10,000 Tops?

The Lehmann Letter © The stock market had a nasty setback today as it struggles to break clear of the 10,000-on-the-Dow benchmark. It’s an important struggle for two reasons. First, we made our initial visit to Dow-10,000 a decade ago – at the end of the 1990s. Today the stock market is no higher than it was then. In the meantime there have been two peaks well over 10,000 and two troughs well under 10,000, but no upward trend. Are we stuck in a range? Second, the September 17th posting of this blog discussed the favorable impact of – and Continue reading

3.5 Percent

The Lehmann Letter © Today the Commerce Department announced (http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm) that GDP snapped its downward spiral by growing 3.5 percent in the third quarter. That was good news and the stock market rallied in response. Close examination of the underlying data, however, provides cause for concern. The GDP grew by roughly $112 billion. Durable goods expenditures, at $55 billion, represented almost half the increase. Most of that was the federal government’s cash-for-clunkers program. It’s over and motor-vehicle sales have consequently fallen. This quarter’s GDP will reflect that decline. Inventories represented $30 billion of the gain, but in a strange way. Continue reading


The Lehmann Letter © Today the Bureau of Labor Statistics announced that the economy lost 263,000 jobs in September and that the unemployment rate rose to 9.8%: http://stats.bls.gov/news.release/empsit.nr0.htm Job Growth (Click on chart to enlarge) Recessions shaded You can observe this recession’s brutal impact on employment. You have to go back more than 30 years to find another recession in which monthly job losses exceeded 500,000. At least employment snapped back quickly from those recessions. If this recovery is a slow as the recoveries from the 1991 and 2001 recessions, we can expect serious unemployment through 1910. (The chart was Continue reading