Stocks tank on horrible job report
May’s unemployment numbers added only 69,000 jobs to the economy, a number far much than the 125,000 jobs needed just keep the unemployment rate up. Hence the unemployment rate jumped back to 8.2 percent and reversed in gear.
It is no wonder that the stock market plunged at the opening bell and never recovered. The selling was heavy in many names and leading stocks. Hence the bears are out in force pummeling every name and issue into a red pulp. European bad news and Greece’s exit from Euro zone are still hanging overhead, in addition to the domestic data. The stock market has been hitting its 200 day moving average as of this writing. Take a look at this chart of SPX emni futures hitting 1276 fresh new lows as the market digested bad news.
After three months of a fragile economic recovery in the US it seems that the economy has definitely stalled into a slow growth pattern and a tail spin in the financial markets have taken hold of the downward momentum . This week the GDP numbers were also revised from 2.2 percent growth in the first quarter to 1.9 percent growth. This again disappointed the markets and that too was a significant factor in evaluating the economic health. The unemployment claims also rose more than expected to 383,000 this week further shedding light on the struggling job market.
In an election year when thing should get rosy as it happens this year things have soured a lot. The voter angst and disappointment is all too visible to see. In an election year stable and strong financial markets follow suit but this time around just five months to go its the opposite equation. This in turn would spell disappoint and disaster for the incumbents and the rivals are well poised and positioned to capture the White House.
The voters are highly responsive towards economic prospects, a fact that the current campaigns are taking into account , and the they will vote with their wallets and nothing else , and they know it. If this job creation and economy stays stagnant into the next few months, there is no way the incumbents should hope to stay in power and win a second term. The democrats are unlikely to get a second chance with this type of performance. Republicans were voted out in 2008 and just the same would repeat here.
The mere fact is this economy never got out of gate in the last four years. There has been no concentrated efforts to push the horse out of the gate. It starts and stalls and consumers go back to the fears of a double dip recession. Consumers have little confidence and the ability to defend themselves should the economy falls back like in 2008. The fear of 2008 happening again scares the hell out of consumers and the financial markets as well. They constantly look for clues and become hyper vigilant in their outlook. There is hardly any air of certainty and stability in 2012. As a result the consumer confidence keeps falling off the horse every two or three months and never gets a good ride.
Until a layer of certainty is wrapped around the minds of voters and employers in particular they will keep postponing hiring and freeze everything and it can go on indefinitely.