Daily Market Commentary for December 2, 2011
Unless you live in a cave, you have heard something about the shale oil drilling boom in the U.S.A.
(read more at Millennium-Traders.Com) http://www.millennium-traders.com/news/newscommentary.aspx
Philadelphia Federal Reserve President Charles Plosser said that the U.S. economy is not heading toward recession. He did report his concerns over the economic situation in Europe however, added that he is not sure just how big the risk is as well as, that Central banks and monetary policy are not real solutions to the European sovereign debt crisis or the massive U.S. fiscal deficit. "The only real answer rests with fiscal authorities and their ability to develop credible commitments to sustainable fiscal paths," Plosser said in a speech at the Philadelphia Fed Policy Forum. Plosser said proponents of central bank intervention "are skating on thin ice." Even though money creation can lower interest rates and provide a modest boost to growth in the short-term, over time it results in higher inflation and higher interest rates, Plosser said. Plosser added that he sees U.S. banks, "in pretty good shape." He said the Fed needs a "more structured" method of making decisions and repeated his reluctance for further monetary policy action. Plosser did not dissent in the last meeting after opposing the prior two decisions, said he did not want to "re-litigate" every move. "History has shown that once inflation is unleashed, it is not always easy to bring it back down, especially if the central bank loses the public's confidence and damages the credibility of its commitment to return to price stability," Plosser said.
Labor Department reported that the U.S. economy created 120,000 jobs in November and the unemployment rate fell to 8.6% from 9.0%. The drop in the jobless rate is the biggest drop seen in 11 months and stemmed largely from a decline in the size of the labor force. During November, nearly 315,000 people stopped looking for jobs which is not a good sign for the economy. The decline in the labor force is believed to show that companies continue to add workers, but at a modest pace. During November, the increase in hiring was accompanied by revisions for October and September data that showed an additional 72,000 jobs were created. The jobs report adds to data showing that the economy continues to strengthen after a early-summer letdown. Over the past year, the economy has on average, gained 131,000 jobs and over the past three months, gained 143,000 jobs. To bring the unemployment rate down to pre-recession level of about 6%, the U.S. would need to add about 250,000 jobs a month for several years. Private sector added 140,000 jobs; the government cut 20,000 jobs in November to put the total loss over the past two years at nearly 600,000. Due to local laws, many governments, states and municipalities have been forced to reduce staff to balance their budgets. During October, hiring was revised up to 100,000 from previous reports of 80,000 and in September, job gains were revised up to 210,00 from 158,000. The retail sector posted the biggest increase in jobs as stores hired 50,000 employees - potentially into the holiday season. The leisure and hospitality sectors added 22,000 jobs; professional and business services gained 33,000 jobs and health care boosted hiring by 17,000 while manufacturing and construction sectors showed little change. Wages and hours worked were little changed during November with hourly earnings falling by 2 cents to $23.18 and average workweek remained unchanged at 34.3 hours. As much as 70% of economic activity is generated by consumer spending, but Americans still have high debts and millions remain without work. An alternative measure of unemployment, for example, puts the jobless rate much higher. The so-called U6 rate, which includes part-time workers and those who recently stopped looking for work, fell to 15.6% last month from 16.2%.
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