline prices. - Los Angeles Times
Yes things seem bad statistically but my dad always said, 'it only takes one person's will to get a job and one person is not a statistic". Lots of 100K jobs FOR THE TAKING-
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You See!
Here's the deal. The Fed has been trying to bring liquidity back into the housing market by lowering the overnight cost of money (which lowers the Prime Rate). This usually helps revive the economy. This time around, investors would buy mortgage backed securities when the stock market was tanking (the so called "flight to quality"). Because of the significant credit issues that have and still do face this nation because of poor lending decisions, unscrupulous loan officers and irresponsible home buyers, these securities are considered to be a poor investment. The Fed actually infused a large amount of money into the MBS market with no result. Here's the other problem, when short term rates come down, credit card companies typically lower their rates which in turn promotes consumer spending. Guess what? All the banks who issue credit cards took it on the chin big time from the mortgage credit crisis and they've decided not to lower their interest rates because that's the only way most of them have been able to make any money in the last year or so. Can you say, "depression?"
ReplyDeleteThat is really informative, Jeff. I didn't think mortgage played that much into this.
ReplyDeleteIt's my business, we knew what was coming long before most people. The information I just shared with you, whil simplistic, hasn't even really been reported to a large extent by the media. They all too busy covering Senator Spector's witch hunt against the Patriots and Obama's naughty minister (preacher? reverend?). I don't even know.
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