By Dave Lindorff
It is part of America’s state religion, the Free Market fundamentalist religion that is accepted as gospel by all leading politicians, by the “brain trust” that sets goverrnment economic policy, and by the supposedly hard-nosed analysts who convince American investors where to put their money, that “markets know best.”
How then to explain the panicked reaction of investors and markets to the Labor Department’s monthly Bureau of Labor Statistics report on the latest monthly jobs and unemployment figures?
Those numbers reported out for the month of June, released at 9:00 am after the usual kind of tight secrecy you’d expect of a National Security Administration international risk assessment, came in at an anemic 18,000 net new jobs, and a new official jobless rate up slightly from 9.1% for May to 9.2% for June. An hour later the stock market plunged by about 1% in a matter of minutes (that 1% drop represented a paper loss to investors of $140 billion!). The reason given by analysts and financial journalists for the plunge was that the “expectation” of investors, based upon forecasts of the jobs number made by economists and analysts the day before the BLS announcement, was for somewhere between 90,000 and 120,000 new jobs, and for a dip in the jobless rate to 9.0%.
So because the actual number of new jobs reported by the BLS was somewhere like 72,000 to 102,000 lower than the forecast estimates, and because the jobless rate edged up instead of down, investors dumped a pile of shares, causing the value of most shares on the exchanges to lose value.
That investor reaction, and the poor jobs numbers themselves, were interpreted by those same economists and analysts in the following days as an indication that the US economy was in trouble--that the supposed recovery from the deepest recession since the 1930s had “stalled.”
The “wisdom” of the market was saying that the American economy was stumbling again.
But hold on a minute. What has really changed with those numbers?...
For the rest of this article by DAVE LINDORFF in ThisCantBeHappening!, the new independent online alternative newspaper now beginning its second year of daily publication, please go to:ThisCantBeHappening!