The market was thrilled by the sudden drop of unemployment rate to 8.6% in Nov from 9% in the previous month that followed the coordinated efforts of six nations to add liquidity to the US dollars.
It seems to suggest while Europe is soaked in boiling water, the US may be gradually bottoming out. True, I doubt.
When one unwraps the gift paper, the so-called positive American job figures would be found to have confused the market as much as when they were negative. Over the past tens of months, the figures ebbed and flew like waves, misleading the market again and again.
Taking a closer look this time, the slash in unemployment actually arose from a shrinking pool as a result of more people giving up the search for a job.
About half of the 0.4 percentage point decline came from 300,000 plus people leaving the work force. The work force participation rate had fallen further by 0.2 percentage point in November. Of those considered as officially employed, the portion of the prolonged jobless climbed to 43%, indicating that the US will lose certain types of jobs, for good.
With just one eye rather than two opening wide, one can expect more “good” news about US employment in the upcoming months and therefore blow the proclaim that the world’s largest economy will be safe again.
Apart from job shortage, not to forget about America is also a long wish list: Cutting huge fiscal expenditure, adding tax, regaining trade imbalance and hence borrowing less and repaying more.
Nevertheless, the temporary instillation of illusory report on job prospects at least has cooled people’s expectation of QE3 that went high when the debt crisis pushed Europe to the brink weeks ago. The weapon, if used, would best serve to help the incumbent administration in seeking a re-election.
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