The economic numbers just keep pounding the economy.  It is at the point where we are at a vicious cycle of bad data feeding valuation programs that will lead to judgments that ultimately generate more bad data.  As more businesses scale back while the consumer is already been forced to scale back the cycle of decisions that will cause more economic hardship is sure to continue.  This recession will not end anytime soon.

The employment figures are truly reaching disturbing numbers.  The latest job market numbers have been reinforcing the position that we are in a recession that’s deepening, with more bad news on the way or perhaps a lot more bad news on the way

Prior to today’s unemployment claims, the claims number was not reaching a point that would break the economies back.  Claims of 490,000 are certainly nothing to cheer over but these are number that we may call standard recession numbers.  The question that a good analyst or economist should be asking is how long and deep will this recession be. Claims over 500,000 are numbers that will solidify the position that the economy will be slow for a long time.  But even these numbers should jump higher if we are going into a seriously prolonged slow down.

Today’s number of unemployment claims is reaching a tough number trending towards galactic economic slow down, trending toward!  In the week ending Nov. 8, the advance figure for seasonally adjusted initial claims was 516,000, an increase of 32,000 from the previous week’s revised figure of 484,000. The 4-week moving average was 491,000, an increase of 13,250 from the previous week’s revised average of 477,750.  This is a figure not seen for roughly 7 years.  Technically, not a big problem.  The worst numbers in 7 years shouldn’t be a driving force of a prolonged recession.  We hit those levels of claims in 2001 and the economy rebounded.  Unfortunately, the odds are the claims number going higher and then we start reaching claims number we haven’t seen since the 80’s (ignoring a number of isolated jumps in claims in the 90’s).

The advance number for seasonally adjusted insured unemployment during the week ending Nov. 1 was 3,897,000, an increase of 65,000 from the preceding week’s revised level of 3,832,000. The 4-week moving average was 3,794,250, an increase of 43,000 from the preceding week’s revised average of 3,751,250.  Large numbers but claim numbers that had also been reached after 9/11.  Surely, they are headed higher.

Last month the U.S. Census Bureau announced that advance estimates of U.S. retail and food services sales for September were $375.5 billion, a decrease of 1.2 percent from the previous month and 1.0 percent below September 2007.  Pretty poor numbers considering that was September figures.  We would have to assume October numbers were fairly poor and November is shaping up to be horrendous. The biggest forces holding shoppers back continue to be worries about home values and income security.  Forces that are not going to change in the coming months.  Rising unemployment in 2008 will further dampen consumer income and contract spending and lead to more job cuts.  Keeping this cycle of misery going forward.

The first estimate of third quarter gross domestic product was a negative 0.3%.  This would confirm an economy in a slowdown and that was the preliminary numbers that are sure to be revised to larger decrease in production.  The near-term outlook for the fourth quarter has to be worse with rising unemployment and continued credit difficulties.  The fourth quarter, in which we are about half way through, will show contraction of at least 2% or more as business spending catches up to considerable retrenchment in consumer spending. 

Which way are interest rates headed?  More importantly, which direction are bank CD and money market accounts going?  Inflation?  Perhaps deflation?  It took too much time to study unemployment figures for the past 50 years; I don’t have a clue which way rates will be traveling.  They should head down in the short term, probably even the next year, but governments creating currency is the number one if the only cause of long term, life ending inflation.  High inflation will yield high interest rates.  I will spend some time studying created currency, inflation and interest rates.  For those who don’t know, huge budget deficits are the foundation of created currency.  An unavoidable foundation.

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