Stocks falling because of 'unexpected' jobless claims?

from JoeUser Forums

According to some news reports the stock market is diving (at least a little) because of an unexpected jump in jobless claims.

I'm left to ask just who the heck was doing what expecting?!

Seriously, the jump in unemployment claims is surprising someone?!  Really?!?  I'm not sure that I should say this, but I think I'd like to meet whomever had the expectations that aren't being met so I can perhaps knock a little sense into their heads (and please note, this isn't meant as a threat against anyone).  I just don't "get it" in this area as I would think at this point that there'd be absolutely nothing UNEXPECTED about a jump in jobless claims.  I would think that the only thing unexpected at this point, at least from the point of view of most citizens in the U.S.A., would be a significant statistical drop in unemployment claims.

The economy stinks right now, and yet it doesn't, no wait it does, or maybe it doesn't.  Who to believe and when to believe them is a big issue.

Realistically, looking at profit reports for many companies seems to show strong returns and healthy business.  Simply going out to a mall or a restaurant seems to give plenty of reason to say that the economy MUST be improving, and yet, well, employers aren't hiring.  They are -- at least according to reports (which make a lot of sense given what you see when you look beyond the surface -- sitting on their piles of profit/cash and waiting for the market to improve before they decide to hire more employees.

For now the employees that many of those employers have are producing as best the companies can hope and even though the companies might be losing some business because they can't keep up with demand, they don't want to rush into hiring more employees only to find that the economy has taken a turn for the worse.

So, the question becomes what do we do from here to spur more job growth?  Ah, that's the question that will help to decide the elections this year, and it's also the question that is not at all easily answered.

I expect eventually we'll see another stimulus of sorts, except it won't be direct cash hand-outs, it'll be in the form of tax-credits and/or lowered tax rates for small businesses, or for businesses which invest in hiring new employees and/or training employees that they have.  Something that helps keep the same profit margins (at least for a while) during the time periods when new hires are brought in, trained and put to work to eventually start producing at the same rates as their co-workers.  Of course whatever is done to help encourage job expansion has to be something without unintended consequences and that is an area where politicians typically fail miserably.  They pass something just to pass it, have it help for a short period and then forget that when the stimulus they tossed around is gone and demand goes back to normal that the market will have to adjust again.

Anyway, hopefully the stock market will start getting back to normal soon, after the participants stop following the prognosticators that have, up to this point, been doing a pretty bad job of telling them what to expect.  Or so I hope.

 

2,349 views 4 replies
Reply #1 from JoeUser Forums Top

I'm left to ask just who the heck was doing what expecting?!
End of quote

The Press.  They WANT Obama to succeed, so they assume he can do no wrong.  So bad news is always "unexpected".

I expect eventually we'll see another stimulus of sorts,
End of quote

I am not too sure.  There are several things going against that.

1. Obama - he hates tax cuts and so will veto any

2. Bush Tax cuts - extending those I do not think is going to be another "stimulus" per se (not extending them will be a definite deflator).

3. The deficit.  The government cannot afford to cut revenue (taxes) or increase spending since they shot their wad already.

If the republicans want any chance in 12, they have one thing they have to do.  Cut federal Spending.  And that includes Federal salaries!  The latter is starting to get real hot considering that the complaint in years past was government workers were underpaid, and now they are grossly overpaid.

Reply #2 from JoeUser Forums Top

Realistically, looking at profit reports for many companies seems to show strong returns and healthy business. Simply going out to a mall or a restaurant seems to give plenty of reason to say that the economy MUST be improving, and yet, well, employers aren't hiring. They are -- at least according to reports (which make a lot of sense given what you see when you look beyond the surface -- sitting on their piles of profit/cash and waiting for the market to improve before they decide to hire more employees.
End of quote

Yes here lies the rub. Businesses, were quick to liquidate their employees at the beginning of the recession (and even now). They are operating lean and so are their suppliers. In order to hire, demand has to increase. Demand won't increase until more people are working and driving up demand. So something has to happen to either lower the supply side (and create a need to hire to replenish) or raise demand beyond existing stock (which will also push the need to hire).

If costs are projected to rise, hiring will continue to be bleak. Right now the economy is in an equilibrium (not in a good way). The only way IMO this can be broken is a wide scale means to get cash moving by those watching their pennies. IMO the only feasible way to do this is lower costs for business to pass on to consumers to get them into the stores. This must be done across the board, any attempt to target a specific market or industry (think road construction alone) will fail. Opponents feel any tax cut will go dirctly to the shareholders. I would remind them that buisness make thier money selling a product, not giving it to shareholders. Also, 80% of buisnesses are small and have no shareholders, while hiring the bulk of workers in the US.

So what does that leave? One choice really, lower taxes to both taxpayers and businesses. I can hear it now...tax cut, yeah, yeah. I ask what is better, tax (or even raise them) and let the government decide where to send this money (the sex lives of bee's prehaps?) or let the consumer have it and inject that cash throughout the nation, quickly?

What about the cost? Of course tax cuts reduce revenue (the money the government spends), but I ask what is better letting a consumer KEEP a dollar that they will spend in the economy directly, or giving a dollar to government to float through the government bureaucracy until it can be appropriated to what ever program, that may or may not benefit the person (or anyone for that matter) that it was taxed from to start. There is even a cost to collecting that original dollar in the first place and moving it through the system, so when it gets to where it's going it isn't even a dollar anymore.  Raising taxes, might be good in the short term, until it dries up monies that would have went right into the economy and our "wise" government that has little concern of what it takes to earn that in the first place, decides where it should go. If we wait too long there will be less people to drive this recovery, making it harder.

The question is how many more jobs can business shed and still remain in business. Are we willing to find out with more of the same inaction that seems to be plaguing the government? We can see first hand that "stimulus" to select industry (or worse, organizations) are ineffective. Monies have been lifted right off the top. We have all heard of the stories of hundreds of thousands of dollars to create one job. Does anyone truly believe that is the effective way to proceed? Pay now or pay more later.

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Reply #3 from JoeUser Forums Top

lower taxes to both taxpayers and businesses.
End of quote

And the fly in the ointment?  Congress and Obama are about to raise it to both through inaction on the Bush Tax cut.  So the "strong" profits you see are illusory.  Basically business trying to push profits into this year - when taxes are lower - sacrificing next year's bottom line when taxes will be higher.  And thus comes the double dip.

Reply #4 from Stardock Forums Top

My company hired many employee's in recent months although I can say without a doubt that the jobless rate was not affected in any way as the number of people was kinda small but still epople were hired.

I, too, can't figure out why some people keep getting surprised when things go wrong, as if they somehow had inside info that all would be well and all of a sudden things went wrong. Gotta love the stupidity that runs the country these days.