Mish's Global Economic Trend Analysis

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European Sovereign Debt Crisis in Pictures; Nothing Solved Yet, Credit Stress Close to All Time Highs Posted: 17 Feb 2011 12:28 PM PST The ECB and EU want everyone to believe there will not be haircuts on sovereign government debt. The market refuses to believe that and so do I. If there was no risk of default, then government bond yields would all be the same. Instead, please follow this progression of current yields on 10-year government debt. click on any chart to see a sharper image Germany 3.237% France 3.615% Belgium 4.23% Italy 4.731% Spain 5.455% Portugal 7.41% Ireland 9.148% Greece 11.859% In spite of all the yapping by ECB president Jean-Claude Trichet and others, the European sovereign debt crisis remains near its most stressed levels, and the above set of charts proves it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Gallup Survey Pegs Mid-February U.S. Unemployment at 10%; Analysis of the Jobs and Unemployment Situation Posted: 17 Feb 2011 09:34 AM PST Gallup says the unemployment rate is 10.0%. However, that is a "without seasonal adjustment". On the same basis, the BLS has the January unemployment rate at 9.8%. The "official" unemployment rate from the BLS is 9.0%, seasonally adjusted. Please consider Gallup Finds U.S. Unemployment Up to 10.0% in Mid-February Unemployment, as measured by Gallup without seasonal adjustment, hit 10.0% in mid-February -- up from 9.8% at the end of January. Numbers reflect rolling averages for the 30-day periods ending on the 15th and last day of each month from January 2010 through February 15, 2011. The percentage of part-time workers who want full-time work worsened considerably in mid-February, increasing to 9.6% of the workforce from 9.1% in January. Part Time Workers Wanting Full Time Jobs Underemployment Surges in Mid-February Underemployment, in which Gallup combines part-time workers wanting full-time work with the U.S. unemployment rate, surged in mid-February to 19.6% -- mostly as a result of the sharp increase in those working part time but wanting full-time work. Underemployment now stands at basically the same place as it did a year ago (19.8%). The Jobs Situation Now Versus a Year Ago The unemployment rate in mid-February is 0.8 percentage points lower than it was at this time a year ago, compared with a 1.1-point improvement at the end of January. This suggests that jobs are less available now than they were in January. More troubling, however, is the surge in underemployment. On this broader basis, current job conditions are barely improved from what they were at this time last year. Essentially, what has happened over the past year is that some people who were unemployed got part-time jobs but are still looking for full-time work. This is not much to show for a year in which many macro-economic indicators showed improvement. This is likely why Gallup's self-reported spending remains stuck in "new normal" even as consumer optimism continues to hit new highs. Jobs remain the key to getting the U.S. economy moving, and mid-February underemployment results suggest little or no progress is being made in that regard. Analysis of the Jobs Situation The best comparison of statistics is non-seasonally-adjusted numbers to the same month a year ago. I added blue circles on the charts to show. While the BLS and Gallup both have non-adjusted unemployment rate dropping nearly a percent from a year ago, the Gallup results suggest that much of that drop is from part-time hiring. To be more precise Gallup shows a .8% drop year over-year in unemployment and a rise of .6% in part-time workers wanting a full-time job. Gallup notes the year-over-year trend in unemployment is rising. This should not be surprising. Many retail companies did not let go workers in January that they hired for the Christmas season. It was on that basis I suggested last November and December we could see a couple of "hot months" at the beginning of the year. We did not see it in jobs, but it sure showed up in the large drop last month in the BLS seasonally-adjusted unemployment rate. Now, unless corporations are about to go on a hiring spree, (and I doubt they are), I would expect unemployment rate to at least tick up to the 9.5-9.6% area again. Moreover, were it not for millions dropping out of the labor force, the unemployment rate would be 11%. Here is one final thought. How much taxpayer money is wasted by thousands of BLS workers putting out constantly-revised results when we can easily get results of high quality from the other places for far cheaper? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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