We all know the upcoming election is about the economy - and specifically, employment, or lack thereof.
Today's release is disappointing: while new unemployment claims are down, businesses still are not hiring. Our own fiscal house is not in order, and we all know what's happening in Europe. China's slowdown scares us. Conditions most likely will not improve until the beginning of the year, and some say that even 2013 could be tough.
We aim to give credit where credit is due, but the drop in the unemployment rate from 8.3 to 8.1 is misleading. The labor force dropped by over 4 percentage points, from 63.7 to 63.5 - the lowest participation rate since 1981. In absolute numbers, that means that the number of employed workers dropped by 119,000.
Companies clearly lack confidence, and only when it is restored will they be willing to invest. Capital equipment is one type of investment; hiring is another. This far into a recovery should signal significant gains in jobs. It's not happening, and while there is much blame to be shared, Washington's policies are up there.
Investors are driving up the stock market in search of yield, since with QE3 threatened, they won't find it in bonds. High-quality, dividend-paying stocks are a good choice, and the market is reflecting it. If the economy goes into another recession (have we really come out of this one?), stocks of companies producing basic goods (food, energy) will hold their own.
Now if we can just get a few more million people back to work...