Unemployment will hit the Market

- Those who make religion their god will not have God for their religion.

- Thomas Erskine 

There is a lot of conversations going around about the disconnection between the stock market and the economy, notably unemployment. We agree. With that said, the market looks further than the weekly claims numbers from state offices. They also take into consideration many aspects gathered about our spending practices. This is where we, at Evolution see the day of reckoning. If you have no income or resources, your only spending is on food and possibly, shelter. We say the spending on shelter as well as energy are categories of our economy that is in flux. We see homelessness. We see people in California buying RVs. They are living in them parked on the street. This change is spreading. Local authorities are already rewriting laws to limit overnight parking on streets. They are adding restrictions to RVs and campers. The Trump administration was quick to pass executive orders to limit evictions after the eviction forbearance clause expired under the CARES Act. He does not want to hand the Democrats an easy issue to blame Trump and the Republicans. As for energy, more and more people are seeking utility assistance. They won't be needing their car to go to work because they don't have a job or want one that does not provide a living.

At present, the recent correction within the market is the diversion being considered by investors. They are taking money off the table. They will probably seek new positions after the election. This is a percentage conjunction. If the government passes another stimulus bill, the market will resume its climb to record territory. However, we see either reason as only painting over rust. Eventually, the rust stain will reappear. We see this happening in the first quarter of 2021. Why, you ask?

Houston, we have a problem.

Every week the number of filed unemployment claims is 850,000 or more. Dear Reader, this isn't even the total story or figure as you will read. There was another 839,000 weekly claims that were not included with the unemployment claims. This is due to our low-paying service society jobs. There are millions of workers who do "gig" work. They are categorized as self-employed. These workers like drivers do not qualify for unemployment benefits. They also won't be building a solid social security net in old age. This will be another economic problem for the US in years to come. Anyway, if you want a clearer picture, I refer you to the work of Edvard Munch, the Norwegian artist and his piece called, "The Scream." The Bureau of Labor Statistics (BLS) reports that at present, 31 million workers are collecting unemployment benefits. This translates to a 63% participation rate. The US has 164 million eligible workers. They say that one in five workers are unemployed. When I went to school that came out to 20%. This is the real unemployment rate. Wall Street thinks that the figure is 8.4% to which the BLS claims. When they read reports of less spending by consumers, they will begin to awaken to the truth. When the impact of rent revolts and utility assistance is constantly in the news, the market will sink like a stone in water.

People, the real number of unemployed is 40 million and that means the unemployment rate should be 25%. This is politics! These phonies create new job categories to keep the public clueless. This is not new. Check out the comedy routine on unemployment by Bud Abbot and Lou Costello. They, and their work is classic.

Other factors...

There are different aspects in our economy that no one considers or looks at. For instance, the Blackstone Group (BX) is considering a buyout of the Kansas City Southern Railroad (KSU). When mergers happen in the US, it is a calling card for job cutting and layoffs. This is only one example. There are others. How about our history of exploiting workers and anti-union actions. Recently, due to the virus, some unions have gotten the Occupational Safety and Health Administration (OSHA) to investigate work sites where infections are high as well as deaths for workers. They just levied their highest fine against two meatpacking plants, JBS and Smithfield. The pork producing Smithfield plants produces 5% of our nations total production. The fine was a joke. It had no real teeth. Sadly, there will not be any real changes. 

Seasonal Help...

will be very important this year. The fliers are already out. Michael's, the retail art shop, is looking for 16,000 workers. They need that many, but come January they will let them go. UPS says it wants (read needs) 100,000. I-800-Flowers needs 10,000. The list goes on-and-on. The deal is this. If you add up all these holiday hires, you begin to realize the extent of our true unemployment picture. 

Add it up...

There are 11 million fewer jobs available due to the pandemic. In July there were 2.5 workers chasing any job offer. This recession and the prior economic crisis of 2008 has resulted in another 5.5 million manufacturing jobs lost. This is why we cannot get a company to make face masks or PPE for our health workers. When you look out into the future the picture is even worse. Self-driving vehicles and robotics will eliminate another 7.5 million jobs. Not only will our nation be unprotected as a self-sufficient country, but it will have a serious unemployment issues for an extended period of time. Congress better put in place some measures to renew manufacturing that offer quality wages to stop the bleeding of the middle-class or the US will become a Banana Republic with nuclear power.

The only thing politicians know is how to buy votes. The spending is reckless. The Congressional Budget Office reported that this fiscal year, the deficit will hit over $3 trillion. Keep in mind, last May they said this years deficit would be "only" $892 billion. Now, you know why the Trump administration has been slow with the requested additional stimulus. They want to buy votes, but they want it on next years budget. POLITICS!