2009-01-09

US Unemployment

Today is yet another doomsday - the December 2008 unemployment figures are due and the expectation is something bad.

November 2008 rate was 6.7%.

I predicted that US unemployment would reach 7.0% in 2008
, and with the final month's stats now due I think it is very likely that the 7.0% rate will be broken.

OSO's low estimate: 7.0% (the average the entrail readers estimate)

OSO's high estimate 7.6% (which would equal the highest monthly increase since January 1975, where it increased from 7.2% in December 1974 to 8.1% in January 1975).

If the rate ends up exceeding 7.6% (and these are unusual times, so the chances are that it might) then all those comparisons to the great depression will become even louder.

I think the markets have factored in anything up to 7.2%. Shares and US Dollar are hardly going to move with any rate between 7.0% and 7.2%. Less than 7.0% will be bullish. Higher than 7.2% will be bearish. Higher than 7.6% will see some major moves, especially in the US Dollar.

Regardless of the result, if you're American I would continue to advise investment in Euro, Yen and Gold.

The release will be available here at 0830 EST / 1330 GMT.

2 comments:

BLBeamer said...

7.2% today.

Rather than gold, might I suggest investing in TIPS (Treasury Inflation Protected Securities) which - unlike other Treasury bonds which move in correlation to interest rates - move in correlation to the Consumer Price Index.

luke said...

Fascinating change in employment graph here for this recession vs others. I don't like that trajectory, but the graphs show it could turn around at any point. How far it dives before that point however...