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Inflation is on the Prowl

The worst possible employment numbers were revealed before the stock market’s opening bell this morning. The U.S. economy managed to create a paltry 18,000 new jobs in the last month of 2007. The unemployment rate jumped from 4.7 to 5 percent, although average hourly wages expanded by 0.4 percent- which is a good deal more than was expected, and raises fears that inflation is rearing its ugly head.

The crack (smoking) squad of Wall Street economists were expecting job growth to register a gain of 58,000, the unemployment rate to creep up to 4.8 percent, and hourly wages to rise by 0.2 percent. That looks like three strikes to me. But, with the stock market still in nose bleed territory, floating on fumes of fancy, it should be no surprise that they were way off the mark.

It seems that the housing collapse, brought on by the bursting of a gigantic credit bubble, is rippling its way across the economy. The unemployment rate has risen 0.6 percent from its cyclical low in March of last year. And, earlier this week, the Institute for Supply Management manufacturing index registered 47.7 in December, signaling a contraction in manufacturing activity. This marked the first such reduction in eleven months, and was due to a worrisome decline in demand.

Believe it or not, the blind sages on Wall Street usually welcome dismal developments on job growth and product demand. Why? Because it frees the hands of the Federal Reserve to lower interest rates, reducing credit costs for those who ply their trade with borrowed funds.

But, it was the shocking rise in wages that caused panic among the skittish flock of traders this morning. Rising wages mean that inflation is far from tame, and it limits the Fed’s interest rate-cutting options.

Over the past year, Wall Street has become increasingly detached from the dim prospects faced by those who call Main Street their home. This may be the year that reality smacks the over-paid former lords of finance square in their glass jaws.

Financial alchemists are not solely responsible for the economic problems that are bubbling to the surface- they needed vast numbers of fools to join in on their escapades. They are, however, the last ones to suffer from the orgy of debt that they helped create. Today may well mark the day that the emperor is exposed not only as naked, but that he also owes money on the robe no longer in his possession.

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One comment for “Inflation is on the Prowl”

  1. [...] These blogs are in the news Request a Trackback Keep a steady course To see the events of the last few days and weeks, it is clear that for those people that are not multi millionaires investing in hedge funds, the most solid, reliable investment is good real estate.  The stock market one day collapses, the next day … making the moves – Last Updated – 12 minutes ago  Request a Trackback Beware the Naked Emperor- by Greg Strid The worst possible employment numbers were revealed before the stock market’s opening bell this morning. The U.S. economy managed to create a paltry 18,000 new jobs in the last month of 2007. The unemployment rate jumped from 4.7 to 5 percent, although average hourly wages expanded … splendidmarbles.com – Last Updated – Sunday January 20  More Blogs… Videos   Related Stories   ”People may be looking to take some profits off the table.” SCOTT FULLMAN director of investment strategy, lehigh valley business news – Saturday January 26 People Cashing Out of the Market Need to Find a Low-Risk Haven . . . washingtonpost.com – business – 13 minutes ago Bulls throw in the towel financial news of the day – cnnmoney.com – Friday January 25 An Ear to the Ground on Stocks nyt > business – 11 hours ago Story Timeline Thu, Dec 27 Wall St. set to mix it up business and financial news – cnnmoney.com Investors awaited several economic reports ahead of Thursday’s U.S. stock market open, with signs pointing to a mixed start. Tue, Dec 11 Here comes the Fed latest financial news – cnnmoney.com U.S. stocks were poised for a flat open Tuesday, as investors waited to see how much relief the Federal Reserve would deliver to markets. Fri, Nov 30 Fed Chief Offers Hint of Rate Cut washingtonpost.com – u.s. economy U.S. stock markets jumped sharply on Friday morning, as investors bet that recent remarks by Federal Reserve Chairman Ben S. Bernanke indicate interest rates will be cut again when the Fed meets in two weeks. Fri, Nov 16 Uncertainty on Wall Street latest financial news – cnnmoney.com U.S. stocks could have trouble again Friday as investors remained jittery about the credit markets and worried about the health of the consumer. Fri, Nov 16 Bulls gain optimism latest financial news – cnnmoney.com U.S. stock futures rose early Friday as investors recovered from jitters about the credit markets and consumer spending that sparked a selloff the previous session. Fri, Nov 9 Stock futures drop on bank, tech woes usatoday.com money – top stories U.S. stock index futures slid Friday as another bank reported large credit losses tied to risky debt and investors worried over … Wed, Oct 10 Stocks poised for a rest latest financial news – cnnmoney.com U.S. stocks were set for a lackluster open Wednesday as investors wondered how much more room the record-setting stock rally has to run. Thu, Oct 4 Wall Street waits for jobs report business and financial news – cnnmoney.com U.S. stocks could be on hold Thursday as investors await the closely watched employment report due at the end of the week for clues about the future direction of interest rates. Wed, Oct 3 Stocks poised for tough start business and financial news – cnnmoney.com U.S. stocks are likely to struggle in early trading Wednesday as investors wonder whether the Federal Reserve is likely to keep cutting rates. Fri, Sep 21 Bulls aim to restart rally latest financial news – cnnmoney.com U.S. stock futures were stronger Friday as positive earnings news helped investors push inflation worries aside. More… Stories   . . . While the Bargain-Hunting Investors Are Just Getting Started washingtonpost.com – business – 16 minutes ago For the average investor, the U.S. stock market is looking downright scary. One day it’s plummeting. The next day it’s soaring.   function footerJump(szWhere) { location.href=’/'+ szWhere + “.php”; } Home |  Widgets |  Terms |  Privacy Copyright 2007 CDR Networks _uacct = “UA-2278587-1″; urchinTracker(); [...]

    Posted by Connecting News, Commentaries and Blogs at NineReports.com - | January 27, 2008, 3:57 am

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