All of the heralded economists we look to for answers, predicted October unemployment would be 9.9%. (1) As we warn here on a regular basis at SwiftEconomics.com, always be weary of an economist’s prediction.
The Labor Department reported that the unemployment rate hike was driven by formerly self-employed people no longer using that designation, as well as additional teenagers out of work. (1)
We know, though, that companies like Microsoft and Johnson & Johnson are not finished trimming their workforces. Microsoft announced a layoff of 5,000 employees earlier this year, with another recent announcement to fire 800 more, showing a great deal of confidence in Windows 7. Johnson & Johnson announced two days ago it will cut 7,000 employees worldwide.
The data confirms a SwiftEconomics.com call that the real GDP recovery in the third quarter is a product of companies cutting costs, not increasing revenues. Real GDP increased an estimated 3.5% last quarter, ending a slide of 4 consecutive contracting quarters. Firms have been adjusting to the economic climate, shedding jobs and cutting the fat in their businesses. An expanding economy would be creating jobs, and that is simply not happening. (2)Predictably, investors bought up gold futures in a flurry upon hearing the unemployment news. December gold broke yet another intraday record by trading at $1,101.90/ounce, before settling in at $1,095.70. (3)
(1) Unemployment hits 10.2% – CNNMoney.com, retrieved November 6th, 2009, http://money.cnn.com/2009/11/06/news/economy/jobs_october/index.htm?postversion=2009110611
(2) Bureau of Economic Analysis News Release – BEA.gov, retrieved November 6th, 2009, http://www.bea.gov/newsreleases/national/gdp/2009/pdf/gdp3q09_adv.pdf
(3) Gold breaks $1,100 – CNNMoney.com, retrieved November 6th, 2009, http://money.cnn.com/2009/11/06/markets/gold/index.htm