Forget “Grexit”, Jobless Claims Data Suggest June 2012 Could Be Worse Than May Unemployment Growth Of 69,000:
Fed may move after Greek elections on Sunday.
Americans are still finding it difficult to obtain employment. Unemployment insurance benefits rose last week which suggests the labor market won’t improve significantly anytime soon. While most people are focused on Greece and whether they will leave the euro based on the upcoming elections on Sunday, it’s becoming clear the U.S. has it’s own economic headwinds.
Initial jobless claims benefits rose by 6,000 to 386,000 for the week ended June 9, 2012 from a revised 380,000 in the prior week the Labor Department said today, which was more than most economists were expecting.
The data seems similar to weekly jobless claims reports in May 2012 that led to a meager increase of 69,000 jobs for the month. At the current rate, jobs gains for June 2012 could be 70,000 +/- 30,000 (standard deviations for monthly unemployment data are large). This data would confirm the need for some stimulus entering the economy and the Fed is expected to make a decision next week on “Operation Twist-QE3″ after the Greek elections.
The political economy issues related to jobs make it very difficult for President Obama to get reelected and this result is a much bigger issue for jobs growth, the “fiscal cliff”, business certainty and taxes in 2013. We continue to watch the financials, tech and small caps while the dollar will make a move in the next few days either in anticipation of – or as a result of the Greek elections.
The likelihood that Greece will leave the euro has increased dramatically in the last few days and we believe one nation leaving the euro could set a precedent – others may follow. The Fed may move in anticipation of this and join China as well as Australia with easy money policy via lowered rates since the last U.S. monthly unemployment data was released.
