Economics Update

As expected, today was a busy day, we had the ECB raising its benchmark interest rate 25 basis points to 4.25%, though investors were heartened that the accompanying statement appeared to make further hikes less likely.

We also had 62,000 jobs lost in the US, though the statistical witches brew known as the official unemployment rate stayed at 5.5%.

Of course, the "adjustment" for April and May added another 52K lost jobs.

Once again, I have to point you to Barry Ritholtz, who notes that the adjustments to that number are sick:

June 2008 was 177k versus June 2007 155k
Construction Gains +29k
Professional & Business Services +22k
Leisure and Hospitality +86k

Construction gained workers? Leisure and hospitality picked up 86K jobs? When the number of people traveling is dropping?

We need a truth and reconciliation commission for our economic stats generating agencies.

I would also note, as Mr. Ritholtz does, that the number of new unemployment claims jumped to 404,000, which does not include those people who will now get an additional 13 weeks.

What's more, the SM nonmanufacturing index fell to 48.2% from 51.7%, indicating the service sector is taking it on the chin too.

It appears, however, that investors expected worse, as the dollar actually strengthened after all this.

Behold the power of low expectations.


However, despite the dollar strengthening, oil hit a new record, hitting $145.85/bbl mid day, and retail gasoline hit a new record too.

In real estate, we are seeing home mortgage rates down for the first time in 3 weeks, and we have demand for office space shrinking.

Chart pr0n: