Well it has happened, a week when the markets went down overall.  Though the US markets had an up day on Friday before the long weekend.  It is hard to see what caused such enthusiasm. On Thursday the initial unemployed came in highter than expected, but little notice was taken of this, the market has become used to people losing their jobs. Over half a million people were laid off in the week.  The market was waiting for the non-farm payrolls on Friday.  This number came in better than expected with only 216,000 lost when the market was expecting 240,000. But that is still nearly a quarter of a million jobs that are no longer available.

With the figures coming in consistently around the quarter million mark each month it is not so surprising that the unemployment rate in the US is now 9.7% (those that they count) and closer to 16% in real terms.  Considering that when the stimulus plans were floated, the recovery time was based on an unemployment rate of just 8%.  It is estimated that the countable unemployment rate will be over 10% by the end of the year and will not “top out” until over 11%. It could be that the recovery will take longer than first estimated.

All this means that although there may be a statistical recovery with some positive GDP numbers, there is no real recovery.  What we need for that is an expanding economy with  jobs created each month leading to more people in work etc.  So much was said over the last decade as to how the “consumer consuming” was 70% of GDP.  It is going to take a lot to get that consumption going again.

Last Tuesday was the biggest down day for several weeks, bought on by renewed nervousness about banks, and their profits, or lack of them.  With good reason, anothe 5 banks failed during the week bringing the total for the year to 89. At this rate of failures it will only be another few weeks before we are into triple figures for bank failures.  If banks are continuing to fail at this rate when the economy is meant to be “recovering” it would tend to suggest that all is not what it is cracked up to be.

The next couple of weeks will be interesting.  Was this week’s loss just a pause in the rally or the turning point?  Time will tell.