As almost 400,000 more people join the food stamp program, Wall Street bankers party on. They had a wonderful weekend in the Hamptons. The cocktail parties were exquisite. The weather was fabulous. They only had to call the cops once to run the ignorant masses off their private beaches. Retail sales at Tiffanys and Saks 5th Avenue are booming. They are looking forward to another record year of $200 billion in bonuses for their absolutely brilliant financial acumen. Who else on the planet could take free money and generate risk free profits?
Meanwhile, in the real world, the unemployment rate is 22% and the economy has ground to a halt. The $7 trillion of stimulus has failed. Paul Krugman declares that if it had been $14 trillion, it would have worked. There are no jobs being added. More people are getting laid off. QE2, which has propped up the stock market for the last 6 months will end in 3 weeks. Anyone with an ounce of brains (this eliminates Wall Street economists, CNBC anchors, and 99% of the politicians in Washington DC) can see we are already back in recession.
The government response to this downturn will set the course of this country for the next ten years. Do you think they will choose wisely?
Horrible Economic Data Continues: ADP Plunges To 38K On Expectations OF 175K; Downward NFP Revisions Next
Submitted by Tyler Durden on 06/01/2011 08:18 -0400
The latest economic data is out and it is horrendous: with expectations for the ADP employment number to come at 175K, following a downward revised 177K print previously, it tumbled to a puny 38K in May. While this number is extremely irrelevant in terms of correlating to the actual NFP number due out this Friday, expect to see a spate of downward NFP revisions on this latest confirmation that the US economy has stalled even with QE2 still in effect for another 29 days (and soon to be extended). From the report: “Today’s ADP National Employment Report suggests that employment growth slowed sharply in May. Employment in the nonfarm private-business sector rose 38,000 from April to May on a seasonally adjusted basis. A deceleration in employment, while disappointing, is not entirely surprising. In the first quarter, GDP grew at only a 1.8% rate and only about 2¼% over the last four quarters. This is below most economists’ estimate of the economy’s potential growth rate and normally would be associated with very weak growth of employment.” Precisely as expected by Zero Hedge.
May’s ADP Report estimates employment in the service-providing sector rose by 48,000, marking 17 consecutive months of employment gains while employment in the goods-producing sector fell 10,000 following six months of increases. Manufacturing employment fell 9,000 in May following seven consecutive monthly gains.
Employment among large businesses, defined as those with 500 or more workers, decreased by 19,000, while employment among medium-size businesses, defined as those with between 50 and 499 workers, increased by 30,000. Employment for small businesses, defined as those with fewer than 50 workers, rose 27,000 in May.
Employment in the construction industry dropped 8,000 in May, completely reversing April’s increase. The total decrease in construction employment since its peak in January 2007 is 2,124,000.
Also, so much for the financial and construction work renaissance:
The only thing now preventing the Fed to begin the push for QE3 is the continuously resilient stock market, which needs to drop at least 15-20% before Bernanke is given a carte blanche. Yet paradoxically, it is stocks’ anticipation of QE 3 that makes the actual political case for QE 3 impossible. Geithner upcoming NYT op-ed: “Welcome To The Catch 22.”