Danny Salas

Archive for September 30th, 2009

Chico, CA Interest Rates Market Report – Economic Influences – September 30, 2009

Rates Are Still Low

I’m Down With ADP…Yeah, You Know Me…

Yeah, well I’m NOT so down with American Data Processing (ADP).  ADP is an American payroll company that releases its own unemployment statistics, separate from the government’s statistics.  Sometimes they’re right on…and other times…well let’s just say that other times…they’re just plain rediculous.  So, you have to be careful with the information that they report. 

254,000 Jobs Cut

ADP reported that the private sector of business cut 254,000 jobs.  They only expected that 200,000 jobs would be cut.  So, you’d think that the market would consider that horrible information and interest rates would plunge downwardly.  Part of the problem is the media.  Remember when we were losing 380,000 jobs, or more, a month?  The media’s take on this is that a loss of 254,000 is almost like Christmas!  Well, my take is that there is almost nobody left to lose their job.  So, where’s the good news in that?

The Real Jobs Numbers

So, let’s take a look at where we really are.  The population of the work force of the United States grows, at 1.5 Million people per year.  So, that’s 125 thousand new jobs a month.  So, if we’re losing 254,000 and the work force is growing at 125 thousand…that puts us at 379,000.  That number close to any other number mentioned in this article?  Now think about this…ten percent of that work force is unemployed.  So, fifteen million people are out of work.  But think about the people whose unemployment compensation has run out.  Also, if you don’t physically look for work in a four week period, you’re not included in those numbers, either.  That bring unemployment to more like, eleven percent.  Now, many of the Americans that lost their jobs over the past couple of years, had to settle for part-time jobs.  That’s another six percent.  So, realistically, The United States of America is seventeen percent (17%) unemployed.  UGLY!

What’s Your Point, Danny?

We’ve got a long way to go.  To put it mildly, we would have to have the best employment period, ever on record over a ten year course, to get back to normal six percent (6%) unemployment.  I know, “Danny Doom & Gloom.”  But, don’t let the media tell you that things are golly and rosy out there.  They’re not.  So, this information should keeps low, however, when the government stops buying Mortgage-Backed Securities, rates will move up.  And when inflation moves up, that’s when things could get ugly.  SO BUY NOW!  When I say that employment figures should keep rates down, I’m looking at the 7.0% range, in a couple years. 

Float Like A Butterfly

So, we’ll be ready to “sting like a bee,” with a quick finger on the lock button, but let’s see how the day pans out, before locking.  If you have time…

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