Unemployment Rate Drops from 9.1% to 8.6%
So the unemployment rate dropped to 8.6% with the addition of a mere 120,000 jobs in the private sector. Immediately the pundits poured out their interpretations. Don't bother listening - unless you've got nothing else to do. Just think about this.
First, the "unemployment rate" number is calculated in a rather torturous way, so yes, unemployment probably didn't go down that much. The drop had more to do with how the rate is calculated. (In fact, the 120,000 was actually lower than what was "anticipated" by economists.)
Second, it very well may be that fewer people are now unemployed. The Fed has been doing all it can to "pump" up the economy. So if economic activity has increased, don't be surprised if there's more hiring. Don't forget that the Fed does have the ability to goose things - even if it's only a temporary phenomenon.
The only thing any of us should care about is the overall direction of the economy, not what statisticians do to juggle numbers.
But what really struck me were comments from economists about how a "perception" of lower unemployment (doesn't that recognize that this drop isn't really substantive?) will drive people to purchase items like refrigerators.
See how they think of you? They think that you'll be successfully bamboozled by these headline numbers and make purchases you were reluctant to make before. They think you're all idiots.
If you do make purchase decisions based on these sorts of reports, you may very well be an idiot. But I suspect most of us aren't making decisions this way - at least I hope not.
When you make a decision to spend rather than save, I hope it's based on some rational process driven by your needs and some sort of "plan" you've got for your assets.
Now, if you were an idiot in the past and - for example - bought a big house with a mortgage you couldn't afford and ran up your credit card debt buying all sorts of junk you really didn't need but figured might impress someone, maybe you can face the facts and stop behaving this way. And if reading these sorts of headlines and (heaven forbid) listening to radio and TV (Bloomberg, MSNBC, etc.) gets you all worked up so that you run out and start spending again, then stop reading, listening and watching all this junk.
Just straighten out your financial situation by paying down debt, saving, raising cash and being really careful with your investments. There's not much time left for you to get yourself straight. Harder times are coming.
First, the "unemployment rate" number is calculated in a rather torturous way, so yes, unemployment probably didn't go down that much. The drop had more to do with how the rate is calculated. (In fact, the 120,000 was actually lower than what was "anticipated" by economists.)
Second, it very well may be that fewer people are now unemployed. The Fed has been doing all it can to "pump" up the economy. So if economic activity has increased, don't be surprised if there's more hiring. Don't forget that the Fed does have the ability to goose things - even if it's only a temporary phenomenon.
The only thing any of us should care about is the overall direction of the economy, not what statisticians do to juggle numbers.
But what really struck me were comments from economists about how a "perception" of lower unemployment (doesn't that recognize that this drop isn't really substantive?) will drive people to purchase items like refrigerators.
See how they think of you? They think that you'll be successfully bamboozled by these headline numbers and make purchases you were reluctant to make before. They think you're all idiots.
If you do make purchase decisions based on these sorts of reports, you may very well be an idiot. But I suspect most of us aren't making decisions this way - at least I hope not.
When you make a decision to spend rather than save, I hope it's based on some rational process driven by your needs and some sort of "plan" you've got for your assets.
Now, if you were an idiot in the past and - for example - bought a big house with a mortgage you couldn't afford and ran up your credit card debt buying all sorts of junk you really didn't need but figured might impress someone, maybe you can face the facts and stop behaving this way. And if reading these sorts of headlines and (heaven forbid) listening to radio and TV (Bloomberg, MSNBC, etc.) gets you all worked up so that you run out and start spending again, then stop reading, listening and watching all this junk.
Just straighten out your financial situation by paying down debt, saving, raising cash and being really careful with your investments. There's not much time left for you to get yourself straight. Harder times are coming.
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