All data from US this week points to my earlier post of a pure re-stocking in the manufacturing sector and a worsening housing and job market. With my earlier posts talking of retail sales and manufacturing, I now shift focus to unemployment. With the Fed saying that unemployment will stay high for an “extended period” of time, I wonder will happen to the "reported" figure of 10% unemployed population who have been living off their savings ever since they lost their jobs.
Considering that last 18 months the unemployment data has been this high, we can assume that it’s been that long since the unemployed have had any cash inflows apart from the unemployment , which is also going to stop. The end of the unemployment extension benefit will result in 1.2mn unemployed getting affected by next week.
Also in the past the only way Americans seemed to fund themselves was by investing in housing which I am sure they haven’t been doing (for obvious reasons!). Therefore it has to been how much savings these Americans have and how much longer can it last.
Now can we see a continued drop in retail sales followed by decline in manufacturing data? Lets wait and watch.
The graph above shows the correlation of the stock market with unemployment data. Based on this if unemployment continues to be where it is, the markets dont seem to be heading anywhere in the near term!
Considering that last 18 months the unemployment data has been this high, we can assume that it’s been that long since the unemployed have had any cash inflows apart from the unemployment , which is also going to stop. The end of the unemployment extension benefit will result in 1.2mn unemployed getting affected by next week.
Also in the past the only way Americans seemed to fund themselves was by investing in housing which I am sure they haven’t been doing (for obvious reasons!). Therefore it has to been how much savings these Americans have and how much longer can it last.
Now can we see a continued drop in retail sales followed by decline in manufacturing data? Lets wait and watch.
The graph above shows the correlation of the stock market with unemployment data. Based on this if unemployment continues to be where it is, the markets dont seem to be heading anywhere in the near term!
Very true!!
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