13 Million Americans Exhaust Unemployment by 12/09 http://seekingalpha.com/article/153555-five-reasons-the-market-could-crash-this-fall A lot of the bull-tards in the media have been going wild that unemployment claims are falling. It strikes me as surprising that this would be true given the fact that virtually every company that posted the alleged âawesomeâ earnings in 2Q09 did so by laying off thousands of employees: * Yahoo! (YHOO) will cut 675 jobs. * Verizon (VZ) just laid off 9,000 employees. * Motorola (MOT) plans to lay off 7,000 folks this year. * Shell (RDS.A) has laid off 150 management positions (20% of management). * Microsoft (MSFT) plans to lay off 5,000 people this year. So unemployment claims are falling, that means people are finding jobs right? Wrong. It means that people are exhausting their unemployment benefits. When you consider that there are 30 million people on food stamps in the US (out of the 200 million that are of working age: 15-64) itâs clear REAL unemployment must be closer to 16%. And theyâre slowly running out of their government lifelines. The three million people who lost their jobs in the second half of 2008 will exhaust their benefits by October 2009. When you add in dependents, this means that around 10 million folks will have no income and virtually no savings come Halloween. Throw in the other four million who lost their jobs in the first half of 2009 and youâve got 13 million people (counting families) who will be essentially destitute by year-end. How does this affect the stock market? The US consumer is 70% of our GDP. People without jobs donât spend money. People who are having to work part-time instead of full-time (another nine million) spend less money than full time employees. And people who are forced to work shorter work weeks (current average is 33, an ALL TIME LOW), have less money to spend. Wall Street makes a big deal about earnings (earnings estimates, earnings forecast, etc), but when it comes to economic growth, sales are the more critical metric. Companies can increase profits by reducing costs temporarily, but unless actual top lines increase, there is NO growth to be seen. No revenue growth means no hiring, which means no uptick in employment, which means greater housing and credit card defaults, greater Federal welfare (unemployment, food stamps, etc), etc. So how will corporate profits perform as more and more consumers become part-time, unemployed, or destitute? Well, so far profits have been awful. And thatâs BEFORE we start seeing millions of Americans losing their unemployment benefits. With the S&P rallying on these already crap results⦠what do you think will happen when reality sets in during 3Q09?
In a related story: The Senate has passed a $124 billion bill that pays to add millions of people to the food stamp rolls as rising numbers of the jobless are forced into the program.
Ritholz' blog has some good numbers on this idea: The Big Picture (HOLY JEBUS THIS WAS SUPPOSE TO BE A SMALL CHART) Lemme get this straight: 26 weeks unemployment benefits, plus another 20 under EUC and then another potential 20 under Supplmental EUC. O Lawdy, Obama for sho gonna haf to pay ow'a mawgage too. The lastest GDP shows the problem as government spending is creating the relative stability out there but to do that they have to run the printing press. That's nice in the short run but that's the next bubble burst/train wreck.
1.5 million will run out in the next month and a half. 13 million will run out by year end. The true rate of unemployment nationally is 16% AND RISING.
If you run a trendline up from the two highs it should land at about 8 or 9%...a huge number. Look for big hype coming in the next 5 months. Year to year data will now be againt the collaspe of fall 2008. Based on that numbers will look very positive.