Key News
*EU Says Europe Economy to Shrink 4% (Bloomberg)
* Obama Seeks to End Tax-Haven Strategies (Bloomberg)
*Chinese Manufacturing Expands (Bloomberg)
*Dollar Demand Is Strong, but Lending Lags Behind (WSJ)
The Event Agenda
The Morning Run-Down
This week, among the trading catalysts surrounding the US administrations involvement in, and handling of, private industry, we have three key data points. Both the ECB and the BOE meet on interest rates. The BOE is expected to hold steady at 50 bps and the ECB is expected to cut another 25 bps down to 1%. The post meeting press conference with Trichet will be important. The ECB has been public in their division on the future extent of interest rate cuts and on any plans to engage in quantitative easing, though it is expected that the ECB will reveal plans for QE measures.
Also, we get employment data in the US. Non-farm payrolls are expected to have stabilized around the 600k level. But unemployment is expected to tick up to the 8.9% level– still 2.3 percentage points lower than the peak in unemployment in the 81-82 recession. With the recent surge in risk appetite and the run in the stock market, the market is most vulnerable to a negative surprise.
The peak in unemployment in the 74-75 recession was 9%. In the 81-82 recession, unemployment reached 10.8%. Now, sixteen months into this recession, unemployment stands at 8.5%.
{ 2 comments… read them below or add one }
Bryan,
Does the unemployment chart in your 5/4/09 post account for adjustments to the published unemployment rate made during the Clinton administration? Is the 10.8% number for the ‘81 – ‘82 recession better compared with today’s U-6 rate or some other broader measure?
Thanks,
Paul
Bryan Rich Reply:
May 11th, 2009 at 1:59 PM
Hi Paul,
The data in my chart is the civilian labor force from the BLS. The current U-6 number is 15.8%.
Thanks Bryan. I did know that, which is why I posed my question…
So, I am wondering if the 10.8% peak rate shown on the chart for ‘81 – ‘82 includes the discouraged workers and others presently measured by today’s U-6 number. If so, then it would be better to compare the ‘81 – ‘82 period on the chart with today’s U-6 rate of 15.8% (instead of the 8.9% shown on the chart). The idea is to be sure that they are comparing apples to apples.
Best,
Paul
Bryan Rich Reply:
May 11th, 2009 at 3:13 PM
The civilian labor force is the U-3…it goes back to 1948. Per the BLS, the U-4,U-5 and U-6 data record begins in 1994 when the most recent redesign of the “Current Population Survey”. So yes, apples to apples on the series I have in the chart– all U-3.
Rgds,
Bryan