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Labor Market – Finally Some Good News?

After almost a year of painful job cuts, employees finally have a breather. Wall Street is rejoicing as well. There are indications that the labor market might be on the road to recovery. Stock gauges are at their highest in over a year even though economic data reports only modest gains. Highlights include the improvement on consumer sentiment, increase in retail sales, and reports on the trade gap.

For the month of November, employers laid-off 11,000. While still significant, it is the smallest job cut since December 2007. The unemployment rate is now at 10 percent from the 10.2 percent high in October. Phil Orlando from Federated Investors observed that it’s going to be years before the labor market goes back to where it was in 2007 although he acknowledged that it was already improving.

Yet, for the positive signs, there are also disturbing factors under the statistics. The drop in real unemployment rate may be because millions of Americans who had lost their jobs almost two years ago may have given up looking for work. Thus, the figure was not included in the data.

On the investor front, the stocks are expected to remain at a certain range. According to Jamie Cox of the Harris Financial Group, “The broad averages are probably going to go sideways and for a while…it’s not going to be as hard or as easy as it’s been in the last 24 months”. At many stages, the market rose dramatically and then fell, and then the trend continues.

The next few months are going to be different. Analysts predict that investors will focus more on stocks, rather than the market as a whole. As a whole, many are betting that the recession is about to end. Combined with the fiscal stimulus, the stocks are currently at their 9 month high.

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One Response

  1. [...] to say that it is just not right to impose additional taxes on struggling Americans who are already coping with unemployment and health care costs, it might be inevitable. Bad decision making has made it necessary. According [...]

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