Real Unemployment: Jobs and Economic Growth For 2013 Will Be Tepid

The Dow dropped over 200 points on Friday, the 25th Anniversary of Black Monday. In finance, Black Monday refers to Monday October 19, 1987, when stock markets around the world crashed. The Dow Jones Industrial Average (DJIA) dropped by 508 points to 1738.74 (22.61%).

While Friday’s results were disturbing, the news of the week could have produced substantially more significant declines.

The U.S. Deparment of Labor released the weekly claims report on seasonally adjusted initial claims. In the week ending October 13, the advance figure for seasonally adjusted initial claims was 388,000, an increase of 46,000 from the previous week's revised figure of 342,000. The 4-week moving average was 365,500, an increase of 750 from the previous week's revised average of 364,750.

The month’s second report on initial unemployment claims further brought into focus an expected revision in the nation’s unemployment report from September to 8.0% if not 8.1%.

Feeding into the expectations of a revised unemployment figure were a string of disappointing 3rd quarter earnings reports across sectors as diverse as technology, banking, and hospitality and restaurant.

An errantly released 3rd quarter report by Google actually caused trading to be stopped in the tech sector giant. Google’s earnings report missed analyst expectations by a wide margin causing the stock to drop by over 10% before recovering to a degree..

Financial sector pillar Bank of America Corporation reported net income of $340 million, or $0.00 per diluted share, for the third quarter of 2012, compared to $6.2 billion, or $0.56 per diluted share, in the third quarter of 2011. When a major bank has a drop in net income by almost $6 billion year to year, it is extremely unlikely there was much if any growth in GDP in the third quarter.

McDonald’s Don Thompson, the president and chief executive officer stated Friday, “For the quarter, global comparable sales were up 1.9%, operating income was flat in constant currencies, and EPS reached $1.43, which is a 4% increase in constant currencies. And as we begin the fourth quarter, global economies remain challenging and our comparable sales for October are currently trending negative.”

Thirdquarter earnings are supporting revisions in global economic growth from worldwide shipping giants such as UPS and FedEx to the International Monetary Fund itself. Last week the IMF lowered its 2012 growth forecast, saying it now expects global growth to slow to 3.3%, down from its earlier view of 3.5%.

This year is now on track to lag 2011’s growth of 3.8%, and it will remain far below 2010’s robust growth of 5.1%. The outlook for 2013 isn’t much better with expectations that growth will be flat or lower in most developed countries.

There is a reason global growth predictions continue to drop. No matter what anyone wishes to believe is true, America’s economy is being stymied by “uncertainty” caused by a gridlocked Congress engaged in partisan political death march with the country held hostage. As goes the American economy so too often goes the globe.

On Friday American equity markets did not repeat the crash of Black Monday. Yet how much longer investors will risk a repeat of that event is anyone's guess. 

Which brings us back to the basic question of this year’s presidential election, “Do you believe the recovery is on the right course?”

How likely are you to make Mic your go-to news source?

Rick Mathews

Christian, Fiscal Conservative, Executive Publisher www.voicesof.us Author Resurrecting Common Sense in America, Married for 25 Years to Love of My life, Father 4 Kids Who are my Treasure. Fighting for Your Future and Future of our Children.

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