Steve Leesman from CNBC has the quote of the day when he refers to the jobs report as, “a sea of lesser negatives”.
First, the close of Thursday saw the bond market drop slightly with rising yields mostly due to the first increase in four days for the stock market. The six month Treasury rate ticked up one basis point to 0.23%. The one year Treasury also was up by one basis point to 0.42%. The ten year Treasury gained four basis points to close out 3.33%.
The U.S. economy added another 216,000 job losses. Due to revisions to previous months, the unemployment rate ratcheted up to 9.7%.
The monthly jobs report indicated that the U.S economy is now shedding jobs more slowly. It is true that the job losses in this recession are going from horrific job losses to just really bad job losses. The important element is that they are losses on top of an already staggering number of unemployed individuals.
In order for the U.S. economy to turn into a recovery, deteriorating at a slower pace is not a recovery; consumer spending will have to pick up. If the work force decreases by one worker it is unlikely that the economy will recover. It is nice to think that since job losses are getting smaller this pace or trend will continue until job growth arrives. Great fantasy.
Why would the job market move with a fixed positive slope. It is just as likely that job losses reach zero in 5 months and remains stagnant without job growth or losses for a year. Without job growth, the consumer is not going to increase spending measurably and the economy will not recover. And since the stimulus package that was approved by those inept drunks, crooks and morons in congress is unquestionably the worst stimulus package, if job growth doesn’t arrive soon it may never arrive until the next election.
To avoid a spirited debate on the stimulus, the short reason this stimulus was badly contrived was it gave money to the states to pay the bills and work on projects that do not stimulate long term private sector involvement which is the key to recovery. Let the state make their employment cuts and work on funds for the private sector or joint private sector projects or similar components.
Example: if the US. Government fast tracked the construction of a nuclear power plant and loaned the money to the utility at say 1.25% for seven years, this would cost tax payer almost nothing since the government borrows at 2.95% for that term and it would be a private project that ultimately ends with a clean burning generator of cheap electricity.
Keeping workers on the state payrolls is inefficient and temporary. The stimulus program was a bust. My town received money to do home energy audits. When the money ends, how will the private sector pick that up. Consumers will decide to build windmills in their backyards? The Hoover Dam still generates electricity. Build another Hoover Dam, better yet, entice the private sector to build it. A new road is nice, but its temporary if no one travels down that road – take a peak at the empty massive four lane highways of North Korea, no employment, no cars, empty highways.
It is possible that Chia Debt Obama will be the biggest mistake of our lifetime – and I do not belong to the Beck, Limbaugh, Dick Army crazy club. I had hope. I don’t think Obama has a clue about economics, he is making social decisions only.
For the most part, this week has seen no significant changes in CD interest rates. Some of the larger online banks have ratcheted up their longer term CD rates ever so slightly. Ally Bank raised their five year CD rate by five basis points for the week to 3.30% as well as their two year CD rate by an equal amount to 2.35%.
The post CD Interest Rates Sept. 4, 2009 – Deteriorating at a Slower Pace is Not a Recovery appeared first on SelectCDRates.com - The Leading Industry Tool to Help You Select and Compare the Best 6 Month, 1 Year, 2 Year, and 5 Year CD Rates, Find rates by individual states, Money Market Account Rates, Savings Account Rates, Money Market Fund Rates, and Tax Exempt Fund Rates.