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Cue the alarms, the warning sirens, the panic and the bear stampede on the Street today ... the U.S. nonfarm payrolls dropped unexpectedly in December.
The good news? November nonfarm payrolls were actually revised higher, reflecting a gain of 4,000 jobs. Despite November's gain, payrolls dropped by 4.2 million in 2009, bringing the two-year total of job losses for the recession to 7.3 million. As for the official unemployment rate, it remained at 10% during December. That said, the data that includes discouraged workers and those forced to work part time increased to 17.3% from 17.2%. Perhaps the most discouraging aspect of the report was that there were "few signs of further improvement in labor conditions."
With futures pointed lower following this report, what does the news hold for the market in a long-term capacity? At some point, all of this "bad news" surrounding jobs and joblessness will wear on investors. When the investing bunch finally decides that they are done buying what some of the uber-bulls are selling, then we could see a sizable drop in the market. I'm not sure how long we can hear that the unemployment situation is improving when the data shows us that this is not the case. Eventually the bad news will sink in and we will see a drop. How far will the market drop? Hopefully not too far. I'm not sure the battered psyche of investors can stand too much more bad news.
All this said, remember that jobs were revised to show an increase in November -- let's just hope that revised numbers for December show the same. Eventually, we will hear that jobs increased on the initial report, not the revised report.
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