Lets Analyze the Stress Test Results

Monday, May 11, 2009

So we finally got the stress test results, we finally heard the European Central Bank President unveil his stimulus plan and we finally saw the ECB lower their rates to 1. We have been waiting for all these for such a long time it is as if there was nothing else going on. But there was, in the mix of all this we saw on Friday the US release their unemployment figures for April, and not to be shown up – they were less than the 590,000 that analysts thought – which was less than the 600,000 I thought and put down on these pages two weeks ago. But there is a sleight of hand going on here and few people have picked up on it – and in fact, it is in front of all of us in the release of that data. You can find it on the US Department of Labor’s website and boy is it telling.

When scrutinizing the numbers, I was so happy that I was wrong – that the analysts were wrong, “we are finally coming out of it.” But looking deeper I saw something that struck me. The US government added 66,000 jobs in April. These jobs are not construction, not manufacturing, not industrial, not even office work – they are temporary Census workers – you know the people who come to your house once every ten years at 9:00pm and ask you a whole bunch of personal questions so the government can know how many people live where and what they do and how many kids they have. In the report it clearly showed that 611,000 jobs were lost in the private sector – but thanks to the minimum wage earning, college student Census workers, the US lost less jobs overall than was expected. I think not.

I cannot stress enough how looking into the real story is the most vital thing we can do to gather information. Don’t believe what you read until you have read it all – and by that I mean numbers can be manipulated to make us think whatever those presenting the numbers want us to think – and in the case of US jobs, they are falling faster than expected .

The US unemployment rate is 8.9%, 9.3% if you discount the pimple faced adolescents who gave up flipping McBurgers, pouring McSoda’s and slating McFries to harass the US citizenry in the middle of the night and are now counted as part of America’s workforce for doing so. God bless the American accountants and number crunchers who have second degrees in marketing. Their efforts helped the market rally to year highs – what will you give us for an encore?


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